Broadcasters and cable networks are having a tough time prying ad money out of their advertisers. The Los Angeles Times reports that sales in the recent upfront market were unexpectedly weak.
“Broadcast networks ABC, CBS and Fox collectively booked $600 million less this summer than during last year’s market, according to estimates by network executives and analysts,” the paper reports. “Cable network executives also struggled to find buyers for their commercial time.
“Analysts have speculated on various causes, citing the migration of advertising dollars to the Internet and a retrenchment by two major advertisers. Others might be on the sidelines gambling that prices will be lower later in the year.”
Two of the TV industry’s top advertisers, General Motors and Procter & Gamble, committed far less in this year’s upfront — tens of millions of dollars less, network executives say. “GM’s pull-back largely hurt the broadcast networks, while cable channels missed the P&G money,” the Times notes.
One big exception, on the broadcast side, is NBC, which upped its haul in the upfront by $750 million, the piece reports, citing comments by NBCUniversal CEO Steve Burke during parent company Comcast’s earnings call this week.
“The Peacock Network came roaring back to life during the just-ended TV season after a decade in the ratings cellar,” the Times reports. “NBC was able to hike its ad rates 8% during the upfront market, Burke said.”
One reason cited for the decline in this year’s upfront was the usurping of ad dollars by two major sports events — the Sochi Winter Olympics in February and this summer’s FIFA World Cup in Brazil. Those events “soaked up more than $1.5 billion in advertising dollars this year, leaving fewer dollars in the upfront market,” the story reports.
NBC was the big winner there, too. “NBCUniversal took in $1.1 billion in ad revenue for its broadcasts of the Olympics. Advertisers sometimes adjust their budgets to save money following a big expenditure, such as the Olympics,” the Times notes.
A big part of the overall problem, though, is a familiar factor in the TV business: ratings.
“Declining ratings at Fox, ABC and cable channels TBS, TNT and MTV contributed to the lower hauls,” the report notes, adding: “A Cowen & Co. media analyst Wednesday downgraded stocks of 21st Century Fox, Time Warner Inc. and Viacom Inc., in part, because of declining ratings.”
In his research report, Cowen media analyst Doug Creutz wrote: “Advertising trends clearly worsened in the second quarter. While we do not necessarily believe recent softness signals the start of something more serious, our caution level has increased.”