In the absence of any verified client budgets, talk about what’s in store for the coming upfront marketplace is highly speculative. That said, macro-economic trends seem to portend another robust sales period.
In a note to clients, Janney Capital Markets analyst Tony Wible said he believed that ratings leaders CBS and Fox were poised to set the market, eyeing 10 percent CPM increases for both broadcasters. By Wible’s estimation, ABC is in position to command a 7.5 percent rate hike over 2011-12 pricing, while NBC is likely to write 6 percent increases.
CBS has already indicated that it would look for double-digit rate increases. In late February, CBS Corp. CEO Les Moonves  told investors that a reviving scatter market and strong demand would pave the way to pricing hikes of 10 percent or greater.
Much of Wible’s enthusiasm stems from improving economic indicators and a stronger-than-anticipated automotive market.
“The economic backdrop should help ad sellers,” Wible wrote in the report. “Consumer spending appears to be rising, and the auto market is poised to benefit from pent-up demand and the spike in fuel prices that may push sales of newer, more fuel-efficient cars.”
Wible added that while political ad spending typically goes to local media, election campaign dollars “should nonetheless increase demand for broader advertising and help sustain momentum in the scatter market that helps set the pricing benchmark for the new upfront.”
As automotive accounts for 13 percent of all advertising revenue at the Big Five broadcast nets, analysts have seized on U.S. car sales data to support their upfront theses. Late last month, Moody’s Investors Service svp Neil Begley said domestic auto sales were on pace to grow 9.3 percent  to around 14 million units, a spurt that should lead to record-high pricing in the upfront.
While pricing is looking up, Wible wrote that he believed dollar volume would be a mixed bag across the broadcast slate, given the range of available GRPs in play. Through the first 28 weeks of the TV season, Fox is down 8 percent in the 18-49 demo, averaging a 3.2 rating, while CBS is up 3 percent with a 3.1. Thanks in large part to the Super Bowl, NBC is in third place with a 2.6 rating, up 8 percent versus the 2010-11 campaign, while ABC is flat with a 2.4.
“Ironically, it may be the networks with the largest ratings declines that will see the largest CPM price increases,” Wible said in the report. “The weakest networks (from a ratings perspective) will need to price in substantial increases to maintain or nominally grow advertising dollar sales, leading to artificial CPM growth. While an 8 percent to 10 percent price increase would be welcome, it may only offset a comparable ratings decline at some nets.”
Second-quarter scatter rates are steady, with unit prices up between 5 percent and 15 percent from last year’s upfront rates.
Last year, the networks booked 80 percent of their available time, for an aggregate haul of $9.25 billion. CBS commanded broadcast’s highest price increases, writing deals at a 13 percent premium over its year-ago rates, while taking in a grand total of $2.65 billion  in upfront commitments.
ABC racked up $2.5 billion in early sponsor buys in its 2011-12 prime-time slate, while Fox booked $2.2 billion and NBC took in $1.75 billion. The CW wrote $420 million in advance business.
Wible noted that while broadcast should enjoy another stellar sell-off, there were dark clouds massing on the far horizon. “This year we will see a digital upfront ahead of the major networks, which is a clear sign they are jockeying for share of the traditional TV spend,” he wrote. “We doubt it will detract from the billions of dollars spent on traditional TV ads, but it is a sign of the looming competition.”
Last week, Morgan Stanley analyst Benjamin Swinburne said in a note that he expected to see $3 billion spent in online video this year, and of that, the majority will be invested on “professional content,” i.e., streaming episodes of broadcast series and on high-traffic sites like ESPN.com.
And while some buyers are always ready to tout digital as an alternative to television, don’t look for linear TV dollars to fall into that bucket in the immediate future. “Measurement issues and high [ad rates] act as limiting factors in accelerating growth in online video ad spend,” Swinburne said in the report.
Total digital video spend represents around 5 percent of the $60 billion marketers invest in TV.