NEW YORK — A strong economy will continue to deliver good news to the TV business next year, with most sectors expected to gain 5% to 7% and cable continuing to post stronger gains.
That’s the prediction at the opening bell of the PaineWebber media conference for analysts, which every December trots out a parade of media CEOs and CFOs to detail highlights of the year and predictions for the next year. This week, execs from Time Warner, Viacom, News Corp., CBS, NBC and TCI are among those scheduled to appear.
In terms of ad spending, the engine that fuels most of these other businesses, predictions, it seems, are in the eyes of the soothsayer. Both Robert Coen, exec VP-director of forecasting at McCann Erickson, and David Poltrack, exec VP, research and planning, at CBS, are in the same ballpark regarding estimates for the Big Four networks for 1997: Poltrack a year ago predicted a modest 1% to 2% uptick, with comparisons suffering from 1996’s Olympics, and Coen now expects a 1.5% increase, tempering an early higher estimate.
But next year appears to be more of a crapshoot: Coen expects 5.5% growth, to $14 billion, while Poltrack sees a 9% gain, with three to four of those percentage points attributed to incremental ad volume from CBS’ Winter Olympics.
“Slower economic growth expected for ’98 may moderate ad spending,” Coen told analysts Monday, “but we really do have a very good business and economic climate for advertising in the next year.”
Overall, Coen says, national consumer media should grow 6.6% in 1998 to $51.8 billion, with the Big Four continuing to generate more than any other single national sector. Among specific categories, spot TV should rise 6.5% to $10.65 billion; syndicated TV will be up 5.5% to $2.52 billion; and cable will climb 13%, down from 18% this year, to reach $5.96 billion in 1998 (see chart).
Total U.S. ad spending should rise 6.2% to $198.42 billion in 1998 after climbing 6.6% to $186.77 billion this year.
The TV sector, while continuing to easily dominate other media, is becoming more fragmented. Coen said cable’s gains will be spread across many new networks — minimizing the assist to any single entity — and broadcast gains will be more modest, as many advertisers hike print ad budgets at faster rates, after years of TV budgets growing more quickly.
Yet Poltrack said a “broadening base of advertising,” particularly in the high-tech, financial services and prescription drug categories, will continue to fuel network advertising, even as its audience continues to shrink.
Season-to-date, the Big Four share has fallen to 61% from 65%, a much steeper decline than in past seasons. But the webs have only themselves to blame, Poltrack said, as the losses were “exacerbated by major strategic errors by the networks themselves.”
Despite CBS’ opposition, the other networks persuaded Nielsen to begin measurement of the new season a week later, and a full three weeks after Labor Day, which “clearly confused and frustrated viewers” and hurt sampling of new series. And the “collective shift from counterprogramming to confrontational programming” also hurt, by reducing the “diversity” of network fare and driving viewers to cable.
The Big Four’s combined share on Monday, previously their strongest night, fell to 61% from 69% this season due mostly to NBC’s decision to aim directly at Fox and CBS for women viewers. But increased diversity on Sunday, where ABC targets families, Fox younger viewers and CBS older demos, has actually increased the combined four-network share to 67% from 65%, Poltrack said.