ABC: The Biggest Fish in a Smaller TV Upfront Pond

Disney Net Set to Deal First and Most Aggressively

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NEW YORK ( -- ABC, thanks to the strength of its ratings performance this year, is expected to be the first broadcast network out of the gate in this year's upfront race and, with its stellar programming lineup, should be able to command the most aggressive price increases for its ad inventory.

Mike Shaw
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But the Walt Disney Co. network is in the same inevitable race as the other networks toward what is likely to be a smaller pool of TV dollars from marketers.

"I would love to think that last year was a key indicator, all the stars are aligned," said Page Thompson, CEO of Omnicom Group's OMD North America. "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."

The upfront in reruns
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-viewer rates. Last year, advertisers committed around $9.1 billion to the prime-time broadcast market, down from an estimated $9.3 billion in 2004.

The "upfront" refers to the buying bazaar that takes place each spring as the TV broadcast networks try to sell between 75% and 80% of their commercial airtime ahead, or upfront, of the new fall TV season.

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 movie studios MGM and Lions Gate Films, predicts that NBC will have to reduce its pricing by the same percentage that ABC increases its rates.

Nielsen: TV ad spending down
Last week, Nielsen Media Research released ad-spending data for 2005 that had spending on 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, as dollars flow 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.

ABC's position of strength
Over at WPP Group's 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 airtime 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."

Ratings standoff
The elephant in the room for all, however, is the standoff over which set of Nielsen ratings to base upfront guarantees on. Nielsen now offers up three sets of ratings that are meant to factor in the use of digital video recorders: viewing live (as the show airs), live plus same-day viewing (watching the recorded show on the same day) and live plus seven days viewing (catching up on recorded shows within seven days).

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