Good News For The TV Upfront - In The Short Term

This year’s TV upfronts may have some good prospects for legacy TV owners -- in the near-term anyway. Long term? Well, that’s always another story.

Much has to do with pent-up demand from big brand marketers feeling the effects of a lost year in 2020.

Reports suggest the near-term national TV buying, the scatter market, for the first and second quarters, continues to thrive. And we aren’t just talking about a restricted level of inventory at typically high pricing this time of year.

In the past, TV networks might only have small supplies level of inventory to sell -- the result of selling lots of inventory previously in the upfront period (typically 70% to 75%). Typical second-quarter company earnings could then tout “double-digit” percentage increase.

This time around, there could be more to the story. Because of the uncertainty in the marketplace, due to the pandemic, TV networks sold less upfront inventory for the current TV season. (Making matters a bit more complicated, there had been, for a time, a difficult makegood situation.)



But now, all that could change. MoffettNathanson Research, for one, shows all TV ad spending in the second quarter could rocket 25% -- all this as the pandemic eases in many areas of the country.

More generally, Jason Kanefsky, managing partner of marketplace intelligence for Havas Media, writes: “Second-quarter comps [will be] the easiest to hurdle ... advertising investment will surpass 20% versus prior year.”

For TV, he says: “Ratings remain at all-time lows at most networks/dayparts and the inability to write the money, due to sell-out levels and makegoods, may offset some of the pent-up demand.”

This would seem be a nice push into the upfront selling period -- second-quarter activity being a good indicator of the potential strength of the forthcoming upfront marketplace.

In addition, the rescheduled Tokyo Summer Olympics is on track -- at the moment -- to proceed this summer, a TV event where marketers spend plenty.

Still, estimates for TV in the third quarter are that revenues will climb only 6% over the same period in 2020, according to MoffettNathanson. Then they could see a 8% drop in the fourth quarter. The last two periods of 2021 will have a hard time versus the same time span in 2020, due to record-breaking presidential political ad spending.

But all is not back to normal. Long-term, projected TV share of all U.S. ad dollars will continue to see a share drop -- from 33% in 2020 to around 20% in 2025. All the while, digital/online advertising share rises -- growing to 73% in 2025 from 2020.

National TV sellers have a lot to be thankful for this spring. By Halloween, it will be a case of maybe a treat, but mostly trick.

1 comment about "Good News For The TV Upfront - In The Short Term".
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  1. Ed Papazian from Media Dynamics Inc, April 5, 2021 at 9:37 a.m.

    Wayne, it's best to keep any estimates for 2021's second and third quarter separate from the upcoming 2021-21 primetime upfront. Small gains in spending predicted for these quarters mainly reflect relatively low demand---and pricing---- based on the previous, Covid-19 impacted upfront. As for the next upfront, it's starting to look like it may be a rather robust one for the sellers, especially if they are able to integrate their non-linear GRPs into the  equation. At this point, I'm only speculating, of course, so we shall have to wait and see how things develop.

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