NEW YORK (CNN/Money) - The Triple Crown of advertising sales kicked off Monday and all bets are on cable channels to make further strides against major broadcast networks.
NBC's unveiling Monday of next season's prime-time lineup marked the beginning of the national television "upfront" season, the annual period when advertisers buy commercial ad slots for the coming fall's TV shows.
Overall upfront ad spending across all broadcast mediums is expected to hit at least $18 billion, according to independent media analyst Jack Myers. Those sales, a 6.8 percent hike over last year, would set a new peak for television ad spending.
As the economy continues to rebound, advertising budgets continue to fatten. "All ships should rise in this market," said Myers. Echoed Dennis McAlpine, an independent media analyst and managing partner of McAlpine Associates: "It should be a record year."
During the week, television networks will present their fall programs to Madison Avenue and begin negotiating rates and placement with media buyers. As much as 80 percent of television advertising can be sold during this period. Time that is not sold upfront will be sold in a spot market closer to the broadcast date -- what is known as scatter pricing.
Cable up, broadcast TV less so
Both cable and broadcast are expected to show gains in upfront ad rates, though cable rates are projected to grow 9 percent versus 7 percent for broadcast television, according to Myers.
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 | | | | Broadcast | | Cable | | Ad rates | + 7% | + 9% | | Ad revenue | 0% ($9B) | + 19.6% ($6.4B) |
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Still, the six major broadcast networks led by CBS stand to reap the most ad dollars simply because they still draw the most viewers.
Ratings at the networks, however, have been eroding in recent years as more viewers shift to cable shows. The Television Bureau of Advertising (TBA) reports that prime-time ratings for broadcast channels have fallen nearly two percent this season, compared to a 4.4 percent increase for ad-sponsored cable shows. And there are signs that those trends are helping cable operators to close in slowly on the networks' lead when it comes to drawing advertisers.
Media analysts and television executives expect upfront ad sales at the top broadcast networks to be flat or up slightly. Myers predicted sales of $9 billion. While last year spending reached $9.2 billion, the $200 million difference was due to ad slots NBC sold well in advance of this summer's Olympics.
Total ad sales for the 2003-04 season, which were up roughly 15 percent over the prior year, were helped also by the Democratic presidential primaries. Media analysts don't expect political advertising for the November general election to have much of an impact this year because campaign ad dollars will likely be concentrated in regional markets within the key battleground states.
Cable operators, meanwhile, are expected to post double-digit gains in ad sales for the upcoming season. Myers forecasts overall ad spending will rise almost 20 percent, to $6.4 billion, in the upfront. Myers said revenues from cable upfront advertising have nearly doubled since 2000 and, except for the 2001-02 season, have posted double-digit gains every year since 1994.
Among major TV networks, CBS is clearly in the strongest position heading into the upfront, said media analysts. CBS, owned by Viacom, is the No. 1 network from a string of hit shows, including "Survivor" and the "CSI" drama series. CBS captured nearly 8.5 percent of U.S. households for the week ended May 9, up from 8.3 percent a year earlier, according to TBA.
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General Electric's NBC Universal, News Corp.'s Fox Broadcasting, and upstart channels WB, owned by Time Warner, the parent of CNN/Money, and Viacom's UPN, are also expected to post strong ad sales.
NBC announced Monday its evening schedule for next season, officially jumpstarting the frenetic, closed-door negotiations between Madison Avenue and television executives over commercial air time and prices. Although NBC recently lost longtime hits "Friends" and "Frasier" and has seen ratings this season dip 5 percent, the network is banking on a second installment of "The Apprentice" reality TV show and "Joey," the heavily-hyped "Friends" spin-off, to help fill its prime-time vacuum.
All eyes this week are on industry laggard ABC. Viewers at the Walt Disney Co. channel continue to defect, with ratings down to 6 percent from 6.4 percent a year ago, according to TBA.
Disney officials said recently that, while disappointed in ABC's performance, they expect a "pretty decent" upfront. Disney President Bob Iger told analysts Wednesday that the company is seeing broad interest for advertising from almost every business sector, except for the automotive industry, which could suffer from skyrocketing gasoline prices.
Iger pointed to last month's shake up of ABC management as a sign that the struggling television network is turning a corner. As part of the reshuffling, Disney installed ABC Cable Networks President Anne Sweeney as head of the television network.
McAlpine, the media analyst, said ABC's leadership shuffle isn't likely to placate nervous advertisers. "You're flying blind if you're an [ABC] advertiser," said McAlpine.
The one quiver in Disney's arrow is ESPN, the hugely popular sports cable channel. Strong ad sales at ESPN was one of the primary drivers behind a seven percent spike, to $2.8 billion, in second-quarter revenues at Disney's media networks. ESPN ratings are up more than 13 percent this season.
The bullish forecasts for this year's upfront come on the heels of last month's strong upfront in the children's television programming market. According to news reports, total ad sales for kids' channels shot up as much as 15 to 20 percent as DVD, electronics, and video game manufacturers continue to chase youngsters.
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