Ad Money Reliably Goes to Television

Last week, companies like Viacom, CBS and Time Warner reported windfalls in television revenue, much of it from growing ad spending.

Every company was asked the same question by worried investors — will the weakening economy claim television advertising — and every company answered the same way.

“We have not seen any deterioration in our current market conditions,” said Brad Singer, the chief financial officer of Discovery Communications.

“We don’t see any signs of a deceleration right now,” said Stephen B. Burke, the chief executive of NBCUniversal.

“We’re not at all afraid, and frankly we’re looking forward to the fall,” said Leslie Moonves, the chief executive of the CBS Corporation, referring to the start of the fall season.

Despite worries of a possible double-dip recession, so far companies are not pulling back from their television ad spending plans, demonstrating the resiliency of the medium even when faced with a downturn and the persistent threat of the Internet to steal viewers.

Television networks are coming off a robust upfront advertising period, when companies make commitments for spending in the season ahead.

While they can back away from some of those commitments a few weeks ahead of time, “we have seen absolutely none of that,” Mr. Moonves told analysts last week. On the contrary, he said, what CBS has seen is “increased demand for our shows.”

That demand also has been reflected in the so-called scatter market for advertising, when companies buy commercial time during the season. The Viacom chief executive Philippe Dauman said Friday that scatter pricing was up more than 10 percent in the quarter that ended in June, driving a 12 percent gain in domestic ad sales in the spring — and a prediction for double-digit growth this summer, too.

Media executives said in interviews that the optimism reflected the fact that television is a tried and true medium for advertisers, remaining at or near historical highs in the United States.

“In essence, it’s all about sticking with something that you know is proven,” said Chris Geraci, the president of national broadcast at OMD, a unit of the Omnicom Media Group, echoing sentiments heard during the recession in 2008.

Some companies put down more money in the upfront market this spring to guard against high scatter prices later. “Companies are making more long-term commitments,” he said. “You want to just buy more efficiently.”

Other corners of the media industry — like publishing — may have fewer reasons to be confident about their prospects. The Washington Post on Friday said that print advertising revenues had slid by 12 percent in the second quarter, while revenue from display ads on its Web sites slid by 16 percent.

The New York Times had a 6.4 percent decline in print advertising revenues at its properties in the quarter, but a 2.6 percent increase in online advertising. The publishing arm of Time Warner managed a 1 percent uptick in ad revenue, but warned of current weakness in both advertising and newsstand sales.

Broadly speaking, forecasters have been anticipating a slight pullback in ad spending growth this year. ZenithOptimedia, part of the Publicis Groupe, said in mid-July that it thought worldwide ad spending would grow by 4.1 percent this year, down slightly from its previous forecast of 4.2 percent growth. A week earlier, the GroupM unit of WPP said it expected 4.8 percent growth this year, down from a previous forecast of 5.8 percent growth.

“There is no doubt we’re seeing a slowdown in growth as we get into the second half of this year,” Rino Scanzoni, the chief investment officer at GroupM, said in an interview last week.

Mr. Scanzoni called television one “area of resilience” — driven mostly not by broadcast, but by cable — and said that television is “probably more favored in the media mix” at this time. It is a medium that advertisers know, understand and can measure, he said.

Article source: http://www.nytimes.com/2011/08/08/business/media/tv-advertising-still-a-reliable-engine-in-media.html?partner=rss&emc=rss