2012 Reforecast: Total Up, Core Down Slightly

As TVNewsCheck checks back with broadcasters, reps and analysts we surveyed last fall, the spot ad market is looking stronger due to political ad spending. Back then, the consensus was total spot would climb 10.2% this year. Now, however, the spot seers say it’s more likely that number will be a point or two higher, even though core growth my be a little lower than orginally thought.

Three months into what could be the largest year ever for political spending, TV station group executives and analysts are a bit more optimistic than they were last fall about spot TV revenue in 2012.

Last fall, TVNewsCheck‘s annual survey of broadcasters, reps and analysts found that total spot revenue would rise 10.2% on strong, if not record, political spending, while core (revenue excluding spot) would see a 2.7% bump.

Asked to reassess six months later, many of those same survey respondents now say total revenue could finish the year up another point or two, even though core spending (excluding political) may fall slightly short of the September forecast.

The brighter outlook for total revenue stems solely from political.

One TV station executive compared the current situation to a Category 2 hurricane with a Category 4 or 5 looming offshore, in the form of President Obama’s expected monster wave of dollars likely to hit the beach once the Republicans have wreaked as much havoc on each other as they can in the primaries.

Says Borrell Associates EVP Kip Cassino: “We believe there’s going to be so much political spending out there that it will overwhelm the network and spot capabilities of showing it in the September-October time frame. Even local politicians are using TV spot more than they once did.”


Cassino puts total spot at 11.7%. And it might have been five points higher if the law did not require stations to discount time to legally qualified candidates, he says. He believes core spending will decline by 1.1%.

As president of the Petry TV rep firm, Val Napolitano keeps his eye on national spot, which includes much of the political advertising. It could swell to 21.5% or more this year, he says. But if the political is backed up, he adds, national growth plummets to just 1.75%.

Another analyst with a bearish view of core is MagnaGlobal. Its latest forecast puts total spot at 9.3%, but core up a mere 0.1%. Vincent Letang, EVP and global head of forecasting for the media buying and planning firm, says the flat forecast for core is due in part to the displacement of traditional advertisers by politicians, but a larger factor is the sluggish economy.

“Important local categories like home and garden improvement are weak. Restaurants are not very dynamic. Apart from political, the only category that’s dynamic is automotive,” Letang says.

Auto manufacturers expect to sell between 13.8 million and 14 million cars and light trucks in 2012, compared to 12.8 million units last year. That’s good news for stations, as generally there’s a correlation between unit sales and advertising expenditures.

But the auto category didn’t start off the year with its pedal to the metal. Some station execs note lackluster buying by Chrysler, Jeep and Dodge in the first quarter.

But in the second quarter, they say, foreign auto advertisers are likely to come back strongly. Their numbers will look extremely good versus last year’s second quarter, when the earthquake and tsunami disrupted the Japanese auto industry.

Petry’s Napolitano says auto ad sales in the second quarter are now pacing more than 40% ahead of where they were last year at this time.

On the other hand, Letang says, MagnaGlobal’s auto expectations are being dampened by higher gas prices. Letang believes auto will be up mid-single-digit percentage points for the year.

One sector that’s disappointing to just about everyone is telecoms. The cable-telco competition is still intense, but Comcast and AT&T are not spending as strongly as before. And although Cox Communications is now buying national spot, that’s not enough to offset the pull back from the other two companies.

AT&T represents 20% to 25% of total advertising spend in the category, says Letang, but it has gotten stingy even since the its merger with T-Mobile cratered due to government antitrust concerns.

Among the outliers on the plus side is Kathleen Keefe, VP of sales for Hearst Television. When reminded of her prediction last September that total spot would be slightly more than 10%, she said: “Wow. Was I being pessimistic!”

She now predicts total spot will rise 18% to 20% over 2011 levels.

Among other things, Keefe sees vibrancy in the retail category. “There’s a way better Main Street than Wall Street seems to think.”

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