Cable Upfront Seen Matching Broadcast

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As the upfront market approaches, one analyst expects cable to stand out even though he’s predicting more moderate advertising growth for 2011 and 2012.

Anthony DiClemente of Barclays Capital sees the national cable networks taking in 15.3% more  in this year’s upfront market for a total of $9.23 billion, bringing them to parity with the Big 4 broadcasters, which will see a  7.5% increase.

DiClemente sees CBS’s upfront sales rising 15.6% to $3.01 billion, ABC’s sales rising 11.9% to $2.68 billion and Fox’s sales rising  6.4% to $2.11%.

NBC, now owned by Comcast, is looking at a 10.7% drop in upfront sales to $1.43 billion, according to DiClemente. With its viewership down 19.4% this season, he expects the struggling Peacock network, unlike its competitors, to sell less inventory in the upfront this year than last year in hopes that ratings will improve enabling it to cash in during the scatter market.

In terms of pricing, the analyst sees CBS leading the broadcast pack with a 12% gain on a cost per thousand viewers basis. ABC and Fox should score 10% increases and with NBC able to secure hikes of 8%.

DiClemente notes that a prolonged NFL lockout could mean higher prices and volume for both broadcast and cable networks in the upfront as a buyers look to lock in broad audiences on scripted and reality shows in case the games aren’t played.

Upfront sales are just one component of full-year ad revenues. DiClemente has lowered his revenue forecasts for ad spending overall in 2011 to 2.9% from 3.9% and 5.2% in 2012 from 6%.  But within those estimates TV-particularly cable TV-still look good. He has broadcast TV showing a 3.6% gain in 2011 and a 10.3% jump in 2012 (compared with earlier estimates of 5.7% and 8.2%) and cable gaining 9.5% in 2011 and 9% in 2012 (compared to 9.5% and 7.5%).

As far as investors are concerned, DiClemente sees CBS and Viacom as well positioned in the upfronts. He also likes Disney because of the strength of live sports content. In the event of an NFL lockout, he figured Disney stands to gain because it owns about 90% of the gross ratings points in college football and 33 of 35 bowl games.

“Also, ESPN is in a way insulated from the risks of a lockout given its heavy exposure to affiliate fee,” he adds. “We believe Disney has the least among of revenue at rick out of all of the networks that carry the NFL (CBS, Fox, NBC).”

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