Upfront numbers seem to add up

Annual forecast predicts 3% revenue increase for nets

Broadcast networks are looking at a "much stronger" 2007 upfront than last year, Merrill Lynch analyst Jessica Reif Cohen said Wednesday in her annual upfront forecast report.

Cohen predicts a 3% increase in total revenue for the broadcast networks this year to $8.7 billion, up from the loss of about $300 million the six nets reportedly absorbed last year, mostly due to the WB-UPN merger. For the Big Four, the expectations are for 4% total dollar amount and cost-per-thousand increases. The optimistic prognosis is based on a tighter-than-expected scatter market as well as the 2008 presidential elections and Summer Olympics.

ABC, on the strength of its successful move of "Grey's Anatomy" to Thursday, is poised to lead the upfront, with Fox, which is riding the "American Idol" tidal wave, also in a good position, Cohen writes. She forecasts 5% revenue and CPM increases for ABC, which is poised to collect $2.1 billion, while her predictions for Fox are for a 4% CPM and 6% revenue increases for a total haul of $1.8 billion.

NBC is looking to reap benefits of stabilizing its schedule with 3% CPM and 5% revenue increases to $1.9 billion.

CBS is expected to continue as the revenue leader with $2.2 billion, but that is flat from last year because the network "has the most to prove to advertisers as, despite a stable schedule, it has suffered ratings losses on the all important Thursday night," Cohen writes.

The CW also is poised to finish the 2007 flat from last year, while MyNetworkTV, whose low ratings have prompted a major schedule overhaul, is expected to be down 20%.

With all broadcasting networks going for a massive push in the digital-content area, digital sales are likely to go from 2%-3% of all 2006 commitments to more than 5% this year, Cohen said.

On the cable side, she expects Discovery to be "the biggest winner."

During the period of upfront sales after the broadcast networks' May presentations of their fall schedules, advertisers buy in advance the bulk of the networks' commercial inventory for the upcoming season. The rest of the spots are sold during the season in the so-called scatter market.
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