TV Upfront Negotiations Nearly Done

Broadcast's Take Down 10%-15%, Could End as Low as $7.8 Billion

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NEW YORK ( -- Negotiations in the upfront market with the five major broadcast TV networks are close to wrapping up, according to media buyers, with several anticipating volume in the onetime $9 billion-plus market to be off by as much as 10% to 15%. A good portion of the cable marketplace has moved as well, buyers said, with volume likely to be down anywhere from 7% to 12%.

That means total broadcast volume could fall to as much as $7.8 billion to $8.2 billion this year, down from the approximately $9.23 billion the networks secured for their prime-time ad inventory in 2008, a sign of the toll the roiling economy has taken on marketers' willingness to spend on key media outlets. Cable secured about $7.5 billion in commitments last year.

The individual volume of commitments for most of the networks could not be immediately determined, though all are expected to be below last year's totals. Buyers believe CBS may have taken some small amount of share from rivals. All of the networks declined to comment on whether they had wrapped up all negotiations or were unable to make executives immediately available. Both News Corp. and CBS Corp. are expected to report earnings later in the week, and it's possible that executives from those companies could address upfront results on those calls.

Overall, the projected shortfall marks the first significant drop in upfront dollars since the economic downturn of 2001. That year, the broadcast networks secured around $6.7 billion in upfront commitments, according to Advertising Age -- noticeably down from estimates for 2000 that ranged from $7.8 billion to $8.3 billion.

Likely less was sold
With the economy keeping marketers' hands tight on their purse strings, it's likely that most networks sold a smaller amount of inventory than in years past -- the better to try to make up money during the "scatter" market, when ad time is purchased closer to air. Indeed, just last week, top executives at Walt Disney, parent of ABC, said the network known for "Lost" and "Desperate Housewives" would sell less ad time in the upfront, as some major advertisers were sitting on the sidelines during the process and more marketers were holding on to dollars as long as possible.

A person familiar with the situation said at the CW, the broadcast network owned jointly by CBS Corp. and Time Warner, the network's volume was down 10% to 12% from the approximately $350 million to $375 million it secured last year. This person said the network, known for its broadcasts of "Gossip Girl," among other programs, sold about 65% of its inventory, down from approximately 75% to 80% in last year's market. Like its sibling networks, the CW was offering rollbacks in the price of reaching 1,000 viewers, or CPMs, in the 2% to 3% range, the person said. NBC, owing to greater ratings shortfalls, has been offering CPM rollbacks in the negative mid-to-high-single-digit range, according to buyers.

While the networks may see volume fall this year, buyers anticipate the scatter market could pick up. Upfront totals merely represent a directional indicator of how spending could move; the commitments can change over the course of a TV season, with marketers moving money as programming changes or reworking their options to put money down quarter by quarter.

The upfront market has seen some dips in the more recent past: In 2006, upfront spending fell to between $9.2 billion and $9.4 billion, from about $9.5 billion in 2005. The economy wasn't the main factor at the time. Instead, marketers were demonstrating broader concerns about the effectiveness of TV advertising. For the last two years, broadcast TV upfront commitment totals have hovered in the $9.2 billion range, as advertisers wrestled with new ratings that take into account ratings erosion as well as measuring playback on digital video recorders.

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