Cable Experiences Little 'Breakage,' Advertisers Not Cutting Cords
A Wall Street report Wednesday says that even with a bumpy economy, advertisers aren't pulling back on spending commitments made in the TV upfront market, while the scatter business remains robust. Also, national cable ad spending for 2011 is estimated to increase by 12%.
With upfront agreements being wrapped now, there is "little apparent breakage so far," according to Credit Suisse analyst Spencer Wang. Also, the scatter market for national TV has broadcast networks commanding between 10% and 25% hikes over upfront levels, with cable networks between 5% and 12%.
More broadly, Wang noted that the economy appears to be weathering the turmoil enough to prevent a change in a forecast of 2% growth for the U.S. ad market this year. That's largely fueled by the search (up 15%), online display (14%) and national cable (12%) sectors.
He did, however, suggest that a further economic decline might cause a downgrade in growth projections for 2012 -- from a 3% uptick to 2% -- even in a year with an Olympics and presidential campaign. One reason for the prediction is a belief that the ratio between ad spend and GDP will remain about the same next year as this.
As Wang touted the cable ad market, he projected the cable upfront pulled in a combined $9.3 billion in commitments versus $9.1 billion for the broadcasters.
A year ago, broadcasters continued to land more ($8.6 billion) compared to cable's $8.2 billion.
Still, as a 12% growth for cable in 2011 is projected, the rate of growth could be slowed next year if the economy ushers in a slowdown in scatter pricing, since cable networks can leave about 50% of inventory to be sold in the walk-up market.