Primetime TV Sees Ad Dollars Fall in Upfront for Second Year, but Streaming Lends Boost

As a long-time television viewer and follower of industry trends, I can’t help but feel a sense of both excitement and nostalgia as I read about the shifting landscape of primetime TV. It’s fascinating to see how streaming video is rapidly becoming the new darling for advertisers, eclipsing even the once-mighty cable and broadcast networks.

Advertisers continue to withdraw substantial amounts from the once highly valued television medium for prime-time broadcasting on Madison Avenue.

Ad commitments for the next cycle of primetime broadcast TV fell 3.5% in this year’s “upfront” market, to $9.34 billion, according to Media Dynamics Inc., while commitments for primetime on cable tumbled 4.8%, to $9.065 billion. The diminishing dollars spotlight how the media industry is changing as more people gravitate to streaming video and other means of accessing their favorite programs, movies, news and sports events.

Concurrently, there was a significant jump of 35.3% in commitments towards streaming video platforms, escalating from $8.2 billion to $11.1 billion compared to the previous market. Notably, these commitments for streaming video surpassed those dedicated to primetime broadcast and primetime cable for the upcoming TV season – a first-time occurrence within the industry.

Media Dynamics Incorporated serves as a consulting firm specializing in advertising, focusing primarily on monitoring the significant event known as the “upfront” within the U.S. television industry. During this event, TV networks aim to secure the majority of their commercial spots for the upcoming programming season.

According to an analysis by Media Dynamics, it’s suggested that all the recent growth can be linked to streaming services. While traditional TV has seen a decline, this drop has been largely offset by increased viewership of sports programming on these channels.

In other words, things could have been even worse.

2024 saw a decrease in the amount of money allocated to prime-time television by advertisers. The total budget for this platform dropped from approximately $19.1 billion in 2023 to around $18.41 billion in 2024. During the previous year’s market for advance bookings (upfront market), advertisers had committed $9.575 billion to prime-time broadcast TV and $9.52 billion to prime-time cable, representing decreases of 3% and 7%, respectively, as reported by Media Dynamics.

Despite a decline in traditional TV’s worth, advertisers are investing more funds into the comprehensive video sector – both linear and streaming platforms – than they did in the previous year. The total ad investments in streaming and TV increased by 8.1%, reaching approximately $29.51 billion, compared to roughly $27.3 billion in the year 2023.

The withdrawals from TV and cable revenues are serving as a counterbalance for the valuation adjustments made by two prominent TV companies, Warner Bros. Discovery and Paramount Global, during the second quarter. Specifically, Warner admitted to a $9.1 billion reduction in the value of its television assets, which encompass channels like TNT, TBS, and HGTV, due to decreased ad spending and an impending conclusion of its NBA broadcasting contract. Concurrently, Paramount reduced the worth of its cable business, comprising networks such as MTV and Nickelodeon, by nearly $6 billion, attributing this action to operational declines and its anticipated merger with Skydance Media.

Many television firms have chosen to keep secret the specifics of their “upfront” bargaining sessions. While some have mentioned growth in total pledges, they’ve been rather vague about exactly how these funds were allocated across different areas or the potential sources from which they were drawn.

For instance, Disney anticipates a 5% growth in its total upfront agreements, pointing out that advertisers show a preference towards sports and streaming videos. Similarly, Fox reports an increase in upfront sales, primarily driven by sports and Tubi. NBCUniversal states that the national volume of upfront sales has risen, but Comcast President Mike Cavanagh mentioned during their second-quarter call that “our total volume will be roughly equivalent to last year, with linear prices remaining stable.”

As a movie enthusiast, I echo the sentiments of Paramount, who reported that their linear TV viewership trends were consistent with last year’s figures. Chris McCarthy, one of the co-CEOs, shared this update. Warner Bros. Discovery didn’t reveal comprehensive upfront performance details, but they did mention a strong demand for their Max streaming service and sports offerings. Meanwhile, TelevisaUnivision hinted at a modest increase in viewership, anticipating a single-digit percentage growth.

To grab more money overall, the networks had to cut their rates — in some cases noticeably.

“For the second consecutive year, buyers managed to secure substantial discounts from companies selling linear TV ads, an occurrence that’s been rare as of late. According to Media Dynamics, it appears their efforts were successful.”

The cost needed to get 1,000 viewers, often referred to as the Cost Per Mille (CPM), dropped for both broadcast and cable. Specifically, it decreased by 5.6% for broadcast, now at $43.35, and by 6.8%, landing at $20.60 for cable. Conversely, the CPM for a 30-second ad linked to streaming declined by 16.7%. This trend has counteracted TV companies’ attempts to boost advertising income.

Disney, along with other companies, has consented to adjustments in Cost Per Mille (CPM) for specific sections of its inventory, particularly Disney+, as reported by four insiders who have been part of the recent upfront discussions. Media Dynamics hinted at a challenging bargaining process and a movement of funds towards Free Ad-Supported Streaming Television (FAST) platforms, or rivals like Amazon and YouTube, which provided more competitive CPM pricing deals.

2024-08-21 23:47

Primetime TV Sees Ad Dollars Fall in Upfront for Second Year, but Streaming Lends Boost

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