Report: Broadcast Networks Will Get 8% Higher CPMs At Upfront This Year

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The rush of content announcements from video companies in recent days, from players like YouTube (NSDQ: GOOG) and Hulu, has caused a number of people to suggest that internet video has reached a new tipping point with consumer and advertiser adoption. But if it has, it doesn’t appear to coming at the expense of traditional TV. A new research report says that TV broadcasters will get even more money for their commercial time next season.

Pivotal Research Group on Wednesday released a report predicting that the cost for a thousand impressions (CPMs) in prime time will actually increase 8 percent for the networks when they convene with advertisers this spring for their annual upfront selling ritual.
The report was assembled by Pivotal’s Brian Wieser, a former advertising agency research executive, who added: “Cable network owners including Time Warner (NYSE: TWX), Discovery, Viacom (NYSE: VIA), Scripps and AMC may also benefit from a ‘halo’ effect around perceived strength going into the 2012-13 TV season.”

At last year’s upfront market, broadcast networks including ABC (NYSE: DIS), CBS (NYSE: CBS), Fox (NSDQ: NWS) and NBC (NSDQ: CMCSA) saw their CPM prices increase by 9 percent, while cable network CPMs increased 12 percent across the spectrum.

Wieser offered one caveat: There’s no guarantee that broadcasters will sell enough TV ad time during the upfront to match last year’s huge $9.1 billion haul. “There is an absence of empirical data which correlates upfront pricing to actual revenue results,” he wrote.

In any event, Wieser’s prediction that commercial prices will continue to climb comes amid speculation by some that internet companies like YouTube are about to see a major payoff from huge investments in producing premium TV-like video content. Speaking to CNN last week, former MTV Networks CEO Tom Freston suggested that this could be the year for significant migration of viewers and ad dollars from traditional TV to internet-based video. “YouTube’s introduction of 100 channels is going to be a tipping point for the web,” Freston, who is now a consultant, predicted.

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