UNEXPECTED SURGE BOOSTS THE UPFRONT

Total Buying Could Hit $7.5 Billion

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NEW YORK (AdAge.com) -- A stronger than expected broadcast upfront market kicked into high gear late last week, with General Electric Co.'s NBC taking the early lead as expected.

The peacock network booked $1 billion to $1.2 billion in business, about half its projected total take of $2.3 billion, executives familiar with the deals said.

In what could be a sign the ad market is poised for recovery, buyers and sellers now say the network broadcast prime-time upfront could reach $7.5 billion. That compares to early estimates of $7.1 billion, and to last year's $6.8 billion haul.

"The money has exceeded anyone's expectations," said one network ad sales executive. "Every network is feeling like it's in a good position."

Reluctant to gamble
Advertisers are spending more in the upfront because they are reluctant to gamble -- as many did last year -- on a soft scatter market, in part because a dearth of network inventory has raised prices significantly in the current quarter.

NBC put the market in motion May 30 after marketers in several categories -- led by movie studios and import-auto marketers -- "registered" their budgets with the network. Advertisers provide

budgets and networks counter with initial pricing offers to open upfront negotiations.

After NBC, News Corp.'s Fox was said to be the most aggressive in cutting deals, followed by more cautious CBS, with Walt Disney Co.'s ABC bringing up the rear.

NBC is said to be striking deals with healthy 8% to 10% increases in CPMs, the cost per thousand viewers. The network is also cutting morning and daytime upfront deals already; those markets usually follow the prime time upfront.

Fox booked 40% of inventory
Fox was said to have booked about 40% of its inventory at press time, with CPM increases of 5% to 6%. "They are trying to stay as close as possible to NBC," said one media-buying executive. Fox's total could reach $1.3 billion.

Viacom's CBS, which could hit $1.9 billion in sales, is said to be moving more deliberately as it holds out for higher CPM gains of 9% to 11%, in part because the network's programming is now drawing a younger audience more desired by advertisers. CBS took a risk last year when it held inventory out of the upfront to sell in the scatter market, a move that

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paid off when demand rose in the first and second quarters. But the network is said to be likely to sell a more traditional 75% of prime-time inventory this year, similar to rival networks.

Struggling ABC was said to be asking for CPM increases of just 4% to 5%, although buyers said the network was doing deals for less than that. Its total sales are anticipated to be $1.3 billion. At press time, the network was 40% to 50% sold out.

About-face from last year
The overall strength of the market is an about-face from last year's upfront, when dollars declined 16% to $6.8 billion and CPMs fell by as much as 9%-the first network price cuts in a decade.

Movie studios were said to have jumped quickly into this year's upfront market after they were forced to swallow big price increases in the current scatter market, which has seen tighter inventory. Studios spent less in last year's upfront in anticipation of a soft scatter market, and are not eager to take that risk again.

Networks sell the bulk of their prime-time inventory for the coming TV season during the upfront and then sell the rest throughout the year in the scatter market.

WB sold nearly all inventory
Outside the big four, AOL Time Warner's WB is said to have sold nearly all its inventory at healthy 14% CPM increases. The network has a limited amount of programming but a young, largely female audience that advertisers are willing to pay more to reach. It is expected to take in about $525 million. Similarly, Viacom's UPN, with an expected total of $200 million, is said to be asking for 15% CPM hikes.

"We are far exceeding projections," said a WB spokesman. Representatives from the other networks declined comment.

Good news for networks
Although the gains are good news for the networks, one broadcast sales executive said some advertisers may simply be shifting scatter funds to the upfront.

"People are spending more, but I think some of it's people who are moving some money up forward," the executive said.

NBC has been so bullish in the current market that it's even making demands on advertisers. For the coming season, NBC will block movie studios from buying shorter 15-second spots on its Thursday night hit Friends. Thursday nights are the most desirable slots for studios as viewers think about weekend entertainment options. Because of the high unit cost of Friends, some studios had in the past opted for less expensive units.

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