Nets to buyers: Let's make a deal

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The national ad shortfall in the fourth quarter-reaching hundreds of millions of dollars-has led broadcast and cable networks to offer unprecedented deals to advertisers.

One broadcast network has told agency buyers that if they pay for first-quarter spots now, the network will give them bonus commercials in the first quarter.


"Here's the way it works," explained one media executive familiar with the offer. "Let's say an advertiser has 10 spots in the fourth quarter and 10 in the first quarter, all costing $100,000 each. What we're asking for is payment for some of those first-quarter spots now, so we can book the fourth-quarter spots at a higher price." The executive spoke with the understanding that neither his name nor his network would be revealed.

"It's three-card monte," said another network exec. "It's a real circus out there. All the rules have been thrown out as we try and book some money in the fourth quarter."

Some cable networks have been proposing even more radical schemes, buyers said. "We've been told by more than one cable network that if we pay now, we'll get a break on [costs per thousand] in the out quarters next year," said a buyer at a major ad agency. "Basically, what they're telling us is that they'll lower the base rate we pay for CPMs. If we can lower the base we pay with some of these [cable] guys, that's very significant and has long-term benefits for our clients," he said.

Sales executives at a number of broadcast and cable networks declined to speak for attribution, but they confirmed that they are trying all sorts of creative solutions to pump money into the fourth quarter.

Said one: "Our management is very sensitive to Wall Street, and as we all know, that's a game where you're judged quarter to quarter. No one anticipated this collapse in the fourth quarter, and management wants the bucks now. They're willing to worry about next year later. Plus, they have the whole year to make up any first-quarter shortfalls."

Countered one top cable network executive, "I've told my guys to eat it this quarter. I don't want to mortgage my future when there's so much uncertainty economically."


A broadcast manager said he has worries about next year as well. "Our budgets and sales goals for next year were set some time ago, and I thought they were conservative, but they still might end up being too robust."

Sellers and buyers note that the ad collapse, while severe, isn't across all dayparts. "Daytime seems to be the worst," said one buyer. "We've even seen some money switched out of prime into daytime." He explained that the advertiser didn't lose any prime spots but that some of the money was credited to daytime to prop up the numbers there.

Late-night is a daypart that seems to remain relatively healthy, as do certain special events.

Mr. Ross is editor of Electronic Media.

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