The final tally is expected to close at $8.95 billion, down around $150 million from last year's $9.1 billion, and a far cry from the $9.5 billion broadcast networks booked back in 2003.
Last year, the upfront market-the period when TV networks sell ad time for the coming fall season-wrapped up within a few weeks of broadcast networks giving their presentations to advertisers. This year, it limped along right up until the day before the long July Fourth weekend, when ABC, well behind all the other networks, inched toward a final number expected to land between $2.1 billion and $2.2 billion.
Back in May, ABC was widely pegged as the network to lead the upfront market, and few predicted correctly how this market would play out.
"It was a buyer's market this year and simply signals further disenchantment with TV," said veteran upfront watcher, Erwin Ephron, partner at Ephron, Papazian & Ephron, a consultant to media and ad companies. "All the emphasis on alternative multiplatform media buys is evidence that the basic value of TV and the upfront is being questioned."
Broadcast networks gave significant ground to marketers this year, backing down in the so-called digital video recorder debate over whether viewers watching TV in playback on DVRs should be paid for by advertisers. The networks agreed to defer the debate until a new currency is agreed on, and made deals this year based on live ratings, counting only those people who watch programming at the time it airs. Now the prospect of commercial ratings becoming the currency for selling TV airtime seems closer to fruition than it did prior to the upfront selling season.
ABC President-Sales Mike Shaw came out the strongest against using live ratings as the currency, holding firm that he wanted to get paid for those DVR viewers. With a strong slate of shows and strong ratings growth for the 18-to-49-year-old demographic, he was in a good position to test advertisers' resolve. But while he waited, Fox's President-Sales Jon Nesvig and CBS President-Sales JoAnn Ross stepped in and started making deals based on live only. In the end, ABC had to agree to use live only as well.
Fox, which was first to complete its upfront selling, booked $1.8 billion, and also sold 80% of its inventory, a $250 million improvement on last year's $1.55 billion take.
CBS concluded its upfront bookings last week, bringing in an estimated $2.4 billion, according to executives familiar with the network, and selling slightly less than the 80% of its inventory sold last year. That does not include Super Bowl commitments.
Newly-minted CW, led by President-Sales Bill Morningstar, ended at $650 million, a slight decline from last year's WB figure. Time Warner's WB-now part of the CW following a merger with CBS' UPN-took in $675 million last year, though insiders said the final number was inaccurate and the CW had done better than its predecessor.
NBC President-Sales Keith Turner, meanwhile, managed to pull even with last year, a rather good showing considering NBC's ratings were the weakest out of the five networks. But NBC's $1.9 billion includes $300 million in ad commitments from marketers buying NBC's new "Sunday Night Football." Last year's upfront total of $9.1 billion did not include ABC's "Monday Night Football," a franchise it gave up this year, opening the door for NBC to bid on the NFL games. NBC sold 70% of its ad inventory.
News Corp.'s new offering, My Network TV, had not concluded negotiations by the end of last week, but is expected by analysts to book around $50 million.
The networks' smaller take-which reflects commitments made by advertisers to buy time for the 2006-2007 broadcast season-comes amid gloomy forecasts of ad growth this year and next.
Last week, both Universal McCann and Merrill Lynch revised predictions for overall ad spending for 2006 down slightly. Universal McCann dropped its number from 5.8% to 5.6%, while a more pessimistic Merrill Lynch predicted 5.1%, down from 5.3%.
Amid lingering negotiations with the broadcast networks, selling has been slow to start for the cable and syndication markets. Most cable networks report having done only 20% to 40% of their business and expect their upfront negotiations to drag on this week and next. Sensing less money is in the marketplace than they might have initially expected, cablers are trading price for volume. Even top-tier networks such as Turner and MTV have managed to snag CPM increases of only 1% to 2%-a far cry from last year's 4% increases and the double-digit rate hikes of 2004. Overall cable upfront spending is projected to range from flat to up 2% over last year's total of $6.1 billion.