Posted on 06/28/2006 4:32:37 AM PDT by abb
ADVANCE advertising sales for the fall television season will probably be down for a second year in a row, reflecting the growing impact of new media outlets on broadcasters.
Estimates are that the five networks will sell $8.9 billion to $9 billion in commercial time ahead of the 2006-7 season, in what is known as the upfront market.
That compares with an estimated $9.1 billion sold in the upfront market last year, before the start of the 2005-6 season, and an estimated $9.3 billion in the upfront market two years ago, ahead of the 2004-5 season.
"I'm surprised it's two years in a row," said Wayne Friedman, West Coast editor at MediaPost Communications, which covers the media business through online (mediapost.com) and offline publications. "Most of the time, it's the networks holding all the cards."
Along with TV, newspapers and other traditional media are scrambling to adjust as marketers step up efforts to reach consumers in newer ways that include Web sites, podcasts and video-on-demand.
"The broadcast environment remains tough," Debra Schwartz, a media analyst for Credit Suisse, wrote in a report.
The totals are not complete because only three of the five networks — the new CW, Fox Broadcasting and NBC — have completed their sales. Fox, part of the News Corporation, and CW, owned by the CBS Corporation and Time Warner, finished late last week.
NBC, part of the NBC Universal division of the General Electric Company, finished on Monday.
•The remaining two networks — ABC, owned by the Walt Disney Company, and CBS — are still negotiating with advertisers and agencies. They are expected to finish by Friday, if not sooner.
"People would like to go off for the Fourth of July and be done," said an executive at one network.
(Excerpt) Read more at nytimes.com ...
'Upfront' Closes With a Whimper Network Ad-Sales Market Traces a Familiar Plot Line: Less Prime-Time Spending
By BRIAN STEINBERG June 28, 2006; Page B3
Network television's annual "upfront" ad-sales market is ending as it began -- slowly and with little enthusiasm from buyers. For the second year in a row, network prime time is likely to end up with fewer committed advertising dollars than a year earlier.
Advertisers are generally trimming their TV ad buys as they put money into the Internet and other digital media. Each network's performance in the upfront -- when networks sell the bulk of their ad inventory for the fall season -- depends on their ratings strength and negotiating tactics.
CBS Corp.'s CBS, the top-rated network for the just-ended season, is expected to come out of the upfront with ad commitments that -- at best -- are equal to, if not down, from last year, according to a person familiar with the situation.
CBS has written more than $2 billion of business and hopes to reach $2.4 billion by the time negotiations are complete, the person said. CBS came out of the upfront last year with what it said would likely be a total take of $2.5 billion to $2.6 billion, although the network has said in recent months it ended up with around $2.4 billion. The network has been writing ad deals at prices that are in some cases flat with last year or up as much as 2%, according to one media buyer familiar with the situation.
Prices are measured as the cost of reaching a thousand people, the standard measure in TV ad sales.
ABC may be the last network to wrap up negotiations, the reverse of its market-leading position last year. The Walt Disney-owned network has been holding out for relatively healthy price increases, reflecting its ratings strength. It is securing price increases of between 2.5% and 3.5%, according to one media buyer. Last year, the network was more eager to drive volume by being flexible on price.
The weakest performance has come from General Electric's NBC, whose fourth-place finish in overall ratings has forced it to cut its prices by as much as 5% to 6%, according to people familiar with the situation. NBC is making up for the lower prices by selling more inventory, to keep its upfront take equal with last year, at about $1.9 billion. The network sold about 71% of its inventory this year, as opposed to about 67% in last year's session, one person says.
News Corp.'s Fox, home to "American Idol" was the first to wrap up negotiations. It secured from $1.7 billion to $1.8 billion in ad commitments, up from $1.6 billion last year.
The total prime-time take in the upfront won't be clear until the major networks complete their negotiations. Merrill Lynch analyst Jessica Reif Cohen has forecast the overall ad commitments at around $8.98 billion. By comparison, last year's upfront is estimated to have brought in around $9.1 billion. Ms. Cohen puts the figure at $9.03 billion.
Ms. Cohen's prediction includes two networks that start broadcasting this fall, CW and MyNetwork TV. Neither has had an easy upfront. CW -- jointly owned by CBS and Time Warner and formed out of the ashes of the WB and UPN networks -- expects to secure between $625 million and $640 million in ad deals, according to a person familiar with the situation.
The network's programming includes shows from both UPN and WB, but its upfront take isn't even as much as the roughly $675 million that the WB brought home last year. UPN, on its own last year, secured commitments of $375 million. "We met our revenue goals and feel in a challenging marketplace the CW did exceptionally well in our first upfront." says Paul McGuire, a network spokesman.
As for MyNetwork, to air on News Corp.-owned stations that once carried UPN programming, the jury is still out. MyNetwork expects to be negotiating ad deals for most of the summer, says spokeswoman Erica Keane. MyNetwork has secured some deals, she says.
Wednesday Morning Good News Ping.
Starting to hit them where it hurts.
