US TV networks reach ad deals; new ratings used
By Paul Thomasch
NEW YORK, June 20 (Reuters) - The major U.S. TV networks, after a slow start to the annual advertising negotiating season, have completed most of the prime-time commercial deals at prices above a year ago, executives said on Wednesday.
Behind the delay in negotiations was confusion over which audience ratings to use when writing more than $9 billion in deals for advertising time in the 2007-08 TV season.
Although volume was down in some cases, prices were up across the board by an average of between 5 percent and 9 percent based on cost per thousand viewers, media executives said.
While measurement standards have changed, by comparison, prices last year were up by only low single digit percentages.
In the past, negotiations were based on the size of a TV program's audience. The spread of digital video recorders, however, prompted the industry to search out new measures since audiences can now fast forward through commercials.
Nielsen Media Research responded by introducing ratings that track how much of the audience is watching the commercials of any given program.
Media executives said that the majority of deals for this year's upfront -- the period when networks sell about 80 percent of their prime-time advertising inventory -- were based on the Nielsen commercial ratings known as live plus three.
That measurement takes into account how many viewers watched commercials that ran during the program when it first aired, plus the next three days on DVR playback.
"That became the industry standard for everything but sports," said one executive.
About a month after ABC, Fox, NBC, and CBS unveiled their 2007-08 lineups during presentations to advertisers and affiliates, most of the networks are said to be nearly finished with advance advertising sales.
At Fox, home to a lineup that won last season's ratings race for young adult viewers thanks to hits like "American Idol," prices were up between 7.5 percent and 9 percent, sources said. Movie studios have paid even more in some instances.
Overall, that made for the best advertising take in the Fox network's history, at about $1.8 to $1.9 billion. Fox is owned by News Corp. NWSa.N. By some accounts, ABC, owned by Walt Disney Co. (DIS.N), posted the largest increase per thousand viewers, with prices on average up in the high single digits.
During its presentation, ABC, which already has the hit hospital drama "Grey's Anatomy," unveiled a broad programming slate for the upcoming season built around seven new dramas, four new comedies and a new reality show.
Executives said the new prime-time schedule -- a crop of lighter, escapist fare with strong female protagonists and the supernatural -- pulled in about $2.4 billion.
CBS, which is said to be close to wrapping up its deals, is likely to see prices up 7 percent to 9 percent, sources said. The CBS Corp.-owned (CBS.N) network was again tops last year in overall viewership, and trailed only Fox in the sought after 18 to 49-year-old demographic.
NBC, controlled by General Electric Co. (GE.N), also captured higher prices this year, sources said, but trailed other networks as it continued to languish in the ratings race. Once the powerhouse of prime-time TV, the network has struggled to find hits to replace longtime comedy favorites "Friends" and "Frasier," which ended their runs three years ago.
With about 75 percent of its time booked, prices were up 5 percent to 6 percent, sources said.
One deal NBC struck during negotiations was with WPP Group Plc's (WPP.L) GroupM media-buying agencies, which purchased nearly $1 billion in advertising across NBC Universal's television and digital properties.
NBC Universal Chief Executive Jeff Zucker recently said that NBC would book about $1.8 billion to $1.9 billion in advance advertising deals for prime-time. Across the company, Zucker said NBC Universal would book about $4 billion in advance advertising deals.
Vivendi (VIV.PA) has a minority stake in NBC.
((Reporting by Paul Thomasch, editing by Tim Dobbyn; Reuters Messaging: firstname.lastname@example.org, (646) 223-6092)) Keywords: ADVERTISING UPFRONT/
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