Analyst eyes 14% decline in primetime commitments

These are not the numbers network execs want to hear as they get ready for next week’s upfront presentations in Gotham.

Influential Merrill Lynch media biz analyst Jessica Reif Cohen has issued a bearish report predicting that broadcasters’ upfront haul could be down as much as 14% from last year’s take of nearly $9 billion in advance primetime advertising commitments.

In the best-case scenario, Reif Cohen is predicting a 2% decline from last year for ABC, CBS, NBC, Fox and CW, with only top-rated Fox eking out any revenue gains from last year.

Despite the recent optimistic projections of industry CEOs about the health of the scatter ad market, the nation’s lingering economic woes, declining primetime ratings and the migration of ad dollars to other platforms could combine into a perfect storm for broadcasters in the 2008-09 upfront. Reif Cohen said broadcasters’ upfront primetime revenue could be as high as $8.79 billion assuming a 2% decline, or as low as $7.73 billion.

In her worst-case forecast, Reif Cohen sees Fox’s sales taking a 12% dive to $1.59 billion; a 15% drop for ABC to $2.04 billion; 15% for CBS to $1.93 billion; 13% for NBC to $1.57 billion; and 15% for CW to $560 million. In the best-case scenario, Fox could see a 2% gain to $1.85 billion, with modest declines for the Big Three — CBS (-3% to $2.2 billion); ABC (2% to $2.35 billion); NBC (-1% to $1.78 billion) — but a steep drop for CW (-15% to $560 million).

Reif Cohen wrote that cable may be better positioned to weather the storm, particularly as broadcasters have sustained ratings declines in the strike-interrupted season that wraps in two weeks. Cable may be up as much as 5% from last year or down by 3%, with revenues between $8.06 billion and $7.45 billion– an overall prediction less dramatic than her view of the broadcast landscape.

As they gird for upfront selling season, media buyers are certainly wondering about how heavily the nation’s broader economic woes will weigh on the upfronts. At least one prominent buyer sees reason for optimism among the broadcasters despite the tough marketplace.

“It’s a function of supply and demand. The (broadcast) networks are beachfront property,” said Andrew Donchin, director of national broadcast for Carat USA. “The beachfront keeps eroding but people still want that property. With broadcast you only have four or five places to get it, instead of cable, where you have 500.”

Donchin also speculated that some of the bloom may be off the digital advertising rose if major blurbsters are tightening up their ad budgets.

“In a time of downturn, people tend to gravitate to what they know works for them,” he said. “Broadcast TV still has its great reach potential.”

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