Surprise! The Internet hasn't killed TV advertising yet. In fact, the patient is doing all right -- and getting better.
The "upfront" season for TV networks to sign primetime ad contracts has just wrapped. All four majors snagged healthy improvements over last year's haul:
|
Network
|
2010 Commitments
|
2011 Commitments
|
Change
|
|
ABC
|
$2.2 billion
|
$2.4 billion
|
9%
|
|
CBS (NYSE: CBS)
|
$2.5 billion
|
$2.7 billion
|
8%
|
|
Fox
|
$1.9 billion
|
$2.0 billion
|
5%
|
|
NBC
|
$1.6 billion
|
$1.7 billion
|
6%
|
|
Total
|
$8.2 billion
|
$8.8 billion
|
7%
|
Estimates by AdAge.
These are actually somewhat lowball numbers: NBC doesn't include most of its Super Bowl inventory in the upfront negotiations, nor are the 2012 London Olympics included. New Peacock owner Comcast (Nasdaq: CMCSA) should be pretty happy with the 2011 season when all is said and done.
But the improvements run across the board, from ratings leader CBS to Walt Disney (NYSE: DIS) division ABC and its ESPN properties. News Corp (NYSE: NWS) subsidiary Fox Networks reportedly held back on price increases, despite the clout imparted by American Idol and the upcoming X-Factor -- one proven and one potential ratings monster. That's a stark contrast to NBC's attempt to raise prices by 18%, though it's had to settle for about 15% higher price tags per spot. Then again, Fox already commands strong prices; commonly considered a "mini-major" in the industry, Fox typically broadcasts about two hours of primetime programming every night, versus six for the other three.
This uptick reverses a long-running trend of lower and lower upfront sales. Advertisers have been shifting their ad budgets to a heavier mix of online and mobile marketing, where Google (Nasdaq: GOOG) and Apple (Nasdaq: AAPL) reign supreme.
Also, they've been leery of paying high prices for ad spots that are easily skipped if you use a TiVo (Nasdaq: TIVO) or similar DVR device. Skipped ads just aren't as effective as the ones you actually watch. With a few years of widespread DVR activity under their belts, perhaps it's time for a collective sigh of relief -- ads aren't worthless in this environment after all!
Where will the entertainment industry go from here? Read up on this multifaceted sector, then add a few key operators to your watchlist:
Fool contributor Anders Bylund owns shares of TiVo and Google but holds no other position in any of the companies discussed here. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Walt Disney, Google, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.
