CBS (NYSE:CBS) is said to have wrapped up its sales of advertisement slots ahead of the 2013-14 season in the upfront market. While the network gained 7.5% in CPM (cost per mile) during the upfront sales, volumes remained flat despite the network closing the previous season at the top position in terms of viewership. Going forward, as the new season begins, the network is committed to original programming and fewer repeats, which will help the network improve its ratings further and target higher rates for the balance of the inventory.
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In February, CBS passed NBC in the ratings and stayed on top to close the 2012-13 season with an average prime-time delivery of 12 million viewers per night. The network managed to beat Disney’s (NYSE:DIS) ABC by 4 million viewers, giving it the largest margin of victory in 24 years.  The credit can be attributed to the success of the Super Bowl, NCIS, Big Bang Theory and Elementary.
For the new season, CBS plans to add six series to its prime-time schedule, five in the fall and one in mid-season. Comedy remains a priority for the network, and it will focus more on original content and fewer repeats. A total of 20 shows will return to the CBS schedule, including the No. 1-rated The Big Bang Theory, Mike & Molly and 2 Broke Girls. How I Met Your Mother will return for a final season. The cast looks strong for the new season with Robin Williams, Sarah Michelle Gellar, Will Arnett, Brooklyn Decker, Anna Faris, Allison Janney and Tony Shalhoub.  It will be interesting to see if CBS can stay at the top in 2013-14 season. If it does, there would be no surprise to see a jump in its sales volume for the next season.
Upfront Ad Sales
Upfront sales allow marketers to buy television commercial airtime several months before the television season begins. Earlier last month, CBS’ management stated that the network will lead the marketplace in terms of pricing and volume.  The network is reported to have completed close to 80% of upfront sales with flat volumes at $2.65 billion. CPM increased by about 7.5% on average, as compared to last year’s increases of 8-9%.  CPM refers to advertisement shown to per thousand viewers, and it is an important benchmark for advertisers to calculate the relative cost of an ad-campaign in a given medium. There are many factors such as intensifying competition from various networks and the growth of online streaming services that could have led to the flat volumes for the upfront sales. The network will keep balance of the inventory for later stage as the new season begins. The network’s upfront performance is a signal for other networks’ upfront volumes. Other networks such as ABC and NBC may not be able to secure higher rates as their ratings were more subdued and viewership was lower than that of CBS.
Our price estimate for CBS stands at $46.80, roughly in line with the market price.Notes:
- CBS Wins Prime-Time Ratings Crown, Adweek, May 22, 2013 [↩]
- CBS unveils 2013-2014 schedule with a new slate of comedies, dramas, CBS News, May 15, 2013 [↩]
- CBS Management Discusses Q1 2013 Results – Earnings Call Transcript, Seeking Alpha, May 1, 2013 [↩]
- CBS Wraps Upfront Sales with Volume Flat From 2012, Variety, June 7, 2013 [↩]