Amid the talk about a strong upfront with double-digit price increases likely, analyst Todd Juenger of Sanford C. Bernstein points out that upfront price gains don’t directly translate into higher annual ad revenue.
Instead, he notes that if prices are up 10% on a cost-per-thousand viewers (CPM) basis, the average broadcast network’s ad revenue would be up 2% next year, while the average cable network could be down 6%, mostly because of declining ratings that reduce the amount of eyeballs they have to sell at those higher prices. Also much of the dollars spent in this year’s upfront are simply being shifted from scatter, which means they would have wound up in network coffers any way.
The analyst declined in his report to forecast upfront pricing and volume.
Juenger did make some other observations about the week’s worth of upfront presentations.
He noted that CBS and NBC both made claims about being No. 1 among 18-to-49-year-old viewers. Juenger says CBS is No. 1 if all NFL programming is counted, including the Super Bowl, or if all networks exclude all NFL games. NBC is #1 if the Super Bowl is excluded but Sunday Night Football counts.
He adds that ABC and Fox didn’t claim to be No. 1 in audience but each claimed to have the most buzzworthy programming in social media.
Juenger said the networks emphasized reach but reduced their talk about data and management.
“Almost every company did reference their proprietary targeting/optimizing solution. But it wasn’t a big focus and no details were really offered,” he said. “We believe we heard the word ‘Nielsen’ once, and Turner even showed a couple of pieces of Nielsen data, but that’s it. We did not hear the word ‘comScore’ or ‘Rentrak’ at all.”
Several cable networks promised lighter ad loads, notably National Geographic Channel and Turner, Juenger noted. “This will provide a great experiment on viewership and revenue impact.”
“We believe the long-term plan of the forward-thinking networks (we could include Turner and Fox in that category, at least on this dimension) is to converge the ad loads on linear and on-demand,” he said. “That requires reducing the linear ad load, and increasing the on-demand ad load, until they are equivalent. With the obvious goal of reducing the incentive for viewers to wait and watch on demand (or, phrased in a positive way, 'increase the value of the linear product').”