Omnicom dispute to drive down Channel 5 prices in H2
Omnicom's trading dispute with Channel 5 is expected to drive down the broadcaster's prices by an estimated six per cent year on year, according to an internal Channel 5 document seen by Campaign.
Channel 5: trading dispute with Omnicom expected to drive down airtime prices
The document, which was complied by Channel 5’s insight team for the benefit of its new owner Viacom, suggests that the year-on-year rate of inflation (the increase in the cost per thousand viewers) will slow in the second half of the year.
Channel 5 estimates that, on average, airtime prices across all adults climbed by over 10 per cent year on year in the first half of 2014, but will increase by five per cent year on year between July and December 2014.
Within its predictions for the second half of the year, Channel 5 believes ITV’s prices will increase by the greatest degree (12 per cent for all adults, seven per cent for ABC1 adults and 10 per cent for housewives with children).
Due to the absence of Omnicom cash at Channel 5, the broadcaster estimates its prices will decline by six per cent overall and 10 per cent for ABC1 adults and 8 per cent for housewives with children.
However, an industry source questioned the figures, stating it was too soon to calculate proper viewing estimates because the broadcasters have not confirmed their autumn schedules.
Furthermore, the deadline for agencies to plan their November airtime is not until early September (with the December deadline not until October) and so revenue figures could also change.
Across the first half of the year, Channel 5 estimates the total number of commercial impacts declined by four per cent, which it attributed to the better weather and rebounding economy.
ITV and Channel 4 led the decline in commercial impacts, with high single-digit declines year on year, while Channel 5’s commercial impacts declined in line with the overall market, according to the document.
Adam Crozier, the chief executive of ITV, acknowledged the decline in ITV’s overall share of viewing in the broadcaster’s results at the end of July, but said he is "confident" about ITV’s "strong autumn schedule".
Channel 5 estimates the TV ad market increased by around eight per cent year on year between January and June 2014, with ITV ahead of the market and Channel 4 and Channel 5 below it.
TV ad revenue will increase by around two per cent year on year in the second half, according to Channel 5, led by ITV once again. Channel 5 expects its ad revenue to decline by high single figures in the last six months.
Channel 5 expects its ad revenue to decline by around three per cent across the year as a whole. Industry sources suggest their estimates predict Channel 5’s decline will be even sharper at five per cent year on year.
Spokeswomen for Channel 4 and ITV declined to comment.
This article was first published on campaignlive.co.uk
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