Analyst Tries to Make Sense of Tepid Upfront

The upfront market can be confusing, full of off-the-record commentary, some of which is designed to strengthen a buyer’s or seller’s hand as negotiations continue.

Some Wall Street analysts put very little stock in trying to generate hard numbers about the upfront, figuring that the quarterly ad sales numbers reported by the media companies is what really counts in the end.

In a new report, Vijay Jayant of Evercore ISI tries to put numbers to the upfront, which is probably more than halfway finished. He figures that when all is said and done, broadcast volume will be down 3% to $8.6 billion with a price increase on a CPM (cost per thousand viewers) basis of 1.9%, down from last year’s 4.5% price hike. He expects the broadcasters to sell 69% of their inventory upfront, compared to 73% a year ago.

For cable, he sees volume down 2.4% to $10.4 billion, with CPM increases of 2.9% compared to 5.1% last year. He sees cable networks selling 49% of their inventory, down from 51% a year ago.

But even Jayant is skeptical about parsing this year’s upfront.

“We have long been of the opinion that 'upfront volume' is a specious construct in that official results are never audited nor released, which is even further muddied now that more broadcast and cable networks are being negotiated as a portfolio,” he said.

“We are hearing general advertiser talk (the buy-side) that the upfronts could be down low- to mid-single-digits to as much as -10%, with the sell-side (the networks selling the advertising) talking in the up in the low-single digits range,” he said. “However, it does seem like upfront volume could decline a couple hundred basis points again, as networks are likely not enthused by current scatter-market pricing.”