• by David Goetzl  @dgoetzl, May 11, 2012

With the dawn of the upfront presentations by the Big Four networks, a Wall Street analyst suggests that a lackluster scatter market means buyers may have slightly overpaid in last year’s market. Most scatter pricing this season has been less than 10% above the upfront market -- a slim enough bump to suggest the market may have been overheated, according to a new report by RBC Capital Markets’ David Bank.

In a “normal” market dynamic, “scatter premiums generally run at roughly mid-teens versus the upfront; therefore in retrospect, pricing increases” last summer, which were in the “low-teens for many networks” were “probably somewhat higher than … should’ve been,” said Bank, noting that there are a slew of factors that can alter scatter pricing from advertiser to advertiser, including whether the advertiser was an upfront buyer.

Bank is projecting this year’s market to yield CPM increases in the 6% to 7% range. As for volume, he expects a similar mid-single-digit bump for broadcast and cable networks for the 2012/13 season -- about the same as the current one. Fox, with shows like “Glee” and “New Girl,” generally moves first in the upfront selling among the Big Four; it has seven hours a week less in prime-time inventory than the other three.

Bank expects the pharmaceutical category to remain lukewarm -- with few new product releases and patent expirations -- while the auto market should remain solid, but weaken to some extent.

Bank suggests that buyers will continue shifting dollars from broadcast to cable networks -- several cable networks are holding presentations this week -– seeking to reduce pricing inflation. Networks that target an upscale audience could have notable “pricing power.”