Wednesday

Upfront cranks up,
big ad $s flying

May be over by Friday and could hit $9 billion

By Kevin Downey

   The network television upfront is off to a racing start, with media buyers saying late yesterday that negotiations are well underway and they expect the majority of next season’s ad time to be booked by Friday.
   Most industry forecasters just days ago were projecting spending would hit $8.6 to $8.8 billion. Those estimates now seem conservative. Media Life projected last week that spending will easily approach $9 billion.
   Whatever the final number, though, this will be a new record for the broadcast networks and sets the stage for a rapid recovery in the media economy following the recession of two years ago and the sluggish pace of the rebound since.
   The cable TV and syndication upfronts are also expected to post records this year. Total spending on national TV outlets will approach $17 billion.
   Overall ad spending on the broadcast networks will likely be up 10 percent over last year’s record $8.2 million upfront, which is an increase from earlier estimates of 7 percent or less.
   Spending this year is up because of increasing demand from advertisers, who may have been encouraged by the end of the Iraq war, and decreasing supply – the result of declining ratings on the broadcast networks.
   That supply-demand equation is driving up prices. Media buyers say CPMs, or the cost to reach 1,000 viewers, are going up fast.
   Forecasters have been projecting low double-digit increases, while Media Life is predicting that CPMs could be up well over 10 percent and perhaps as high as the mid-teens in some cases.
   Next year is also a hot year for advertisers because of the Summer Olympics on NBC, although that is generally sold outside the upfront.
   Even with that in mind, NBC is forecast by Jack Myers to pull in $2.8 billion in upfront spending. CBS will probably get about $2.1 billion, while Fox will get roughly $1.45 billion.
   ABC is the only network forecast to have a year-to-year decline with spending expected to fall 7 percent to $1.4 billion. The network has been suffering from poor ratings for two seasons and has relied heavily on reality shows, which buyers say despite ABC’s promises to the contrary, will be a significant part of the network’s schedule late in the season.
   In addition to the increasing value of commercial time, advertisers this week will probably eat up as much as 85 percent of next season’s ad time on the broadcast networks. Most years about 75 percent of time is sold, but some networks have made even less available in recent years.
   The rapid pace of this week’s upfront may come as a surprise to some media buyers, but not many.
   Following four days of presentations by the broadcast networks last week, when fall schedules were outlined, media buyers expected negotiations to take off early this week with advertisers spending in excess of $8.5 billion.
   As of Monday, however, the upfront seemed to be unfolding in an orderly fashion. That changed Tuesday with buyers saying early in the day there was a looming sense the upfront was seriously revving up. By the end of the day, buyers were working into the night.

-Kevin Downey is a staff writer for Media Life.

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