The current network TV scatter advertising marketplace has become very flexible, according to top media buyers, and the outlook for the 2020-21 upfront may be one of the lightest ever in terms of the percentage of network ad inventory sold. That's the finding of "ad checks" conducted over past week with top industry executives by the equities research team at BMO Capital markets.
"Broadly, networks are working flexibly with long-term advertising clients and not strictly enforcing commitments or contract terms," writes BMO analyst Daniel Salmon in a note sent to investors.
He added that all eyes are on May 1, which is the deadline for third quarter options, when upfront advertisers have the right to cancel as much as 50% of last year's ad buys for the third quarter.
"Those with a view into the upfront expect volume to be more in the 40% to 60% range of total inventory, versus more typical portions sold in the upfront, likely closer to 70% to 80% normally," Salmon said, adding, "With the lack of new pilots and visibility into live sports, one speaker noted they think upfronts will functionally turn into a series of short-term/quarterly guarantees across a TV network group, rather than for specific shows."
Joe,the typical percentage of GRPs---or commercial time---sold in the primetime upfront, when cable and syndication is factored in with the broadcast networks is normally in the 60-70% range with broadcast higher and cable lower. The same this should prevail if there is an upfront at the usual time however, we, too, expect much lower spending. In fact, the 2020-2021 upfront, if it is completed at the normal time ( June-July )---as opposed to a delay to next fall----may resemble a large scatter sale that stretches across three or four quarters for some buyers---a far cry from the usual upfront scenario. If I were the networks I would pull back on the upfront entirely---except for ultra premium items like certain specials---and go quarter by quarter in order to respond to developments regarding the pandemic and the economy as they develop. This would be far better than caving in on upfront CPMs and being overly flexible regarding cancellation rights for the entire 12-month 2020-21 seasen.