In Depth

Is TV's Scatter Ad Market About to Be Blown by Tough Winds? CBS Maintains Optimism, but Viacom, Disney, AMC Note Some Slowing

By Brian Steinberg
Advertising Age

Sumner Redstone must be wondering what he's hearing. At one of his media companies, Viacom, executives are openly fretting about "scatter," the ad time sold closer to air date that typically serves as a barometer for marketers' TV demand. And at the other, CBS Corp., CEO Les Moonves recently told investors that "scatter" demand is just fine.

So are advertisers facing a softening ad market or do they still have to grapple with the tough premiums they've been paying for the last few years?

Concern is palpable. With the U.S. still mired in a sluggish economy, advertisers' willingness to spend may well hinge on consumers' ability to buy the goods they hawk. "U.S. advertising trends have been decelerating over 2011 and came in below forecast for the second quarter in a row," Nomura Securities analyst Michael Nathanson said in a research note Monday. "We are worried that national scatter trends, a major source of upside, have cooled and will become even more challenging in the first quarter," he said.

While CBS said it believes its recent prime-time performance will help it snare the lion's share of scatter spending, other media outlets have not been as ebullient. Sister corporation Viacom suggested the market for "scatter" was softening compared to past quarters. AMC Networks last week reinforced that view, noting that sponsors were waiting longer than they had in the past to put down money on scatter advertising. Walt Disney also suggested that scatter demand has "slowed."

Ad buyers suggest the trend simply illustrates one truism of the TV-ad market. When "scatter" premiums are high, as they were during the last TV season, marketers tend to increase their spending in the following "upfront," when they purchase ad time in the coming fall season. This year's upfront totals likely contained ad dollars previously earmarked for scatter, said one senior ad-buying executive.

"For the most part, it's slow," this executive said of the pace of TV-ad demand.

The market also hasn't gotten particularly tight because each of the big networks has enough big-ticket programming available that can be used to give advertisers make-goods when necessary.

"There are no great shortfall problems, no great demand out there," this buyer said. "Supply has held up OK. It creates a softer marketplace." Pricing at present is flat to slightly above what marketers paid in the upfront, this buyer said.

Hand-wringing about ad-market sluggishness is also in the wind, Mr. Nathanson suggested. "Due to a stronger upfront base at Broadcast and Cable Networks, we are expecting flattish sequential growth for national TV in 4Q," he wrote. "However, looking forward to 1Q and 2Q, slowing scatter premiums and less upfront money booked in those quarters could lead to slowing trends at national television."