National TV Upfront CPM Report and Analysis

2012-2013 National TV Upfront CPM Report (see analysis below)

Analysis

Overall television industry cost-per-thousand increases generated in the 2012-2013 Upfront marketplace averaged 6.0 percent, according to an industry survey conducted by Jack Myers Media Business Report. Broadcast network primetime and overall cable network CPMs were slightly less than 7.0 percent, with original cable series and selected broadcast series edging into the double digits; lower demand content generated significantly lower increases. The data above reflects a consolidated perspective from several agencies and media sales organizations. Individual advertisers paid increases greater or less than the ranges identified due to specific requirements, sponsorships, demand factors, legacy relationships, etc. The averages are weighted based on available supply and best estimates of network/category pricing distribution and demand for selected inventory.

Last year, broadcast networks generated an average 9.5% increase in primetime CPMs, compared to 6.9% this year. The overall weighted CPM increase for all national television last year was 8.75% compared to this year's 6.0% average. Wall St. analysts had predicted 7.0% to 12.0% increases for broadcast primetime and 10.0% to 15.0% for Cable networks, believing that "networks…would need to see at least a 7.0% CPM increase to keep earnings flat and would need 12.0% to hit the roughly 8.0% earnings growth targets on the street." Last April, Jack Myers Media Business Report projected "broadcast CPMaverages will increase low-to-mid single digits while average cable CPMs will increase mid-to-high single digits."

Also in advance of the Upfront, agency media buyers predicted conservative 2.0% to 5.0% CPM increases for the broadcast nets and slightly higher for cablers. Network sellers argued that market demand would justify 8.0% to 11.0% CPM gains for broadcast primetime and similar results for cable nets. Unlike Congress, buyers and sellers were obviously able to reach a compromise and split the difference in their negotiations. Syndication tracked overall on par with cable networks, while advertiser demand for Hispanic television again failed to meet the high expectations of the networks, although there was strong demand for selected inventory and an increase in the number of advertisers using Hispanic media. NFL inventory, among the most valued in the industry, was only able to achieve CPM growth comparable to high demand broadcast, cable and syndication. Seasonal kid's inventory also experienced significiant CPM gains with Nickelodeon and Turner's Cartoon Network driving growth.

Cost inflation in this year's Upfront may have been lower than last year, and while broadcast network sell-out levels also declined slightly. The availability of more digital inventory for sale by the networks played a significant role in enabling the broadcast networks to achieve positive revenue growth and the cable nets to meet revenue targets. In my report next week, I'll share an overview of overall sell-out levels achieved by national television media in this year's Upfront, accompanied by a perspective on the outlook for digital video ad revenues in 2013 and beyond.

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