Discovery, AMC, CBS Execs Bullish on TV Ad Outlook

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Digital isn't eating TV's lunch, they tell an investor conference after a weak upfront

Entertainment industry top executives on Thursday said that despite a weaker-than-expected upfront TV advertising market this year, they remain bullish on the outlook for TV ad trends.

While some industry observers have wondered if increasing ad spending on digital media had started to affect TV, they shrugged off such suggestions at the Nomura Digital Media Conference in New York.

"Advertisers aren’t seeing as much benefit from going there than in the broader reach of television,” said Discovery Communications CFO Andrew Warren about digital ads.

While advertisers seemed to bet on better scatter market ad prices, meaning prices paid closer to air time rather than in the upfront market, Discovery is predicting pricing to hold up or even strengthen. "There is going to be more demand for scatter than in the past," Warren said. "It’s more of a shift."

Warren said Discovery sold only around 50 percent of its ad inventory in the upfront rather than the mid-50 percent range it typically does to preserve prices.

AMC Networks CFO Sean Sullivan acknowledged that the overall upfront market was less robust, but his company did better, benefiting from "very good" ad rate growth and double-digit ad volume gains. "We were certainly pleased," he said.

While "there are definitely dollars shifting from TV to digital," he said that there was "no significant impact" for AMC right now.

CBS COO Joe Ianniello was also questioned about TV ad trends, saying "it is a competitive marketplace," but CBS continues to have strong ratings. "If you have the content, the dollars always follow," he said, predicting some spending will move from the upfront to scatter. "Whether people shift from upfront to scatter doesn't really matter to us, because we have confidence in our schedule." He also said that typically scatter pricing is higher, making him optimistic.

He also touted the CBS network's new Thursday night NFL games, saying advertising for them is 80 percent-plus sold out. The NFL has the right to end the two-year deal after one year, but Ianniello said CBS' goal is "to make it such a good experience for them" that the league won't exercise the option to end it early.

The executives were also questioned about consolidation. "We are strategically complete," Ianniello said, but said the company always looks at deals in case they make strategic and financial sense.

Asked if CBS could buy full control of the TV Guide Network, which has been expanding its original programming, from Lionsgate, the CFO said it was "too early to tell." The company just got into joint ownership to see how it evolves and likes Lionsgate as a partner, he said.

Twitter: @georgszalai