Upfront ad sales to hike 20% this year

Barclays Capital analyst estimates sales of $8.26 bil

NEW YORK -- Broadcast TV upfront advertising sales will rise 20% over last year to $8.26 billion and slightly outperform the cable TV upfront market's gain of 15%-20%, Barclays Capital analyst Anthony DiClemente estimated early Wednesday.

He cited ratings trends, improved confidence of U.S. corporations amid the economic recovery, strength in key segments, such as automotive ads, a "de-risking" for marketers looking to lock in pricing, higher network inventory sellout levels, a strong scatter market (with prices 15%-25% higher than last season's upfront levels) and likely high-single-digit increases in upfront ad prices.

But the rebound from last year's 21.8% drop to $6.88 billion would still com in slightly behind the broadcast networks' 2007-2008 upfront haul, according to the analyst.

"Broadcast TV should outperform cable TV in growth of dollar volume year-over-year, though any narrowing of the pricing gap between broadcast and cable would bode well for cable on a relative basis," DiClemente wrote.

Among broadcast networks, CBS (+28%) and Fox (+22%) are likely to see the biggest total upfront dollar gains to $2.43 billion and $1.96 billion, respectively, since they are the only networks to post season-to-date ratings gains across all demographics, DiClemente predicted. Last year, they were down 23.6% and 17.5%, respectively, a chart in his report showed.

NBC (estimated to gain 13% to $1.65 billion after last year's 20.9% decline) and ABC (+16% to $2.21 billion after -23.9%) will see smaller gains as "they are constrained by weaker recurring ratings performances," he added. But he said NBC's return to programming the 10pm slot after the "failed experiment of lower-cost The Jay Leno Show" will help NBC compared with last year's upfront.

In terms of ad price increases, Fox and CBS are likely to see mid- to high- single digit CPM gains, with NBC and ABC gains likely to be in the mid-single digit range.

Overall, DiClemente anticipates an average sell-out ratio of 77%, compared to 70% last year.

Auto ads could be key upfront drivers as the U.S. ad industry lost $3.5 billion of auto ad dollars in 2009 compared to 2008, according to the analyst. "The return of these ad dollars could substantially drive upfront volume, especially for networks with heavy sports content," he said.
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