Analyst: ‘Muted’ Recovery is Underway

Networks fare better than stations
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NEW YORK: The media industry is experiencing a “muted” ad recovery, according to Wells Fargo analyst Marci Ryvicker.

“We have spoken with several private and public local media groups--outdoor, radio and television--as well as various media buyers. Most have confirmed that September is showing some incremental improvement but the overall tone remains cautious. Radio is experiencing the greatest sequential improvement, followed by television--networks more than stations--and lastly outdoor.”

The analysts checked prime-time scatter trends, which were described as “tight,” “active” and priced above the upfronts, when networks sold between 10 and 20 percent of inventories.

“CBS continues to take share and seems to have the best pricing trends in scatter,” Ryvicker said.

Cash for Clunkers, which concluded last month, was “incremental but not necessarily material,” she said.

“The media impact from Cash for Clunkers has been mixed,” she said, “with a more material impact in large markets versus small markets. The majority of our contacts claimed that auto advertisers have been mostly repeat advertisers who just changed ad copy rather than spent incremental dollars, although there were notable exceptions based on specific market activity.

“Given the steep declines in auto advertising over the past few years, it sounds like this ad category has hit bottom. There are signs of improvement with hope that incremental spending eventually comes from GM and others. Any improvement in auto would be most significant for television and radio, given that this ad category has historically comprised 25 percent and 15 percent of industry revenue, respectively.

Radio is faring better than TV and outdoor at the moment. Scatter prices were down among TV stations, particularly in larger markets. TV groups face a difficult second half of the year given the substantial revenue contribution of political ads last year.

“Pricing in television has not recovered, and pacings are skewed by the difficult political comps from last year’s presidential election,” Ryvicker said. “While most groups sounded relatively optimistic about Q4 given what they are hearing from their general managers, these trends have not yet materialized in the pacing data. It sounds like the focus will soon be 2010, with significant political, Superbowl and Olympic revenue.”

Ad categories were reported to be mixed, with auto, financial and fast food trending better, and retail weaker than expected.
-- Deborah D. McAdams
(Image by Peter Renshaw)

More coverage of TV revenue trends from TVB:
September 1, 2009: “U.S. Ad Spending Drops 15 Percent During 1H09”
U.S. advertising across TV, radio, print and billboards fell 15.4 percent during the first half of 2009 compared to the same period a year ago.

August 31, 2009: “Cash for Clunkers Concludes”
Local media got an injection from Cash for Clunkers, but now observers are wondering what comes next.