TVB confab produces ‘sobering’ ad outlook

Sep 9, 2002  •  Post A Comment

In this year’s upfront, would General Electric have let NBC’s Keith Turner sell 93 percent of the network’s inventory, or would Viacom’s Mel Karmazin have permitted the sale of almost 90 percent of CBS’s inventory, if they had thought the scatter market would be flush and times would be good going forward?
That was the contrarian question posed by MediaCom co-CEO and Chief Negotiating Officer Jon Mandel at the eighth annual Television Bureau of Advertising Forecast Conference last week in Manhattan.
“May and June are going to be the telling months,” Mr. Mandel said about the broadcast economy, looking ahead to next year’s upfront.
Mr. Mandel was part of a downbeat analysts’ panel at the conference, which included dire warnings to local broadcasters about the increasing competition from cable and the tenuous prospects for economic and ad-spending recovery.
TVB President Chris Rohrs called the panel “sobering.” TVB’s own two-year forecast, unveiled at the conference, was modestly upbeat.
Total spot advertising will be up 1 percent to 3 percent over this year’s spending level in 2003, according to the TVB forecast, and then it will rise again in 2004 by 7 percent to 9 percent over the 2003 level.
There was also good news at the conference for TVB itself, which announced that the entire Clear Channel station group is joining the organization, adding 19 new stations to the five Clear Channel stations that are currently members of the trade association.
Thus far, local broadcasters have benefited from cable’s historic “incompetence” with local advertising sales, but that is changing, said Tom Wolzien, senior media analyst at Sanford C. Bernstein & Co., who moderated the TVB analysts’ panel. He pointed to the fact that the new Comcast-AT&T cable behemoth will be headed by Steve Burke, Comcast Cable’s president, who is himself a son of a former broadcast network president, Dan Burke of ABC. When it comes to understanding the local marketplace and cable’s competition with broadcast, Mr. Burke “gets it,” Mr. Wolzien said.
The cable competition will be taking ad revenues from “lesser” broadcast stations in a given market, Mr. Wolzien predicted, and in the future the “competitive picture just gets tougher and tougher.”
Local broadcast’s very existence is “under pressure,” said panelist Tony Hoffman, partner, Hoffman Schutz Media Capital, and it is a “long way from being out of the woods.”
As for the competition, “cable is eating broadcast’s lunch in certain areas,” Mr. Hoffman said, suggesting to local broadcasters that they get to know, and even work with, their cable enemy. “Have a copy of their rate card on your desk,” he told the approximately 250 broadcasters and others who attended the conference.
The analysts’ look at the larger picture was also grim. The overall economy “is in trouble,” propped up by low interest rates, Mr. Hoffman said.
“The economy is hovering between recovery and relapse,” Mr. Wolzien said, and consumer confidence is “going in the wrong direction.”
In an opening presentation, David Wyss, Standard & Poor’s chief economist, predicted that an economic expansion is on the way, albeit the “slowest expansion in post-war history,” with brisk auto and home sales fueling recovery from the recent recession. Both ad revenues and the stock market will recover, too, he said, “but slowly,” although he also cautioned that recovery could be derailed by more terror attacks, a war in the Mideast that sends oil prices soaring, or even a stock market crash.
On less apocalyptic notes, the conference also heard from David Harris, senior partner at Mindshare, who had practical insights and tips about multicultural marketing, and from representatives of leading advertising categories, who also came with solid tips and advice. For example, James Ward, a senior representative from the Kohl’s specialty department store chain, told the broadcasters about the retailer’s plans to open 80 new stores next year, presenting new ad sales opportunities for stations in Los Angeles, Phoenix and Las Vegas, big markets where some of the new stores will be located.
And Phillip Brady, the head of the National Automobile Dealers Association, representing local broadcast’s largest advertising category, was on hand to point to success stories of cooperation and “closer association” between local stations and auto dealers. In Rochester, N.Y., the NBC affiliate joined with an auto dealer to produce a PSA on job opportunities in the auto industry, he said, and in Detroit, the ABC affiliate and an auto dealer produced a PSA about child safety.
Mindshare’s Mr. Harris pointed out that Hispanics and Asians both hold traditional views of parenting, tending to emphasize extended families and be “we” focused, rather than having the “I” focus of the culture at large. Two-thirds of all Asian Americans live in just 10 states, and half live in just three cities (Los Angeles, San Francisco and New York), creating targeted marketing opportunities, Mr. Harris said.
African Americans generally watch more television than any other segment of the population, Mr. Harris noted, but their program preferences are different from the general marketplace. Only one of the top 10 ranked programs among African Americans, “Monday Night Football,” is also in the top 10 of the general market, he said. Because of their history of hardship and prejudice, African Americans currently have “stronger than average desires” for “instant gratification,” “respectful recognition” and “status and prestige,” Mr. Harris said, for example spending more annually than Anglo households for such items of “portable” prestige as men’s pants, women’s footwear and jewelry.