AUTOMAKERS AND THE FORCE ARE WITH THE SPOT MARKET: SPOT TV TARGETS 5%: LOCAL TV STATIONS LOOK TO MILLENNIUM PACKAGES TO DRAW SPARE DOLLARS
Prices in the spot market are expected to rise as high as 5% over last year with automobile marketers expected to pump up the third quarter.
Last year, hot political races added zip to spot sales, but this year that won't have any impact on supply and price. General Motors Corp. should get a lot of the credit for the strong quarter, says Michael Hugger, president of Katz Media Group, New York.
"GM will come back and spend, and the other auto nameplates know what GM is trying to accomplish, so they'll step up to the plate. I think auto will be a strong category," says Mr. Hugger.
The third quarter should also get a boost after the release of LucasFilms "Star Wars: The Phantom Menace," he says.
"There are tangents that come along with that -- the toy business, the fast-food business. We think that's going to help," he notes.
In addition to auto marketers and dealer groups, Richard Cotter, senior partner and regional broadcast manager for J. Walter Thompson USA, New York, expects long-distance services and pharmaceutical companies to continue their strong local spot buys.
Aaron Cohen, exec VP-director of broadcast for Horizon Media, New York, expects regional market variations will continue.
"Some markets are red hot, others are cool," Mr. Cohen says, and adds that hot markets like Dallas, Los Angeles, Phoenix and San Jose, Calif., were selling third quarter in early April and advising buyers to think about fourth quarter purchases.
In smaller Midwest markets, by contrast, second-quarter spots are still available.
Mr. Cohen says dial-around services are another important category and he's seeing a little more interest from dot coms -- Internet companies such as E*trade and Amazon.com.
Political advertising was a very important category for many stations during last year's third quarter, Mr. Hugger notes, "and you have to subtract that out" in most markets this year. An exception might be Mississippi, which is expecting a competitive race for governor this fall.
While the presidential election season is starting earlier than ever, Mr. Hugger doesn't expect to see third quarter buys.
"You may see people kick off campaigns in November," he predicts.
Stations are planning to start special programming for the millennium in the third quarter, according to John Heise, president of Petry Television, a sales rep.
Most of the local special programming is expected to consist of news-style shows unique to each market.
"A number of our stations have millennium packages geared to the local marketplace, and there is a trend that national advertisers want it," he says.
While some national advertisers, such as Procter & Gamble Co., have cut back on local spot spending, he adds, others -- such as Kraft Foods -- are picking up the slack.
Fox recently informed its affiliated stations that it wants to take back 20 30-second commercial slots in prime time. Its real strategy, though, is to reduce national prime-time inventory, which might tighten up its national pricing.
Fox wants its owned-and-affiliated stations to buy back the 20 spots and give them an additional 15 prime-time slots to sell; if consummated, the effect could be to drive prices lower for spot buyers.
Fox's owned-and-operated stations have agreed to the buy-back. Under the proposed formula, the stations will pay under-market rates for the 20 spots. For the additional 15 spots, Fox will determine average net revenue for a prime-time spot on each station and then take 25% of that figure multiplied by 15.
The buyback will be implemented if affiliates covering at least 30% of the U.S. join the owned-stations in accepting the plan. If Fox ends up with inventory from some affiliates it can sell it locally -- in competition with the affiliate -- or, more likely, use it for promos.
Laura Silton, a senior VP-director of local broadcast for McCann- Erickson Worldwide, New York, says some national advertisers remain concerned about the measurability of local spot ratings. Nielsen Media Research uses diaries and household meters to measure local spot ratings.
"One reason there's no People Meter in spot is the stations are afraid that the numbers will be lower, and the lower numbers will be significantly lower for older-skewing programs." Ms. Silton says, adding stations fear lower numbers, but shouldn't. "If ratings go down we buy more spots, which makes the market