Are we soon to see the demise of the NYT? They are getting shelled from so many sides, prosecution by the Department of Justice will seem like a relief.
But the financial will be the most telling.
I'm convinced that MSNBC's recently announced cutbacks in programming are a result of parent NBC's rating woes. I maintain my prediction that by the end of the decade, networks (along with their news divisions) as we know them today will cease to exist.
More information...
http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=44962
NBC May Match Last Year's Upfront Volume, Despite Eroding CPMs
by David Goetzl, Tuesday, Jun 27, 2006 8:33 AM ET
NBC IS VIRTUALLY FINISHED WITH its upfront business, and through a combination of selling more inventory and leveraging its new prime-time NFL package, is expected to pull in the same revenue--about $1.9 billion--as last year, despite ratings tumbles and attendant CPM drops, an industry source said.
NBC was expected to sell about 71 percent of its inventory--up from the 67 percent range last year, the source said.
NBC's CPMs--which were in the $30 range and topped the market--dropped about 5 percent this year, which would now place them in the $28.50 range.
With increases in the 2 percent range, Fox is believed to now have the highest CPMs among the Big 4 networks--in the $31 range. CBS is believed to now be approaching the declining NBC--with ABC still in fourth place, even with increases this year.
Those projections are based on market insight provided by News Corp. President-COO Peter Chernin several weeks ago. Chernin said that going into the upfront, Fox and NBC led the market with CPMs in the $30 range, followed by CBS at $27 and ABC in the $24 to $25 range.
"I'm surprised it's two years in a row," said Wayne Friedman, West Coast editor at MediaPost Communications, which covers the media business through online (mediapost.com) and offline publications. "Most of the time, it's the networks holding all the cards."
The arrogance of the Networks Elite has created a lot of bad feelings with many of its advertisers. In many companies some who dealt with that arrogance for years are now in top management. They will have long memories of the arrogance and some very sharp knives for justice for their side.
More details...
CBS Completes Upfront Sales, Matches Last Year's Revenue
by Wayne Friedman, Wednesday, Jun 28, 2006 10:33 AM ET
CBS CLOSED IN ON COMPLETING its upfront dealings yesterday--grabbing nearly $2.3 billion, virtually the same revenue level as a year ago, according to media buying and selling executives.
CBS averaged somewhere from flat to 1 percent price increases in cost-per-thousand viewers (CPMs), according to media buying and selling executives. CBS did get some 2 percent increases from certain advertisers.
A number of media executives insist that CBS did not write any "negative" deals--although other executives say this wasn't the case. Some executives say this "upfront math" depends on how each side does its specific accounting for individual deals.
CBS sold off about 71 percent to 72 percent of its prime-time inventory--which is about par for the course for most broadcast networks this year. NBC sold some 71 percent of its inventory in getting to $1.9 billion for this upfront process (which includes anywhere from $250 million to $300 million for "Sunday Night Football." A CBS spokesman had no comment about the network's upfront sales results.
With CBS over and done with, ABC will be the last of the broadcast networks to finish its upfront activities--which could happen late today. It's expected that ABC could reach $2.05 billion to $2.2 billion with CPM increases in the 2 percent to 3 percent range--close to the increases of Fox, which grabbed an overall $1.8 billion in volume. Fox completed its upfront sales process last week.
Newcomer CW took in $650 million--a number that came in about as expected, according to media buying executives.
However, continuing to blindly bet on traditional MSM in an era when the Web is the No. 1 media may ultimately prove ruinous: "Nike income slides on ad spending"
This is very good news. I agree that the dinosaur media is dying, though it will start to adjust pretty soon. Adjustments will not be enough to save them, but will be enough to slow down the inevitable demise.
"A number of media executives insist that CBS did not write any "negative" deals--although other executives say this wasn't the case. Some executives say this "upfront math" depends on how each side does its specific accounting for individual deals."
CBS probably had more than one negative deal with key advertisers. So they are lying again as per their corporate culture of lying to customers and advertisers.
The rates will leak and CBS will be forced by other advertisers to meet the special rates. We might even see another lawsuit.
If CBS lied about the rates and gave special rates, the SEC might have to take a look at their books.
Check out this article on NewsCorp and MySpace.com
http://money.cnn.com/2006/06/27/magazines/business2/howfoxgotsosly.biz2/index.htm
How Fox Interactive got so sly
Their war on G. W. Bush does not seem to be going that well.
One net did a story on Craig's List---that it is outpacing newsprint ads.
Craig's list is smashing the West Coast Dinosaur personal ads.
A young relative is moving back to N California, and he asked us to get newspaper apt and rooms ads in the fishwrap where he is returning. Basically most of the ads were aimed at illegal aliens or elderly and only run on Friday and Sat.
Craig's list had dozens of current ads in his price range. He said not to even bother with sending the worthless fishwrap ads to him.
So, advertisers may pay to "reach" me, but the network inserted distractions put me in such a foul mood,
I can't wait for the breaks to get a break from all the ads.
Craig's list founder is into Zen----like Steve Jobs.
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