National TV Syndicators Hold Back Inventory from Strong Market

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As usual, the national television syndication market is a tale of three markets: high, middle and low demand tiers. While Upfront observers and pundits often suggest that high demand, highly rated series such as Oprah, Dr. Phil, Wheel of Fortune and Jeopardyare most likely to have higher sell-out levels, the reverse tends to be more true, as sellers hold back inventory in anticipation of stronger scatter market demand. This year, even more top shelf inventory is being withheld, reports veteran media buyer Larry Novenstern, as leading syndicators CBS, Warner Bros and Sony are confident of strong scatter business throughout the year and especially in the 3rd and 4th quarters. As a result, sell-out levels are an estimated 68% for top tier inventory, compared to 75% in typical years.

The strong broadcast and cable network Upfront markets, which wrapped up last week, resulted in higher than average sell-out levels, ranging from 78% to 82% for broadcasters and 55% to 65% for cablers. With less network inventory available to scatter market buyers throughout the upcoming season, syndicators should achieve their ambitious goals. Jack MyersMedia Business Reporthas forecast 5.0% increases in advertising revenues for calendar year 2010 and 3.0% gains for 2011. Based on the strong Upfront market, ratings stability and expected continued demand, my forecasts appear conservative, especially for 2011. Danger lurks, however, on the long-term horizon for syndicators when Oprah moves to her OWN channel and as several long running first run syndication series are up for contractual renewal. Local TV stations, facing challenging economics, are less likely to support expensive deals that are lucrative for the producers but less so for the stations.

The overall strength of the syndication market is also being led by higher than normal sell-out levels of third tier inventory, such as long running sitcoms, movie packages and low rated late night and daytime talkers. With female demographics in short supply this year, daytime and female-targeted syndication properties performed better than expected, generating higher sell-out. Costs-per-thousand remained attractive for buyers who moved early before the market's strength was apparent. CPMs for female targeted top tier series like Oprah generated cost-per-thousand increases reported to be in the 8% to 10% range.

Average CPM increases for the total syndication market are reported to be within the 6.2% to 7.2% range.

National TV syndication ad revenues have grown only an annual average of 1.8% since 1998, when the market totalled $1.6 billion dollars. Advertisers are projected to spend slightly less than $3.2 billion in syndication during the 2010 calendar year, after a 4.9% decline in 2009 recession-era spending, and a commensurate 5.0% increase this year. During that same span, cable network ad revenues have increased from $6.56 billion in 1999 to a projected $19.8 billion this year. Broadcast network revenues have grown only marginally over the 11 year period from $14.3 billion in 1999 to a projected $17.6 billion in 2010. (All spending data is from Jack Myers Media Business Report.)

Online video advertising is projected to grow more than 50% in 2010 to more than $1.5 billion, almost half the syndication total and positioned to emerge as a viable option for TV media buyers in 2011 and beyond.