• by Wayne Friedman , Staff Writer, October 30, 2008

The real news about the weakening TV ad market should hit on Thursday, when CBS Corp. -- the most vulnerable media company in terms of percentage of revenue coming from ad dollars -- tells all to industry analysts.

Specifically, questions will be thrown at CBS CEO Les Moonves concerning the current fourth quarter scatter market, and more pressing first quarter options. CBS gets 70% or more of its TV, radio, Internet and outdoor revenues directly from advertisers.

Bits of information are already drifting in. So far, it's not just the prime-time marketplace that has been weak, but fourth quarter 2008 TV sports programs. In particular, the NFL, has seen a 10% drop in scatter market CPM pricing versus a year ago. If the NFL -- the crème de la crème when it comes to TV sports -- is apparently getting hammered, how is the rest of the marketplace performing?

Don't get me wrong. Companies like NBC and Viacom also sell a lot of advertising -- but a lot of their business comes from their cable networks, which typically derive around 50% of revenues from subscriber fees.

As far as the first quarter 2009 is concerned, some advertisers are, initially, only cancelling the typical 3% or 4% of what networks allow them to pull back. Typically, TV national advertisers can cancel up to 25% of their upfront buys during the first quarter.

But the option period might not be over yet. Usually, networks tell advertisers they need to know about cancellation 90 days before the period begin. Better customers get 60 days; some, even 30 days.

Even if Moonves has good news, there are plenty of hurdles to come. A few weeks from now networks will be hoping a first quarter scatter business develops, which could be a tough stretch for TV networks coming right after this questionable holiday period.

What about the Super Bowl, you say? NBC will tell you it is selling plenty of 30-second commercials at a historically high $3 million dollars. Don't read much into this. The Super Bowl can be an anomaly as TV's single biggest rated show of the year -- going against the grain during strong, weak, and mediocre markets.

The killer for CBS is that it has been doing all the right things -- at far as TV is concerned. It had a proper development season -- other networks did not. It gave TV critics pilots for reviews, to spur much-needed PR. As a result, it is having a surprisingly better season than other networks.

Still, all this is relative. CBS is still down, but not as much as the other networks.  That's not the message Wall Street wants to hear.  

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