Less drama, more money in TV dealmaking season
NEW YORK (Reuters) - Television networks could bring home at least $1 billion in extra advertising sales for the upcoming prime-time TV season, a big improvement after last year's dismal "upfront market."
Sales start in earnest later this month after ABC, CBS, NBC and Fox introduce their 2010-2011 TV schedules, and could wrap up in a matter of weeks, possibly by early July, according to advertising and broadcast executives.
At this time last year, advertisers and broadcasters were heading into a protracted, contentious and frustrating upfront market. In the end, advertisers bought about 15 percent less commercial time, and successfully bargained for price cuts for the first time in eight years.
ABC, CBS, NBC and Fox should win back most of that money this time around, with major categories like auto, retail and financial services in far better health. Barclays Capital analyst Anthony DiClemente predicted that ad dollars would be up about 20 percent to $8.26 billion for the four biggest broadcast networks.
Advertising and TV executives, many of whom spoke on the condition of anonymity because of the sensitivity of negotiations, said preliminary meetings between the two sides had a far different tone than last year.
"Things couldn't be more different than they were a year ago," said Jo Ann Ross, head of network sales at CBS.
"Right now, all indications are good. We're having a lot of good meetings with clients," she said. "The number of meetings is about the same, but the tenor and tone is different. We're finding a lot of enthusiasm on the other side of the desk -- there isn't that 'The sky is falling' feeling."
Even media buyers, who negotiate for ad time on behalf of clients like Ford Motor Co, AT&T Inc or Microsoft Corp, are willing to talk higher prices this year.
"The mood has changed drastically," said one, predicting that the advertising community would wind up paying rate increases of about 10 percent. "People are positive about the remainder of 2010 and especially 2011."
Increased confidence about the economy is driving stronger sales -- and can be witnessed in the rates advertisers are now paying for last-minute commercial buys. In many cases, they are paying 20 percent to 30 percent more than they would have in last year's upfront market.
Investors seem well aware that advertisers are buying again. In the past year, shares of Walt Disney Co, owner of ABC, News Corp, owner of Fox, and CBS Corp, owner of CBS, have outpaced the S&P-500 index.
Analysts warn, however, that expectations of a stronger upfront are already built into the stocks, most of which have fallen in recent days despite improved quarterly results.
To be sure, the TV business isn't all rosy. Advertisers continue to be frustrated by the spread of digital video recorders, allowing more viewers to skip commercials. Plus, they have plenty of other choices when it comes to spending budgets, whether that is cable TV, social networks or search.
So far this year, viewership among young adults is down about 8 percent for regularly scheduled prime-time programs on the big four networks, according to Brad Adgate, a senior vice president and researcher at Horizon Media.
Each network faces also faces headaches ahead of next season. For instance, Fox badly needs to rebuild buzz around "American Idol," while ABC must fill a hole left by the end of "Lost." CBS, meanwhile, needs to expand beyond crime-drama franchises like "CSI" and "NCIS," ad executives said.
NBC looks to be in the toughest spot. Its prime-time ratings are stuck in a slump, it is still recovering from the disastrous decision to move Jay Leno to prime-time, and will soon undergo a change in ownership with Comcast Corp buying control from General Electric Co.
"For the NBC broadcast network, our goal is to continue to rebuild our programing in prime-time," said Mike Pilot, who heads sales, adding that the network ordered around 20 pilots, roughly twice as many as last year. "We're really optimistic about what we're going to have for the fall season."
Pilot is also among those executives who expect a stronger -- and less contentious -- sales season.
"Last year, there was a real feeling with the advertisers that they needed to get some prices back. That caused a stalemate and created a protracted marketplace. I think this year will be much more like a typical, healthy year."
(Reporting by Paul Thomasch. Editing by Robert MacMillan)
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