Wall Street Report: '05 Ad Market Still Lagging

Despite the seeming buoyancy of the networks during the recent upfront presentations, the word from Merrill Lynch is that the current U.S. ad market is showing "no momentum whatsoever."

Looking back at the first quarter and into April, Lauren Rich Fine, a Merrill analyst, said on Friday that broadcast network business remains strained.

"The Big Three network revenues declined modestly in Q1, and there is still scatter available," Fine said in her report. "The television upfront market is off to a slow start, with ML Broadcast analysts forecasting a 0-5 percent increase."

So far, broadcast network revenues are down 2 percent, with first-quarter ad revenues for ABC, CBS, and NBC declining from $2.94 a year ago to $2.88BN this year--as reported by the Broadcast Cable Financial Management Association.

The declines were heaviest in the sports category, which dropped 21 percent--but the Super Bowl could account for this drop, she wrote, since it's not included in the BCFM numbers. Late night, daytime, and children's dayparts also continued to see declines, Fine noted. On the bright side, news programming ad revenues were up 12.43 percent, with prime time up as well as the morning daypart.

Meanwhile, the cable business remains strong with both network and local, leading to expectations that the cable upfront market could rise 11 percent.

"The kids upfront market is about 90 percent wrapped up, with the more solid inventory getting mid-double-digit CPM increases," Fine said. "ML Media & Entertainment analysts are currently anticipating a robust cable network upfront with 11 percent growth year-over-year to $7.3 billion, with cable taking a plus-10 percent share of TV due to climbing ratings and CPMs still at a significant discount to broadcast networks."

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