• by Paul Gough , March 9, 2003

While the national broadcast market remains hot – analysts expect another torrid upfront this spring – it doesn’t mean that there aren’t some underlying weaknesses. That was the message at Friday’s International Radio and Television Society Forum in New York City.

One potential weakness: The highest-spending categories, automotive and motion pictures/entertainment. Automotive is vulnerable because of intense competition and a likely rise in gasoline costs if war breaks out.

“It can’t go on forever. At what point do they turn off? There are a lot of categories that aren’t healthy, including automotive,” said Merrill Lynch’s Jessica Reif Cohen. She noted that there has been some spillover into cable following a good upfront and a higher-than-average scatter market, but that the money hasn’t been flowing to local stations. She tied the advertising market’s upturn to new products and brand concerns, rather than the economy.

Cohen said the broadcast ad market had been fueled in the automotive sector by competition and a high number of model launches.

Analyst Christopher Dixon said the entertainment industry might be headed for less spending following weaker DVD sales. Technology Partners’ Porter Bibb predicted the pharmaceutical sector doesn’t have a good long-term prognosis, with pressure coming soon on the health reform and regulatory fronts.

They also said TV’s current fascination with reality TV wasn’t likely to last. And then when it goes bust, the shows that have been traditional long-term successes would get a higher premium.

Tom Wolzien, a senior media analyst at Sanford C. Bernstein & Co., said the only one of the crop of current unscripted programs that could make it in the long run would be Fox’s American Idol. He pointed to a predecessor, Talent Scout, which ran for a decade beginning in the 1950s.

Bibb said reality programming has had an impact on the creative impulses of Madison Avenue, citing the Budweiser Mud Wrestling spots.

“Look out. This is just the beginning of where advertising is going to,” Bibb said. But he said that these changes haven’t been well received and advertising companies would pay a price.

The analysts were pessimistic about the possibility of relaxation of the media ownership rules, with the FCC chastened by its telecom deregulation efforts and perceived problems with deregulation.