Scatter Market Stuck in Neutral as Q4 Launches

It’s nervous time for broadcast and cable network executives as the fourth-quarter scatter market begins. For the sellers of free TV, later-than-usual finalization of upfront orders has left the six broadcast networks nervously sitting on about $200 million in unsold inventory. Meanwhile, most cable advertisers did commit during the upfront, which, combined with anxiety over the economy, has led to very little spending on cable networks.

“The scatter marketplace for broadcast and cable has not developed the way the networks had hoped it would,” said Aaron Cohen, vp of national broadcast for Horizon Media. “There was more scatter activity last year, and scatter budgets are definitely smaller this year. Depending on your ability to negotiate, you might be able to get a [scatter] guarantee or you might not.”

“Last year scatter was moving at a much brisker pace at this point,” conceded one network sales executive. “When you charge so much in the upfront, scatter just becomes harder to sell, especially at higher prices. Advertisers are now playing a waiting game because they are not afraid of getting shut out.”

Ironically, the considerable $2.6 billion in fourth-quarter upfront orders this year ate up more scatter ad inventory than last year. However, last year advertisers began actively buying scatter in August, filling most of the networks’ ad time by early October. This year, the lateness in firming up upfront orders, combined with the possibility that many advertisers moved scatter money into the upfront, has resulted in a slow trickling of scatter dollars.

Although all of the six broadcast networks have denied it, media buyers say sales people at each network have been willing to take scatter business in exchange for giving audience guarantees, which is usually done only for upfront ad buys.

“Depending on the volume of money you were willing to spend and what programs you were willing to buy, all of the networks were willing to entertain discussions about [scatter] ratings guarantees,” said Harry Keeshan, evp of national broadcast for Omnicom’s PHD USA. “But that ended once their new shows started to premiere. Now the marketplace is shaping itself based on the ratings.”

While most of the networks conceded that they have sizable amounts of scatter left to sell, Randy Falco, group president of NBC Television Network, insisted that NBC scatter sales are “pacing according to plan.”

On the cable side, David Levy, president of entertainment ad sales and sports for Turner Broadcasting, acknowledged: “Do I believe this will be a robust market? No, but I do believe there will be a market.”

Compared with the last four scatter markets, advertisers are buying inventory closer to airtime, a trend seen in all forms of media buying. Also, advertisers that paid high scatter rates during the 2002-03 season decided to protect themselves by locking in a stable price during the upfront this year.

“An upfront buyer semi-reliant on scatter inventory last year increased their play in the upfront to lessen their dependency on it this year,” said John Wagner, media director for Publicis Groupe’s Starcom.

But the new crop of season premieres has not so far lived up to ratings guarantees that were made during the upfront, which may force broadcast executives to use up inventory put aside for audience-deficiency units.