TV picture dims in 2001

Modest TV ad yields expected after big presidential returns
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The year after the presidential-election campaign probably won't be a memorable one for broadcast-TV ad sales, industry analysts predict, but cable will be fine and dandy.

However, everyone seems to agree that the current presidential TV-ad season will positively sing, to the tune of $750 million to $800 million.

"It's going to be a wild few weeks while it all occurs," said Vinton Vickers, managing director of Chase H & Q, during last week's annual Television Bureau of Advertising forecast forum.

Political ads already represented 5% of the take for TV stations during the third quarter, according to Victor Miller, vice president of Bear Stearns, who said the combination of 15 swing states and tough Congressional races could produce a "big, big number this year."

Maintaining that big-bucks-this-fall theme, Frank Bodenchak, managing director of Morgan Stanley Dean Witter, predicted an NBC Summer Olympics "win" to the tune of $1 billion. (NBC nearly hit that, reporting its Olympian sales effort at $900 million.) But Bodenchak doesn't see the games sparking any spillover effect.

Beyond the races for Olympic medals and the White House, financial analysts aren't seeing a golden hue on the immediate TV ad horizon. A consensus of financial analysts surveyed by the TVB project 2001 percentage increases this way: local spot up 3.5%; national spot up a scant 0.5%; network up 7.2%; syndication up 7%; as cable does a double-digit 15.2% jump. TVB reports a consensus of TV reps surveyed see the spot market inching up by just 1.3%.

TVB's own 2001 projections fall in the same range as the analysts' consensus (see chart). Last year, its projections for 2000 were nearly dead on: 7% to 9% growth for local spot, against actual growth of 9.8% to date, and a 12% to 14% projection for national spot, versus an actual 16.5% increase thus far. Casting TV ad sales in a two-year frame, TVB is projecting 2002 numbers this year too: 6% to 8% growth for local spot and 8% to 10% growth for national spot. "It's pretty clear we're in a two-year business cycle now," said Chris Rohrs, TVB president, citing off-year elections and Winter Olympics alternating every two years with the presidential and Summer Olympics run.

David Wyss, chief economist for Standard & Poor's, painted a rosy pastiche of the near economic future, predicting current U.S. prosperity could persist through 2004. He cited lower government spending relative to gross national product, fewer new retirees and a fundamentally different economy as prime factors. "The economy has changed," he said. "It takes a lot of oil to run a factory. It takes almost no oil to run the Internet."

Ad agency executives see dotcoms fueling significant TV ad buys long term. "The dotcoms have moved from emotions to being real businesses," said Charlie Rutman, executive vice president and media director of Carat USA, although he foresees a "serious and steady slowdown" for that market in the near term.

Jonathan Mandel, co-managing director and chief negotiating officer of MediaCom, agreed: "A lot of that advertising wasn't to build traffic. It was to build that IPO."

Both Mandel and Rutman were bullish about the drug category, predicting it would double its TV ad buys over the next two years, fueled by a spate of new products.

On the automotive front, Robert Maguire, vice chairman of the National Automobile Dealers Association, delivered a mixed message, citing 7% growth in TV ad spending by dealers between 1998 and 1999, to $872 million, but pointing to the 1% drop that represented a total share of ad dollars. Direct mail and Internet marketing is taking up that slack, he said, hitting $1 billion last year as 18.8% of that pie.


Forecast 2001

<p> <span class="small" id="d9e39-16-small">Source</span> </p><p> <span class="small" id="d9e44-20-small">Local</span> </p><p> <span class="small" id="d9e49-24-small">Spot</span> </p><p> <span class="small" id="d9e54-28-small">Nets</span> </p><p> <span class="small" id="d9e59-32-small">Synde</span> </p><p> <span class="small" id="d9e64-36-small">Cable</span> </p>



TVB



+3-5



+1-3



+7-9



+6-8



+13-15



McCann Erickson



+2-4



0-+2



+2-4



+6-8



+14-16



Veronis Suhler



+2.5



+1



+1



+4.2



+13.4



Bear Stearns



+3-5



-1-+1



+10-15



+8-10



+18-20



Chase H & Q



+2



-2



+5



+4



+14



DLJ Corp.



+4.5



+2



+8



+6.5



+12



First Union Sec.



+4



+3



+10



+9



+17



Georgia Advisors



+8



+4



+9



+7



+12



Lazard Freres



+2



-2



+5.5



NA



NA



Merrill Lynch



+2-3



+2



+8-10



+10



+20



Morgan Stanley



+2



0



+8



+6



+16



Paine Webber



+2



-2



+8



+6



+15



Sandler Capital



+3



-1



+2



+2



+12



Wasserstein Perella



+4



+2



+2



+10



+15

TV industry analysts offer a fairly broad range of projections for ad sales in 2001. The following chart compares percentage growth or loss projections from the Television Bureau of Advertising, with estimates from a cross-section of financial analysts.

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