Upfront Forecasts See Modest Growth

A few days before the broadcast networks begin their upfront presentation, analysts are predicting a more modest market for 2012-13 than the robust one the networks rang up a year ago.

Spencer Wang of Credit Suisse estimates that broadcast upfront dollars will rise 2% to $9.3 billion and cable will see a 4% rise to $9.7 billion.

Wang says three factors lead him to this conclusion. He says that scatter pricing has been more muted that last year, he expects advertisers to shift some dollars spent in the upfront last year back to scatter, and that declines in TV viewing will limit growth.

With that upfront forecast, Wang sees TV ad spending increasing 3% for broadcast and 7% for cable in 2012. For 2013, Wang estimates 3% growth for broadcast ad spending and 5% for cable ad spending.

David Bank of RBC Capital Markets expects prices to be up 6-7% in the upfront.

“For the 2012-13 upfronts, buyers seem to be looking for pricing increase of roughly mid-singles, while sellers are probably looking for pricing increase closer to high singles — the answer is probably somewhere in the middle,” Bank says in a new report. “Broadcast nets will likely continue to guarantee down mid-singles in ratings, though so far this season broadcast ratings have been more flattish.”

Within cable, mass market channels and special niche channels (especially those that target upscale audiences) appear to have better pricing power, he says.

Bank adds that “more importantly, growth in total ad budgets in broadcast year 2012-13 is expected to be similar to that of prior year.”