Media Talk

Twitter Updates

    Twitter follow me on Twitter
    Recommended Picks
    More recommended titles in our aStore...
    Google Ads
    Seeking Alpha Certified

    « Box Office Recovery Continues | Main | Selling Comcast. Buying News Corporation. »

    December 26, 2007

    TV Ad Market Strong. For Now.

    On Monday, the New York Post reported that scatter market TV advertising on the big four broadcast networks is running up 18%. Scatter market represents TV ad inventory available for sale on the spot market. This price increase is occurring despite another year of accelerated declines in ratings for prime time network TV shows. What is happening is that advertisers have not achieved the reach they desired with their upfront ad purchases so they are aggressively bidding for limited inventory and driving up pricing. This situation bodes well for 4Q EPS of the owners of the broadcast networks – Disney (ABC), News Corporation (FOX), CBS, and General Electric (NBC).

    A gentler version of this rising ad prices/falling ratings dynamic has been going on for more than a decade enabling the broadcast network TV market to grow modestly despite the steady market share gains for cable TV and other forms of media. The concept sold by the broadcast networks has been that “we are the only place where you can still reach a mass audience even if it is ways less massive than it used to be.” The winners at any point in time are the networks that are on top of the ratings or sustaining ratings momentum (currently ABC and FOX)....

    ....This situation could change for the worse over the next months, however, if the writer’s strike continues. TV ratings are likely to dive as most of viewers favorite shows leave the air and are replaced by reality programs, repeats, or a limited number of new original series. Advertisers seem likely to take a tough line and being to fight back against rising prices amid deteriorating ratings. This is the real risk to the broadcast networks from the writer’s strike. As a result, the scatter market bears very close watching over the next month as the final episodes of most viewer favorites are aired.

    FOX is best positioned to weather the storm in the short-term because it has a fresh season of American Idol ready to start. CBS might also hang well in the near-term because its schedule is loaded with shows like CSI that repeat well. On the other hand, CBS is most exposed long-term as it gets over two-third’s of its revenue from advertising.

    Posted by Steve Birenberg at December 26, 2007 07:57 AM in Media

    © 2012 Northlake Capital Management | 1604 Chicago Avenue Suite 4
    Evanston, IL 60201 | 847-226-9713 | info@northlakecapital.com

    privacy policy | site design by windy city sites

     

    Nothlake Home Media Talk Home