In Depth

Why Isn't Les Moonves Making Upfront Predictions? CBS Bigwig's Uncharacteristic Silence Has Media Buyers on Edge

By Jeanine Poggi
Advertising Age

During the TV upfronts, there's one thing buyers have come to expect as much as star sightings, free-flowing booze and Fox-party shrimp: Chest-thumping over price increases by CBS's Les Moonves.

But this year, there's been nothing but silence from the Eye Network head honcho. Mr. Moonves has yet to make his traditionally bold prediction on the price increases he expects CBS to pull in for the upfront, when TV networks secure advertising commitments for the coming season. That's left the marketplace wondering whether his quiet is cause for concern.

"How could his silence not signal anything?" said Marc Morse, senior VP-national buying at RJ Palmer. "That's the problem when you boast and then you don't, the silence is louder. It implies something is wrong."

Speaking at Deutsche Bank's media, internet and telecom conference last month, Mr. Moonves declined to make predictions about CPMs (cost per 1,000 viewers). "My sales guys killed me for the last two years when ... I guaranteed double-digit CPM growth. Two years ago, we were up 13 to 15%, I did OK, and last year we were only up 9%, so I was a little bit of a liar. But they made me swear I'm not going to give out any numbers [until] we get closer to it."

At the time, Mr. Moonves did note that CBS will lead volume and CPM increases.

Now it's a month until broadcasters make their presentations to media buyers and advertisers, and Mr. Moonves still hasn't spoken.

"If he were to say CPMs will be up double digits, the next question would be: Does that mean dollars are up a lot? And he would have to say no," Mr. Morse said. "The double-digit increase would come because there's less supply due to ratings erosion, not more demand. Advertisers will be paying more for less, and he doesn't want to say that."

Even so, Mr. Morse said, CBS is in a better position than its rivals. "Those buying ABC, Fox and NBC won't want to pay 10%-plus increases for lower ratings and will likely move some money to CBS."

Media buyers also say it wouldn't be fair to expect CBS to deliver the same CPM increases it did as the economy was pulling out of the recession. As conditions stabilize, the whole space will start to see normalized growth patterns.

Overall, the expectation is for a tepid upfront. "We won't see double-digit CPMs," said Gary Carr, senior VP-national broadcast at TargetCast.

Barclays Capital analyst Anthony DiClemente predicts broadcast-upfront revenue will increase by less than 1% to $9.2 billion, while cable will wrap with dollar volume up 2% to $9.99 billion, he wrote in a research note earlier in the month.

Like Mr. Moonves, he expects CBS to lead CPM increases, forecasting a 6.5% boost for the Eye Network, 6% for ABC, 5.5% for Fox and 5% for NBC. These increases are slightly less than last year's high-single-digit range, Mr. DiClemente noted.

Pivotal Research's Brian Wieser is more optimistic, expecting about 8% CPM increases for network TV.

Mr. DiClemente said the Big Four will sell an amount of inventory similar to last year's, but sellout levels will remain just below the historical 78% as broadcasters will seek to hold more inventory back amid a slow start to the season.

"We think that a well-positioned network going into the upfront negotiations like CBS will be able to maintain relatively high levels of sellout while maintaining solid pricing increases," he wrote. "On the other hand, a network like NBC, with weaker ratings momentum, may hold back some inventory in the hopes of getting better rates later on in the scatter market."