National TV spot biz sags

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Forget about the advertising weakness at the broadcast or cable networks. The real bleeding is in the national TV spot business, which in the first quarter is seeing overall advertising revenue falling off by a whopping 20%, according to industry executives.

"[Individual] TV stations are hurting more than either broadcast or cable networks," said Howard Nass, senior VP-executive director of local broadcast for True North Communications' TN Media, New York. National spot, as it is called, is where national advertisers buy TV advertising time on a market-by-market basis.

Advertisers are cutting back on local TV stations rather than on national TV outlets because it's easier. Broadcast and cable networks sold more than the usual inventory in last May's upfront-more than 80%. Though advertisers have options to cut back, there still is plenty of ad time on the books at all networks.

But unlike national broadcast and cable advertisers, national and spot TV advertisers can more easily move money in and out of TV stations' schedules-buys that are sold on a quarter-by-quarter or even week-to-week basis.

"We have flexibility," said Chris Rohrs, president of the Television Bureau of Advertising. "That's a strength and a weakness for us."

Declining segments include some of the biggest categories for TV stations, such as automobiles, dot-coms and retail, said Mr. Rohrs. Dot-coms in particular are hurting the big TV station markets, especially in the top 20 largest markets. "People are just being blinded by efficiencies," said Mr. Nass.

This year's spot market has had to compete against the vigorous market in 2000, which rose 11% from 1999. But a lot of this gain came early in the year-which is why TV stations are having a difficult time improving their first-quarter numbers.

`MONSTER MONTHS'

In January 2000, for instance, the TV spot market was up 17% compared with the previous January; February was 20% higher. "We were up against monster months," said Mr. Rohrs.

All this activity is recent. During the fourth quarter of 2000, the TV market was doing fairly well, up 10% from a year earlier, chiefly because of the strength of local and presidential political advertising. While October and November witnessed double-digit percentage increases, December's numbers plummeted into negative territory.

The automotive industry represents about 30% of all national TV revenues. So far this year, the car segment also cut heavily from the broadcast and cable networks, especially in the first and second quarters. But Mr. Rohrs believes some of this money may find its way back into national spot in the coming months.

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