Linear TV ratings may be falling, and upfront volume was largely down across the board this year, but broadcast ad sales divisions couldn't be happier as the year winds down. That's because of an extraordinarily strong scatter market (ad time bought during the season as opposed to the upfronts) that has propelled networks to significant increases this fall.
Standard Media Index data indicated October was broadcast TV's best advertising month since January 2014, with scatter up an impressive 19 percent compared with October 2014. At various points this fall, the broadcast networks have boasted about their good fortunes in scatter. Most recently, while speaking with investors Monday at UBS's annual Global Media and Communications Conference in New York, CBS Corp. president and CEO Les Moonves said that "third quarter scatter was phenomenally good, and fourth was even better than that."
Now, it's Fox's turn to gloat. Even though the network is tied with ABC for third place among adults ages 18 to 49 this season—NBC is in the lead with a 2.9 average rating, CBS has a 2.5, and ABC and Fox have a 2.2—it is the only broadcaster up in the demographic over this point last season. (Fox has Empire, TV's top scripted broadcast show in the 18-to-49 demo, to thank for that.) The network is seeing a nearly 60 percent increase in scatter spending for broadcast prime time and Sunday NFL games this fall compared with the previous two years and is also getting scatter pricing increases of around 20 percent over upfront pricing.
"A lot of advertisers who value flexibility chose to modify their spending upfront and make some decisions later," said Toby Byrne, president, advertising sales, Fox Networks Group. "With those decisions, unlike the last couple years, where scatter wasn't as strong and they either chose to put those flexible numbers to the bottom line or to spend them in new opportunities or new media, the dollars have found their way into the premium television marketplace. I think it reaffirms the value of that premium television content at the center of a media plan."
The scatter market strength "is broad based, and not coming from any one category," said Byrne, explaining that scatter has "more than compensated" for the evaporation of the daily fantasy sports market. "The broad-based strength in the market has more than compensated. That's the most encouraging, though anybody who's got sports to sell would be thrilled if daily fantasy finds its way back into the marketplace at some point, because it's great to have a brand new category that very obviously believed in television. It was moving the needle on their business."
Fox's most robust scatter categories include automotive, mobile, telco, pharmaceuticals and beverages.
Scatter has boosted the coffers of all broadcasters this fall. While CBS's upfront volume was down 4 percent to 5 percent this year, Moonves predicted that next year's upfront will be "extraordinarily strong" because advertisers have been regretting not paying "20 percent less," as they could have during the upfront. Earlier in the fall, CBS credited the scatter surge with bringing them more money in late night. "Going back a few years, we would not be seeing these dollars coming our way nor the increases that we're writing," Chris Simon, evp of network sales, said in October.
During last month's Disney earnings call, CFO Christine McCarthy said the network's prime-time scatter was "running 16 percent above upfront levels," while Dan Lovinger, evp, entertainment ad sales at NBCUniversal, credited "an extraordinarily strong scatter market in the fourth quarter" for robust ad rates for The Wiz Live and the Macy's Thanksgiving Day Parade.
The networks are hoping their good scatter fortunes continue going into 2016. "It's hard to predict the future," Byrne said, "but we're optimistic that this is now a trend."