With sales cooling in television’s scatter advertising market, negotiations underway now for the huge upfront market will generate less than networks would like Nomura Equity Research’s Michael Nathanson predicts this morning in his thorough quarterly review of ad trends. He forecasts that overall U.S. sales will grow 5.6% in 2012, making him more optimistic than ZenithOptimedia (which projects U.S. sales +3.6%) and MAGNA Global (anticipating +4.0%). Television will be +6.6% this year with help from the additional spending for the 2012 election campaigns and the Summer Olympics — but will decelerate to +0.9% next year. Demand in the broader marketplace “seems to be stable,” he says, after rising 5.3% to $19.2B in the first three months of this year vs the same period last year. The 11.8% boost in Q1 online sales to nearly $5B accounted for much of the growth. But television was up 6.0% to $10.2B. The return of NBA games, following the basketball league’s lockout, helped cable networks to lead the way, +7.9% to $4.8B. But the major broadcast networks enjoyed a 5.0% bump to nearly $3B. Nathanson says that Fox’s ratings struggles with American Idol (and not including the network’s boost from the Super Bowl) offset the mid-to-high single digit growth at CBS and ABC.
Other traditional media were much worse off in Q1 with consumer magazines -3.3% to $522M, newspapers -9.0% to $1.2B, and radio -2.5% to $1.4B. Retail, financial, and media companies led the pack among industries that increased their ad spending on all media. But telecom, pharmaceuticals, and travel were down. Notably, ad purchases by auto companies — the biggest contributor to TV sales — were down 1%, the first such decrease in eight quarters. Nathanson’s message for media investors: It’s “unlikely” that companies will see a big jolt from ad sales this year, so stick with cable giants such as Disney and News Corp that should be able to force cable and satellite companies to pay higher fees for their channels.
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