CBS Suggests New Momentum For TV’s 2016 Upfront Market

CBS, a company that has never been shy about tooting its own horn in the never-ending back and forth between TV networks and Madison Avenue, is gearing up for the next round of bargaining.

In a statement released Tuesday, the company indicated it is seeing positive momentum in the TV-advertising market, which it hopes augurs good results in TV’s coming upfront market, when U.S. networks hope to sell the bulk of their ad inventory for the coming season. “Super Bowl 50 and the Grammys delivered results that exceeded our clients’ expectations and surpassed our financial targets,” the company said in a statement. “The success of these big events, along with the strength we’re seeing in scatter, provide an excellent market indicator as we head into the upfront.”

Release of the statement comes several months before advertisers and networks is slated to start in earnest. Upfront negotiations typically don’t begin until late May or early June. But it sets in motion the ongoing debate about how what value advertisers will accord TV in an era when they have many new digital venues vying for their attention — and dollars.

CBS is reiterating statements made by chairman and chief executive Leslie Moonves during a recent conference call with investors. During that call, during which the company reported its results for its fourth quarter, Moonves indicated that so-called scatter advertising, or ad inventory sold closer to air date, was fetching better pricing than ad time purchased during last year’s upfront. When CPMs, a unit that gauges the cost of reaching 1,000 viewers that is used in talks between advertisers and networks, increase over what they were in the upfront, it is typically a signal that the TV-ad market is on the rise. That in turn often spurs advertisers to invest more heavily in the upfront in hopes they can lock in favorable ad pricing that may be on the increase.

In its comment, CBS is wielding two mass-audience events, the Super Bowl and the Grammys — with good reason.  Despite the finer audience targeting and lower costs of digital advertising, marketers still crave the ability to blast a promotional message to the widest audience possible. TV continues to win big crowds, and the networks will likely look to supplement their ability to woo big crowds with video placed in other types of viewing windows, including on-demand windows.

Is there broader reason for optimism? Past markets have been crimped. Based on guidance from buyers, Variety estimated the five networks secured between $8.02 billion and $8.69 billion for their prime-time entertainment schedules in the 2015-2016 season, compared with between $8.17 billion and $8.94 billion for the 2014-15 season. The performance marks the third consecutive upfront in which volume committed for prime time fell.

There are some suggestions that volume of ad dollars committed in the upfront might rise in 2016 after several years of slips. “We do think that national TV should have a good upfront, with low single digit volume growth and high single digit pricing,” Brian Wieser, a media-industry analyst with Pivotal Research Group, said in a recent research note. “But investors shouldn’t expect that national TV can do much better than the total market for advertising will do, which should see +2 to +3% growth once again,” excluding political and Olympic Games advertising.

CBS’ statement comes early in the process. The cable-industry is set to start unveiling some of its programming and advertising packages, with Viacom’s Nickelodeon slated to hold a presentation March 2 in New York City, followed by CMT and TV Land one day later. Digital companies will make similar offerings in early May, followed by the major English- and Spanish-language broadcast networks and some of the bigger cable entities.

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