A glimmer of prosperity aheadAt TVB confab, something unusual: Optimism about the advertising climate 3/31/2002 07:00:00 PM Eastern
What's this? Optimism about the economy? Signs are still mixed, but people in the TV business are starting to get the sense that a recovery may be near. Just how near is uncertain, but, at a New York confab last week, the consensus was that the ad recession might be history a little before the year is over.
Clearly, business people are groping for answers about the economy in all sectors, a fact that helps explain the overflow attendance at last week's Television Bureau of Advertising Conference. For the first time, TVB held its annual gathering in New York in conjunction with the New York Auto Show, a shrewd pairing because car advertising accounts for one-third of all television ad spending.
This year's attendance reached 717, nearly quadruple the number at last year's TVB conference in Las Vegas during the National Association of Broadcasters conference. Last week's event dovetailed with NBC's annual affiliate meeting. And a handful of station operators held group-wide sales meetings around the event.
But, even if there was a little bullish talk, no one expects the ad biz to roar back to pre-2001 growth levels, at least not this year. Sanford Bernstein media analyst Tom Wolzien expects just 1% overall growth for TV this year, with the networks up perhaps 3%, cable down 2% and local TV stations roughly flat.
Local-TV sales remain very tough in many markets. New York station sources say it's a real dogfight, with prices slashed left and right. And buyers continue making deals at the very last minute.
Even the ever optimistic Mel Karmazin, president and chief operating officer of Viacom, speaking at one TVB panel confided that some CBS stations still had some time available in the NCAA Basketball Tournament less than a week before the Final Four championship game.
Wolzien predicts that even 2003 and 2004 will likely be "transition years," showing growth but not a lot of it. "It will take a couple years to get back to normal trend-line growth."
Karmazin didn't offer specific projections for this year or beyond, but he did say that, if Wolzien's numbers are accurate, "I know we are going to grow more than that, which means some one else will grow less."
One definite plus: National spot, which got hammered pretty much all of last year, will show positive growth in the first quarter. Bear Stearns broadcasting analyst Victor Miller estimates growth at 4% to 10%.
As for this year's upfront market, Karmazin suggested that CBS and UPN would refuse to accept price cuts again this year—if the networks have the same confidence in their new schedules that they had last year.
Last year, only CBS's "best" customers got rate cuts, the network has said. "One thing we learned this year is that the money comes in the upfront or in scatter," said Karmazin, noting that CBS is getting "double-digit increases" in the second-quarter scatter market compared with upfront pricing.
As long as he has confidence in the networks' programming lineups, he said, "it would seem silly to do deals" at discounted rates in the upfront.
Irwin Gotlieb, chairman of MindShare Worldwide, the big New York-based media buyer, countered that, by definition, scatter prices should be higher than the upfront. "Otherwise," he reasoned, "the integrity of the entire process is destroyed. The issue is whether the upfront pricing is too high."
But commenting on TV advertising generally, he said he is "cautiously optimistic." There's typically a lag between an economic recovery and the time it takes for advertisers to resume normal spending levels. But "TV will probably do reasonably well relative to all other media categories" this year.
Attendees also heard from several auto marketing executives last week, including Michael Browner, executive director, media and marketing operations for General Motors, whose message was blunt: Don't expect GM to pay ad-rate hikes going forward. With ongoing audience fragmentation, he said, broadcast ratings will continue to erode. "It's especially critical that cost controls be implemented for both of us. It's not reasonable or possible for our costs to continue to rise."
GM wasn't the only one delivering that message. Said Steve Wilhite, vice president, marketing, Nissan North America, "We can't pass higher costs on to the consumer."
Separately, the TVB luncheon (co-sponsored by BROADCASTING & CABLE ) honoring Dennis Swanson, president and general manager, WNBC-TV New York, sold out way in advance of last week's conference. Swanson received BROADCASTING & CABLE 's first annual Broadcaster of the Year Award, in recognition of his 40-year career as a local broadcaster and network executive.
"We have an obligation to serve the public," he said of broadcasters. "Some forget that, but it shouldn't be forgotten. You must create a bond with the people you're serving."
The NBC affiliate meeting, which occurred a day before NBC icon Milton Berle passed away, was apparently devoid of news but full of goodwill. Affiliates did elect a new chairman: Roger Ogden, who runs Gannett's Denver station and is the former head of NBC's international operations. "It was largely a celebration" he said of the meeting—both of the network's accomplishments in February and of the upcoming 75th anniversary events planned for May.