Upfronts 2012: Analyst Predicts More Modest Broadcast, Cable TV Growth

Leslie Moonves
Neilson Barnard/Getty Images

Barclays Capital's Anthony DiClemente expects CBS to see stronger ad price gains than other broadcasters and grow its upfront revenue 10 percent.

With U.S. TV networks preparing to sell fall season advertising in the coming weeks, Barclays Capital analyst Anthony DiClemente on Monday predicted "another strong upfront, although it may not be as robust as last year's."

In a report, he highlighted that this time last year, the economic outlook was optimistic, and broadcast scatter advertising prices were up 25 percent-40 percent from the 2010-2011 upfront.

"While sentiment has improved year-to-date, we believe the set-up for this year's upfront is not quite as favorable as last year's," DiClemente said. "Macro uncertainty and European contagion risks remain, which could modestly limit upside."

He estimated broadcast TV upfront revenue would increase 4.3 percent, with cable networks revenue said to rise 6.3 percent - weaker growth than last year. That would bring upfront primetime ad sales for the broadcast networks to $9.49 billion, a new all-time high, and the cable channel total to $9.88 billion. Other analysts have also predicted that cable would outperform broadcast networks in the upfront this year.

Among broadcast networks, DiClemente projected that CBS would lead the pack by locking in ad rate increases of 10 percent, followed by Fox with 9 percent, ABC with 8 percent and NBC with 7 percent. The forecast would be consistent with comments from CBS Corp. CEO Leslie Moonves at an investor conference earlier this year where he predicted that CBS would see double-digit increases in the upfront.

Overall upfront ad revenue for CBS would then hit $2.92 million, up 10 percent, followed by ABC with 5.8 percent growth to $2.65 billion. Fox could bring in $2.15 billion, but see a 2.1 percent revenue decline as it holds back more ad inventory for later in the season, while NBC could grow 1.4 percent to $1.78 billion, according to DiClemente.

"We believe this year the broadcasters will generally sell slightly less inventory in the upfront compared to the historically high levels of sell-out from last year," he predicted.

Morgan Stanley analyst Benjamin Swinburne recently forecast more modest upfront revenue gains of 1 percent for broadcast networks to $9.16 billion and 4.3 percent for cable, which would then reach $9.69 billion. That brought his total upfront haul estimate to a 2.6 percent gain to $18.85 billion.

Auto advertising should be a key driver in the upfront amid solid  vehicle sales trends, which DiClemente said "bode well for auto advertising since it is the largest category and represents an estimated 20 percent of all network and cable TV advertising."

DiClemente also raised his U.S. ad growth forecast for 2012 due to higher Internet and political ad estimates and the "not as bad as once thought" economic outlook. He now projects growth of 4.6 percent, up from his previous 4.0 percent prediction.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai