• by May 18, 2005

FOLLOWING PLENTY OF BULL, THE UPFRONT MAY PROVE TO BE A BEAR - In recent years, the prelude to the upfront network TV ad marketplace seems to have stretched and grown ever more cluttered and far noisier with marketing hype, portentous research, buyer/seller positioning, and of course, predictions for market outcomes than each preceding year. And the build-up to 2005-06 has been no different. We've seen a barrage of trade ads, including an especially aggressive and in-your-face marketing assault by the magazine publishing industry (see item below). We've seen new research from the Cabletelevision Advertising Bureau and Turner Broadcasting Sales. Big pushes by the online, radio and outdoor media industries. And we haven't been keeping count, but we'd bet we've seen more than a normal allotment of market pundits. But until today, we hadn't seen something we always value and look forward to provide context for any upfront season: Merrill Lynch analyst Jessica Reif Cohen's annual upfront preview.

Naturally, when it arrived this morning we pored through it to see if we could find definitive signs of whether this year would in fact be Madison Avenue's equivalent of a bull or a bear market. Unfortunately, the Merrill Lynch analyst isn't being true to her company's corporate animal icon. Where the networks are concerned, she's turned quite bearish in the report entitled, Kicking off the 2005-2006 Upfront: Muted Expectations."

Projecting that network prime-time advertising sales would rise by only by only around 2 percent to $9.1 billion during the 2005-06 upfront, the report predicts that cable will grow by 11 percent to $11.3 billion. "The next result," writes Cohen, "being continued share gain at the expense of broadcast."

Intramural competition aside, Cohen believes the overall climate will be "muted," citing weak second quarter scatter sales - "Generally a good leading indicator" - and continuing uncertainty about the general economy.

Ironically, Cohen observes that an issue that would seemingly be growing in importance - digital video recorders - does not "seem to have the same hold on advertisers' attention as a year ago" where it was the centerpiece of discussion at the Association of National Advertisers annual Television Advertising Forum.

Another new media technology - the Internet - also is not expected to have a profound impact on this year's upfront discussions, though Cohen predicts the major online portals represent a "longer-term threat" to the major broadcast networks.

"Yahoo! and AOL are both poised increase programming (AOL plans to program a fall lineup), in what appears to be the first move towards competing with broadcast and cable television, although details from both companies remain vague," she notes, adding that such programming is not likely to become a major factor for broadcasters until "we move towards [an] on-demand, IP-based delivery system."

In the near-term, Cohen says the 2005-06 upfront will once again prove to be a "bifurcated market" among the broadcast networks, with ABC positioned to be the big gainer (+21 percent to $1.5 billion), CBS coming in second in relative growth (+10 percent to $2.6 billion), Fox placing third (+2 percent to $1.5 billion) and NBC playing clean-up, and diving for dollars to do so (-14 percent to $2.4 billion).

SPEAKING OF THE NETWORK UPFRONT --  Media buyers attending the networks' upfront sales presentations in New York this week will get another change to buy into "ER." No, it's not NBC's must-see-TV medical drama. It's part of the anti-network upfront drama behind unfolded by the magazine industry. More than 70 people dressed in red t-shirts were camped outside New York's Radio City Music Hall Monday night in clear sight of media buyers as they entered the concert hall to hear NBC's upfront pitch. The t-shirts read:  "Magazines offer ER:  Engaged Reach." 

Naturally, they were engaged in the process of reading magazines as they handed out postcards promoting the "power of magazine advertising." Similar guerilla marketing techniques were planned for to sabotage other network presentations this week.