Bullying or Bullish? CBS Preps Advertisers for Higher Rates

(MoneyWatch)  Death and taxes are not life's only certainties. You can also count on Les Moonves (CEO of BNET's corporate overlord, CBS), to be bullish. And so it was less than surprising when Moonves told a media conference put on by Credit Suisse that he expected the network to get "strong double-digit" increases in this year's upfront ad sales market. This usually sells about 75% of advertising inventory for the season to come.

Let's look at recent history. On the one hand, Moonves' comments get at something beyond the usual posturing that goes on between networks and media agencies. There's reason for CBS (and the other networks) to be optimistic. Advertisers think the economy is improving and prime-time ratings at CBS are strong. Further, the scatter market, in which ads are sold closer to airtime, is up around 30 percent compared to last year's upfront, according to Moonves. A strong scatter market hints at demand continuing in the coming upfront.

On the other hand, advertisers and their media agencies should look back at what Moonves said last May, when he predicted the network would "maintain or increase revenue" following a prediction in January 2009 that the network would see increases in ad rates. Did that happen? Doesn't look like it.

In the end, per Adweek, the network settled for decreases in ad rates of at least one percent. This was better than NBC, which posted a seven percent decline, and far better than the overall upfront marketplace, down 22 percent. But it was also not the rosy scenario that Moonves had predicted. Admittedly, there were some strategic reasons for this, since Moonves, and the other network chiefs, held back inventory for later in the year to heighten the slack demand for airtime before the season began. But no network boss wants to see a decline in ad rates, under any circumstances. CBS saw a decline in network ad sales during the first half of 2009, but a rebound of eight percent in the fourth quarter.

Looking backat the 2009 predictions proves, not for the first time, that it's important to take what all of the network chiefs say with a grain of salt. That said, this year, Moonves and his competitors will probably be less wrong. While there may not be "strong double digit" increases in ad rates, all indications are that network TV ad sales are destined to rebound.

Photo: CBS Previous coverage of the upfront at BNET Media:

• How CBS' Les Moonves Can Get Price Increases Out of Advertisers
• CBS' Moonves Not as Upfront About the Upfront
• The Network TV Upfront: CBS Is Where the Sun Always Shines