CBS sits out 'the dance' for now
Moonves talks with ad buyers, but significant deals might be a ways offCBS Corp. CEO Leslie Moonves said Thursday that the upfront selling process could be slower to complete this year.
He also weighed in on a brewing Wall Street debate about the effect that sluggish auto advertising trends will have on media and entertainment companies.
Two weeks after Upfront Week concluded amid the end of the WGA strike-impacted 2007-08 TV season, there's little sign of the headlong rush that characterized upfront selling of a few years ago.
In an appearance at the Sanford C. Bernstein & Co. Strategic Decisions Conference in New York, Moonves said that CBS has "begun the dance" with advertisers and agencies but that no significant deals have been made yet. "We expect it'll happen maybe June, maybe July it'll all break," he said. "But we're ready."
Moonves said the process was slower because of the truncated development season and because there are a lot fewer pilots available to see this year compared with previous years.
Unlike the ad agencies and others who said that upfront pricing will be flat to down, Moonves said he was thinking positively after having preliminary meetings with advertisers. "We are guardedly optimistic that (the) upfront is going to be up, that CPMs are going to be up," he said. "If volume is down, that doesn't bother us."
He argued that as long as the scatter prices are higher than upfront pricing — and they remain up in the double digits, he said Thursday — the CBS network will just sell a lower amount of its advertising inventory in the upfront.
He declined comment on how much prices will be increasing. "How high up, it's a still a little early to tell," he said.
Moonves on Thursday also echoed Viacom CEO Philippe Dauman, who acknowledged a day earlier that auto advertising has been taking a hit, leading his firm to lower revenue growth guidance for its cable networks (HR 5/29). The comment pushed Viacom Class A shares to a 52-week low of $35.78 on Thursday, compared with the previous year-low of $36.
UBS analyst Michael Morris argued in a report this week that Viacom should see little pain in a weak U.S. economy given that its exposure to auto and financial ads, which are under pressure, is well below those of its peers (HR 5/28). But on Thursday, he suggested that Viacom's reduced guidance could mean bigger trouble elsewhere. "Weaker automotive advertising and an overall softer scatter market could prove more detrimental to competing media companies given higher relative exposure," he argued. (partialdiff)