Special Report: Network TV

NEW YORK The broadcast TV network ad marketplace is shaping up as a “fortress” in 2008, according to Lee Westerfield, senior media analyst at Harris Nesbitt, summing up the consensus opinion of media buyers, sellers and analysts.

There are so many positive forces at work—a strong upfront, a healthy fourth-quarter scatter market, the benefit of a presidential election and the Olympics—that even a severe downturn in the economy would not be able to derail the huge influx of bucks flowing into nets’ coffers.

PricewaterhouseCoopers projects the nets will rake in $20.35 billion in ad sales in 2008, up 10.3 percent versus this year. That far outpaces PwC’s estimated 2007 growth of 2.5 percent and last year’s 4 percent. Veronis Suhler Stevenson expects a 7.7 percent bump, with ZenithOptimedia projecting a 2 percent uptick.

Next year “could be one of the strongest advertising years within the last 20” in terms of growth, said Dave Poltrack, CBS’ chief research officer.

Despite the usual predictions that advertisers might hold back some upfront dollars this year, media agencies came through, plunking down just shy of $9.2 billion on the Big Five nets during the May upfront, and very little of that was lost when agencies converted ad “holds” to actual orders over the last few weeks.

On top of that, scatter advertising for the fourth quarter is in such demand that the networks are charging between 30 percent and 50 percent higher prices than they did for their upfront ad time—and advertisers are paying it.

CBS’ Poltrack believes that with many states moving up their presidential primaries into the first few months of 2008, the candidates could be motivated to buy national ads on the broadcast nets rather than local TV spots market by market. “With so many primaries taking place so close together, it will become more efficient to buy national ads than buy local spot ads,” Poltrack said. That could tighten up inventory that much more, and keep pricing high.

Of course, NBC will be helped by its third-quarter 2008 telecast of the Summer Olympic Games from China. “It is unlikely that there is anything on the economic horizon that will be able to offset the strength of the broadcast marketplace,” Poltrack said, echoing Westerfield’s view.

The primary reason for the iron-clad outlook: the immediate mass reach broadcast network television still offers advertisers. Few advertisers in competitive categories, even during economic hard times, would be willing to take a chance on cutting back marketing budgets. And in certain ad categories—motion pictures, in particular—it would be almost unthinkable to launch a new product without that mass reach. In recent years, marketers have cut back in many other areas, including layoffs and salary freezes, but continued to spend ad dollars on national TV.

Poltrack also sees the upcoming TV season as one in which many more new shows could succeed based on scheduling. “Not only is the quality real good this year,” Poltrack said, “but there are more different types of shows competing against one another in the same time periods, meaning more people can watch different shows rather than those with the same tastes splitting their viewing.” If a number of shows do break out, it would generate better ratings for the nets to sell against, opening up more ad inventory. But the rush of advertisers to get into those shows also will drive up prices, bolstering revenue.

Fox’s American Idol continues to be the most expensive show on TV, bringing in north of $600,000 per 30-second spot. And each year, Fox adds more hours of the show to its schedule.

Also expected to help the broadcast networks maintain their revenue share: their willingness to do content deals with Internet portals and mobile companies in an attempt to monetize programming beyond the TV screen. Veronis Suhler Stevenson’s forecast is based, in part, on the assumption that the nets will “accelerate their efforts to leverage their powerful brands, content and distribution systems into new media platforms to attract viewers, particularly younger ones.”