Broadcast-television ratings have dropped sharply this season. And that, combined with the weak economy and competition from other media, augurs badly for the spring ad-sales market, ad buyers and analysts say.
Some of them are predicting that the broadcast networks' take will be steady to slightly lower in the so-called upfront, the annual bazaar in which TV executives pitch their new shows for the coming season.
More TV ad dollars are expected to move to cable channels, a shift that has accelerated in the past couple of years. But both broadcast and cable television are facing more intense competition from online media, including Web video outlets.
That rivalry is likely to be on full display in May, when some of the online giants and TV networks go head to head with glitzy events aimed at wooing advertisers. After the presentations, the TV networks step up their ad-sales negotiations, trying to win commitments for the bulk of the new TV season's ad time.
Magna Global, a research and ad-buying arm of Interpublic Group of Cos., estimates that the money raised in this year's TV upfront market could be up about 2%. Magna expects broadcast networks' dollar volume could fall 2% while cable TV's volume could rise about 5%.
"Despite corporate profits being at a high, marketers are still taking a cautious approach in anticipation of lackluster consumer spending and, therefore, their willingness to invest in advertising is taking a conservative approach," said Tim Spengler, chief executive officer of Magna Global.
Another major ad-buying company suggested that ad sales could be flat at broadcast networks and higher at cable networks. Meanwhile, Chris Geraci, president of national broadcast at Omnicom Media Group, a unit of advertising company Omnicom Group Inc., said his firm foresees "flat demand overall, with continued strength from the technology and automotive sectors, balanced by potential reductions from retail and pharmaceuticals."
These predictions suggest the upfront could be weaker than last year, when the ad-sales market was tepid, and volume was flat at most of the major broadcast networks. Networks don't publicly disclose details of their upfront sales.
"Early indications are that the 2013/14 TV upfront could follow last year's trend of slowing growth," Michael Senno, an analyst at Credit Suisse, said in a note to investors last week. He said that ad buyers currently expect steady or slightly higher total dollar-volume growth.
Network predictions are mixed: One network executive said that volumes could be higher, while another said it was too early to make predictions.
One sign of the broadcast networks' tempered expectations came from CBS Corp. Chief Executive Les Moonves, who in the past couple of years has predicted "double digit" increases in upfront pricing. During an investor conference earlier this month, Mr. Moonves declined to project a specific number. He did, however, say ad demand was increasing and CBS would "lead" in "volume and CPM increases." CPM is the cost of reaching a thousand viewers.
Mr. Moonves's reason for taking a low-key approach: Last year, the network's price increase failed to match his forecast. "Last year was only up 9% [in terms of upfront pricing], so I was a little bit of a liar," he said during the conference.
One factor weighing on advertisers' minds are the rating shortfalls that many networks have suffered this season. Ratings have weakened at the four big networks since the start of the fall season in late September.
Among viewers ages 18 to 49, the demographic most prized by advertisers, this season's average prime-time audiences through March 17 were down 23% at News Corp .'s Fox; 7% at Comcast Corp.'s NBC; 3% at CBS; and 8% at Walt Disney Co.'s ABC. (News Corp. also owns Dow Jones & Co., publisher of The Wall Street Journal.)
Fox has been particularly hard hit because few of its new fall shows drew big audiences, while aging hit "American Idol" has been losing steam.NBC NBC's Savannah Guthrie and Matt Lauer. Network predictions are mixed.
CBS was the only broadcast network to show a rise in total viewership, with a 2% gain.
The audience figures don't include delayed digital-video-recorder viewing on days after a show's broadcast, which TV executives blame for most of the erosion.
The ratings declines have some marketers rethinking their ad-buying strategies, ad buyers said. Some are expected to shift money to cable channels, they said. While ratings have declined at some cable channels, ad prices on cable tend to be lower than on broadcast TV, according to ad buyers.
In some cases, the Web could take a share of those dollars. "Advertisers have seen a significant shortage of ratings, and some are willing to take some money and move it online," said John Muszynski, chief investment officer at ad company Publicis Groupe SA's Spark SMG.
Indeed, one major movie-studio marketing executive said the studio plans to keep overall TV spending flat this year, in part because of muted ratings. "Ratings are not up, and there really is nothing big and new to jump into," the marketing executive said.
To be sure, media buyers and networks typically spar over their upfront expectations as a negotiating tactic. But this year's anemic predictions may carry more weight, with full-year growth in TV spending expected to weaken, in part because the year lacks an Olympics or presidential election, two events that boosted ad spending last year. Some ad buyers foresee an uptick in 2014, however, in part because of the Winter Olympics and the soccer World Cup.
Publicis's ZenithOptimedia expects TV advertising to grow just 2.8% this year to $63.9 billion. Zenith expects outlays on network-TV ads to decline 2% and spending on cable to increase 7%.
Michael Nathanson, an analyst for Nomura Securities, is more pessimistic. In a recent note to investors he predicted that broadcast-network advertising would decline 2.5% while cable would rise 5%.A version of this article appeared March 25, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Signals Weak for TV-Ad Market.