Upfront turns nasty as prices tumble

Upfront turns nasty,
as prices tumble

ABC follows NBC in offering sharp discounts

    What started out as the slowest broadcast upfront market in years, with buyers holding out for lower prices in this down ad economy, picked up sudden speed as prices began tumbling late last week.
    Score a big one for buyers.
    After years of seeing ever increasing prices for primetime network TV time, they can expect to see this year's upfront drop 15 percent below last year's $8 billion.
     Indeed, the drops could be even steeper, by some estimates, with the final figure coming in as low as $6.5 billion when the buying ends, likely early next week.
    Going into the upfront, industry forecasters were predicting declines in the range of 10 percent.
    The single biggest factor is the sagging ad economy, which is hitting broadcast especially hard. There are simply fewer advertisers in the market looking to buy.
     The price-cutting was led by NBC, which was anxious to move the market after a month in which buyers held back, hoping for better prices.
    NBC, which led last season in ratings for the 18-49 demographic, began the discounting, with cuts anywhere from 4 percent to 7 percent below last year's. The network's thinking: We've got the highest-priced primetime inventory, so we can cut and still come out with healthy margins.
    The network moved some 70 percent of its upfront inventory over just several days and is expected to unload the rest this week.
    Last year, NBC's upfront inventory went for $2.2 billion. This year's will likely come in under $2 billion, reflecting in part a decision to hold back some inventory for the scatter market.
    ABC quickly followed, discounting by anywhere from 6 percent to 10 percent.
   The Disney-owned network is expected to see the sharpest declines because of the fading of its aging hit show "Who Wants To Be a Millionaire."
    Last year the network sold $2.3 billion in the upfront, moving three-fourths or more of its primetime inventory. This year, moving about the same amount, it is expected to generate $1.8 billion or less in upfront sales.
    Fox, by contrast, is either flat or seeing only modest decreases, in part because of last season's improved performance, especially among younger viewers, and a good feeling media buyers have for its chances in the upcoming season.
    The WB and UPN, the so-called netlets, are seeing price increases.
    CBS, however, is persisting in holding out for higher prices this season, based on the success of its Thursday night assault on NBC with its two hits, "Survivor" and "CSI: Crime Scene Investigation."
    CBS boss Mel Karmazin has long threatened to hold back inventory from the upfront if he didn't get his prices, and so far he appears to be living by his word.
    The network early on sold sponsorship packages tied to "Survivor" at reportedly stiff increases, but total sales are pegged at only $500 million, well behind the others.
    Karmazin's gamble is that the economy will brighten in the fourth quarter, with the effect of reviving the scatter market for ad inventory. It's a big gamble, however, with most forecasters predicting only modest improvements in the ad economy and many putting off hopes of recovery until 2002.

Printer-Friendly Version | Send to a Friend
Cover Page | Contact Us