Analyst Expects Broadcast Upfront Deals by Week's End

UBS analyst John Janedis expects CBS and ABC ad rate increases of 11 percent to 12 percent over last year after an estimated 10 percent gain for Fox, which he said "could limit" the pricing upside for its competitors.

NEW YORK - After Fox started striking upfront advertising deals late last week, UBS analyst John Janedis on Wednesday predicted that
the rest of the broadcast networks would "firm up commitments" by the end of this week.

He estimated that Fox decided to sell about 90 percent-plus of its primetime ad inventory for the 2011/2012 season in the upfront at price increases of around 10 percent over last year’s rate.

"As first mover, Fox apparently went for volume versus maximizing price increases (upcoming new shows such as X Factor play a role in this decision)," Janedis said in a report. "We believe this could limit the [price] increase available for ABC/CBS given the typical pricing differential between the top two or three nets."

The UBS analyst estimated that those two networks could see ad rate increases of 11 percent to 12 percent over last year's upfront, while NBC "is a wildcard given ratings issues," he said.

Janedis previously had predicted bigger upfront price increases for Fox, CBS and ABC in the 12 percent to 16 percent range. Barclays Capital analyst Anthony DiClemente recently projected a 12 percent price gain for CBS and 10 percent for ABC and Fox.

If broadcast upfront deals really move this week, that could mean that cable upfront dealmaking will kick into high gear next week, according to Janedis who eyes cable price gains in the mid to high single digit percentage range.

Broadcast and cable upfront deals overall will bring in about $19 billion this year, he estimated.

"While the upfront has been strong, the demand in the scatter market continues to be somewhat slower than it has been, though [ad rates] are still unchanged," Janedis said. "It’s unclear if the scatter slowdown is a negotiating tactic or [means] less demand, though at this point, ad revenue upside in the second quarter appears limited."


Twitter: @georgszalai

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