Peacock strut draws buyer fire

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NBC is likely to do battle with buyers in this year's upfront as it seeks to command premium pricing despite a ratings slide that has left it in fourth place in the key 18-to-49 demographic.

Buyers are skeptical that it can command top dollar, however, given its ratings fall. "They are reeling. It's been 10 years since they've been in this position," said one major media buyer.

NBC has publicly stated that it still holds the No. 1 position as the most upscale network. Magna Global USA, part of Interpublic Group of Cos., noted in a recent report that eight of the 10 highest-indexing shows among adults 25-54 in households with $125,000-plus income are on NBC. The network's "premium pricing," one buyer said, can be 5% to 35% higher than CPMs (cost per thousand) at rival networks.

"NBC is home to the most upscale audience on television, with a lineup of important shows that resonate with viewers. That premium isn't built in one upfront and doesn't go away in one," an NBC Universal spokeswoman said.

The proud Peacock network, under President-NBC Universal TV Networks Randy Falco and President-Ad Sales Keith Turner, is in fourth place among adults aged 18-49 years and has lost close to a million viewers in that demo, season to date.

Another agency executive, who did not wish to be named, said: "We anticipate that NBC will take in fewer dollars than last year and they expect that, too. ... Most of the industry is looking for a reduction or flat CPM costs."

Bear Stearns entertainment analyst Ray Katz predicts: "The biggest winners? ABC for ratings gains; CBS for long-term stability. The biggest loser? NBC." In the report issued April 28, Mr. Katz anticipates a total prime-time dollar increase of 2% to $9.5 billion and predicts lower sell-out rates for NBC.

Ultimately, NBC's fortunes may depend on how the other broadcast networks play their hands. CIBC Oppenheimer analyst Michael Gallant estimates that ABC's CPM increases will be 5%, and CBS will get between 4% and 5%. Fox can expect between 2% and 3% increases and NBC's will decrease 3%. Bear Stearns' Mr. Katz believes CPMs will be up across the board by 5%, with NBC posed to increase CPMs. Mr. Katz warns however, "The only concern; will NBC play the rate game [reducing rates to gain share]?"

Elizabeth Herbst-Brady, senior VP-director of broadcast investment at Publicis' Starcom Chicago, said, "NBC is going to be very mindful of the shift in position in the marketplace."

Rino Scanzoni, chief investment officer, WPP's Mediaedge:cia, said: "They are in a delicate spot right now. They absolutely understand that, but it doesn't take a lot for fortune to turn around."

Another agency CEO, who wished to remain anonymous, added: "NBC has not fallen out of favor, they've still got some quality programming that people want to buy. The problem is they have much more formidable competition than they've had in the last eight to 10 years."

In conversations with agency executives across the spectrum, ABC is well positioned to take additional dollars. "They have the winner's halo," said one buyer, "even though it's not being driven by the entire schedule." Another commented, "ABC has regained credibility and established value."

Tim Spengler, exec VP-national broadcast, Initiative Media, part of Interpublic Group of Cos., said, "Because there is less than a rating point separating all four, the schedules will be very important." Mr. Spengler's clients include Time Warner unit.

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