Everybody knows the advertising market is tanking in just about all sectors. But is it really possible that syndication dollars might be off by half—or roughly $1.2 billion—in the coming season?
That's what people were asking last week in the wake of comments made a couple of weeks earlier by John Muszynski, chief investment officer for Chicago-based media buyer Starcom. Muszynski told a group of investors that the syndication budgets of his clients (including Philip Morris, Sara Lee and Kellogg) would be down 50% for the coming season.
Even other media buyers were stunned by the magnitude of the falloff in syndication ad dollars at Starcom, which Muszynski said has (or had) about 12% of the overall spending in the sector. "That was the most shocking number I've read so far this year," said Tim Spengler, executive vice president, director of national broadcast for Los Angeles-based Initiative Media, which, like Starcom, is among the top buyers of syndication ad time.
Spengler said that spending among his clients will be down for syndication (as well as network and cable) and that the declines are double-digit but not anywhere near the 50% level. Generally speaking, TV budgets are down closer to 15%, maybe a little more, he claimed.
"Our budgets are going to be off in all dayparts," he said. "Which is not good news for us, or John [Muszynski] for that matter. It's not something we're happy about, but it's sort of a fact of the marketplace, and pricing is going to have to reflect that for our clients." In part, agencies get paid commissions on the dollar amount of advertising they place for a client. The more money they place for a client, the higher the commission. So it's not in the agencies' interest to spend less.
Jon Mandel, co-managing director at MediaCom, another big player in syndication (and network and cable), said overall TV budgets at his shop are down between 20% and 25%. It's difficult, he maintained, to break out syndication per se: "We don't plan syndication, cable or network separately. We just plan television."
The way MediaCom figures it, "syndication is just as good as network, which is just as good as cable," said Mandel. "We play the price-value relationships and move money between them" right up until the deals are done. So while TV overall will be down, at his shop anyway, syndication could conceivably be up. "It could be if they're smart about where the market is and cable is stupid or vice versa."
By Muszynski's estimate, Starcom's decline in syndication spending will by itself drop this year's pool of syndication dollars by 6%. "That won't decimate the market," said Marc Hirsch, president, Paramount Advertiser Services.
Hirsch, one of the biggest sellers of syndication ad time, is holding out for an up market. "Everybody is waiting to see where the marketplace is," he said. Ultimately, that sign will come from the networks, and his view is that they will demonstrate it's an up market. "The buyers have been talking about a soft market. They need confirmation from the networks that it's not a down market," he added, "and I think they'll be prepared to buy syndication up as well."
Spengler responded: "No chance. Talk is cheap, and we can both position. But when I talked to Marc's guys and I said we're off in every category, they said we don't see that. But when I asked what categories were up, they didn't haven't anything to say."
Garnett Losak, vice president of programming at Petry Media Corp., says that the sense she gets from syndicators is that the market will be down, not up. "Everybody is very tentative," she said. "One syndicator told me that, if their show does not go forward, it won't be because he hasn't cleared the show." The syndicator didn't finish the thought out loud. He didn't have to. "I knew what he meant," said Losak. "It won't go forward because they don't have any barter revenue."