National TV ad spend forecast drops as upfront marketplace languishes

All those flashy upfronts presentations don’t seem to be translating into big advertising commitments.

As major media networks remain largely mum on the state of upfronts negotiations, credit reporting agency and research firm S&P Global has slashed its already grim forecast on national TV advertising throughout the end of 2023, citing the quiet upfront as a major factor.

• The ad market for network TV is now expected to shrink 7.9% in 2023 compared to a year ago, nearly 3 percentage points lower than S&P Global previously forecast. (The company does not forecast exact dollar figures.)
• National television’s ad outlook has also been revised to be 1.5 percentage points lower than previously forecast, and is expected to be down 5.9% YoY.
• Cable television’s ad outlook was also reduced by 1 percentage point due to “weak demand for general entertainment and other non-sports programming,” the report found.

The takeaway: “So far this year, few upfront deals have closed, and the current pacing is for less inventory to be sold and for pricing to be at roughly the same levels as last year’s upfront,” according to the report. That takeaway tracks with reporting from Variety that has suggested this year’s upfront, in contrast to last year’s, will be defined by declines in volume and lower ad rates than in past years.

A few factors affecting the media industry help explain the declines in the forecast and the weak upfront marketplace. In addition to continued economic uncertainty, the continued decline in audience ratings for non-sports programming, as well as the continued fallout from the writers’ strike in Hollywood, according to Naveen Sarma, S&P Global’s senior director of global ratings who served as the report’s primary credit analyst.

From bad to worse: As the writers’ strike stretches into its third month and as the actors union, SAG-AFTRA, is precariously close to walking out, there are questions about the continued ability to produce work in Hollywood and what that will mean for advertisers. As Marketing Brew has previously reported, some media buyers expect to see ratings and audience drop-offs as some new content production grinds to a halt.

“If the strike continues longer and content isn’t made, advertisers are gonna be reluctant to spend money,” Sarma said. “If this continues, and we don’t have dramas and things like that on television, I could see advertisers shifting dollars to other media.”

Wait and see: Media companies may be able to make up some of their losses in the scatter market if ad demand surges in the latter half of the year. Whether or not ad demand rebounds, though, remains an open question, and S&P Global “remain[s] skeptical as we have yet to see any change in advertiser sentiment.”