ABC: The Biggest Fish in a Smaller TV Upfront Pond

Disney Net Set to Deal First and Most Aggressively, but Spending Could Slip

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ABC, thanks to the strength of its ratings performance this year, is expected to be first out of the gate in this year's upfront race and, with its stellar lineup, should be able to command the most aggressive price increases. But the Walt Disney Co. network will still be shooting at what is likely to be a smaller pool of TV dollars.

"I would love to think that last year was a key indicator all the stars are aligned," Page Thompson, CEO of OMD North America, said. "Is it this year or next year that money is going to leave broadcast and go elsewhere? I see it going into the digital world, broadband and video streaming on the Web."

Most, like Mr. Thompson, expect this year's upfront to be a rerun of last year, with ABC determining the market and NBC being forced to write flat to negative cost-per-thousand rates. Last year, advertisers committed around $9.1 billion to the prime-time broadcast market, down from an estimated $9.3 billion in 2004.

Geoff Robison, senior VP-national TV at Los Angeles-based Palisades Media Group, believes this year will follow last year's pattern. "It will be similar to last year in terms of who's in charge. ABC has a strong story, as does Fox. NBC might see another year of negatives [CPM pricing]. I think it is another correction year," he said. Mr. Robison, who represents MGM and Lions Gate Films, predicts that NBC will have to reduce its pricing by the same percentage that ABC increases its rates.

Last week, Nielsen Media Research released ad-spending data for 2005 that had broadcast network TV down 1.5% from the year previous against a 4.2% increase in ad spending overall. What's not clear is whether 2005 marked the beginning of a trend of dollars flowing away from broadcast network TV to other media.

"We're not expecting to see a lot of new money for TV, maybe flat to small increases," Richard Taylor, AOL's senior VP-brand marketing said.

ABC-watchers note that sales president Mike Shaw has been one of the most ubiquitous faces on recent media panels and conferences, leading to speculation he'll be more aggressive than last year, when the network eked out CPM increases in the mid-single-digit range. The other networks have been suspiciously quiet about their expectations though CBS Corp. CEO Leslie Moonves is primed to talk about the upfront on a quarterly call with analysts at the end of April.

Over at MindShare, one of the upfront's biggest buyers, Shari Cohen, co-president of national broadcast, said: "ABC is clearly in a position of strength and will likely lead the marketplace. Mike Shaw has got to fill up the piggybank. Everyone will be aggressive in pursuing money-but if they want volume they'll have to make price concessions."

Ms. Cohen expects a few hundred million dollars will be allocated for digital initiatives. The boom in interest in online and experimental media opportunities she said may hurt cable. "Cable will take from broadcast, but at a much smaller rate. I think their better days are behind them."

But Mr. Thompson points out that even if the networks are incredibly savvy about how they price their time this year, marketers are still going to be looking at switching budgets to emerging media. "The pricing of the network programming isn't going to be the factor that drives it out there. It is the fact we're entering the new world and there are new rules of the game. Even if the networks come way down, there's still going to be migrating."

The elephant in the room for all, however, is the stand-off over which set of Nielsen ratings to base upfront guarantees on. Nielsen now offers up three sets of ratings which include viewing live, live plus same-day viewing and live plus seven days.
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