As NBC Universal kicks off its second annual “infront” presentation in New York on May 4, its once-dominant broadcast network faces the toughest ad environment in decades, with both volume and pricing expected to be down across the entire TV market.
Fronting the presentation is Mike Pilot, NBCU's president of sales and marketing. From his perch atop both the broadcast and cable TV marketplace, he tells B&C he is predicting the continuation of last year's shift to cable. “We saw some money leave broadcast and find top-tier original programming in the cable sector, and we'll continue to see that this year,” he says. “I think I'm the only one in town that gets to see both markets simultaneously. We've got a great set of cable networks to receive prime replacement money.”
Not Like Last Year
Though his demeanor is upbeat, Pilot gives the first indication that the market expects to work through an upfront that bears little relationship to last year's bull market, where upfront pricing rose as much as 10%.
Pilot says the effects of the recession really only hit the TV market in February, once advertisers were able to take second-quarter options and move money off the table. Since then, he points out, “There's been real pressure on pricing. I think if you are a buyer in these kinds of market conditions, in any industry, you're not feeling great about paying increases right now and we're not immune to that.”
And from what Pilot says, NBCU appears to be gambling on a stronger scatter market. “History would say that after a recession, the marketplace comes back pretty strongly and fairly quickly,” he says. “That would suggest the right strategy for the upfront is that you understand the size of the market and make sure you look for proportionate share and hold enough good inventory to serve the demand in the scatter market, especially if you think the market is going to rebound.”
Last year, NBC booked some $1.9 billion, an increase of $100 million from the prior year, commanding mid- to high single-digit increases. While that sales figure was aided by an Olympics and a Super Bowl (NBC says it lost money on both), this upfront season will also include the 2010 Winter Olympic Games in Vancouver.
Barclays Capital suggests NBC will be down some 5%, while Miller Tabak analysts predict just a 2% fall in pricing at the network.
Analysts suggest that this year the market for the Big Four broadcast networks will be down anywhere from 10% to 15%.
One of Pilot's strategies—similar to the competition's—has been to engage advertisers as early and as often as possible. The NBC team unveiled its programming thoughts to advertisers attending February's Super Bowl, then talked to them again during the March development season.
Once the infront road show moves through Chicago and Los Angeles in the next week, the network will entertain advertisers back in New York with a comedy night, featuring its great primetime hope, Jay Leno. The event, which replaces any other formal get-together during upfront week, is scheduled for May 19.