National TV Upfront Revenues Increase 5.0% (Including Digital)

ANALYSIS

Overall national television Upfront revenues increased an estimated 1.3% for 2012/2013 compared to last year's Upfront when the networks generated double digit overall increases. The total national TV Upfront marketplace expanded this year by almost five percent when packaging television plus digital inventory sold by the broadcast and cable networks. Broadcast network legacy TV inventory revenues declined by more than two percent, but with incremental digital revenues the broadcast network Upfront expanded by more than four percent. ABC-TV benefited by their early decision to package broadcast and digital inventory. Cable experienced strong overall growth, with 5.5% increases in revenues for legacy TV inventory, and more than seven percent growth when incremental digital revenues are added into the mix.

Actual revenue data for the networks is difficult to ascertain, with estimates for total national TV Upfront dollars ranging from $20.8 billion to $22.6 billion. Estimates of broadcast network primetime revenues range from $6.95 billion to $7.2 billion. Cable TV network revenue estimates vary from a low of $8.3 billion to a high of $9.8 billion. Syndication revenue estimates range from $1.65 to $1.9 billion. These disparities result from differing historic bases dating back more than a decade, varying source data and variable input measures, such as the number of cable networks included in the data. But while revenue figures conflict, there is general consensus across multiple sources at both the agencies and networks on percentage growth and declines.

The networks do not report Upfront revenues to any agency or authority requiring factual data. The total revenues are below a threshold that would require compliance with any federal laws or shareholder requirements. Therefore data provided both on and off-the-record to reporters and analysts is often unreliable and inconsistent, not due necessarily to intentional misrepresentation, but because those reporting seek to conform their data to established benchmarks reported in past years by the press and Wall St, rather than explaining disparities between actual and historic data.

Compounding this challenge to accuracy of dollar estimates are the realities of the Upfront marketplace, which are anything but actual representations of network revenues. The Upfront reflects only the intent to purchase on the part of advertisers and their agencies. It often takes several months before orders convert to actual "buys" and even then advertisers have the "option" to cancel significant percentages of their buys just months before each quarter. So, at best, the Upfront reflects the overall health of the national television industry, rather than an actual reflection of dollars committed by advertisers.

In this context, the health of the national TV industry is considerably better than several media agencies anticipated prior to the Upfront, but slightly less healthy than forecast by many Wall Street analysts. Compared to projections by the networks themselves, their Upfront performance was pretty much as they anticipated. If the economy continues to grow slowly and TV primetime ratings remain as stable as they were during the last season, the scatter market should be reasonably strong and overall national TV industry revenues should continue to grow in the mid-single digits.

In the next two weeks, Jack Myers Media Business Report will share new insights on the online video marketplace and expanding advertiser options.

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