NEW YORK (CNN/Money) -
Another year of behind-the-scenes haggling, cajoling, and arm-twisting neared an end Monday as the top television broadcasters locked up major advertisers for the upcoming season.
After a slow start over the Memorial Day weekend and into last week, CBS, NBC and ABC were closing deals at a brisk pace by Monday afternoon, analysts said. Fox completed most of its advance sales late last week.
There appeared to be no major surprises. All four major broadcast networks commanded higher ad rates than a year ago. Prime-time leader CBS posted the biggest increases in ad rates, with hikes of 9 to 10 percent over last year.
But despite the rate increases, analysts stood by earlier projections that the networks' total dollar sales would remain about the same as last year. According to a variety of estimates, between $9 billion and $9.4 billion in ads were sold during the 2004 "upfront" season, the annual period when the bulk of commercial air time for the upcoming prime-time season is sold.
"Overall pricing increases in broadcasting will be in the mid-to-high single digits, but total dollars are going to be flat," predicted Paul Kim, a media analyst at Tradition Asiel Securities.
The reason: brinksmanship. The broadcast networks are selling fewer ads during the upfront in the hopes of selling more ads at even higher prices closer to broadcast dates. Advertisers are also holding off committing to deals, or shifting more dollars over to cable.
"Last year," said Kim, "everybody threw money at the upfront."
Final crush of deals
Jack Myers, an independent media analyst, predicted that the bulk of the broadcast network's advance ad sales would be completed by Tuesday afternoon and any remaining deals finalized by week's end.
The final crush of deals comes two weeks after the six major broadcast outfits officially kicked off the upfront sales season by parading their fall prime-time lineups before advertisers.
Every year, ad sales executives at the major broadcast square off against each other and media buyers in a bid to command the biggest price increases.
The major broadcast networks entered into this year's upfront in a precarious position. While they still draw by far the largest share of eyeballs, they once again lost viewers to cable. It didn't help that a number of new network shows flopped.
According to Myers, the cable networks closed the majority of their ad sales last week. Fox and the WB, which is owned by CNN/Money parent Time Warner (TWX: Research, Estimates), also got rid of a lot of inventory because their younger demographics are highly coveted by advertisers. The other major networks, meanwhile, weren't selling much last week.
To break such logjams, networks will often play games. This year, according to Myers, it was General Electric's (GE: Research, Estimates) NBC that tried to instill panic among advertisers by spreading rumors mid-week that the market had moved.
Myers said NBC's ploy may have backfired on the network, which is facing the twin losses of "Friends" and "Frasier."
"If anything there's been a little bit of a backlash," said Myers. "NBC is the only network that appears to selling at a [rate] increase less than pre-market projections." Myers said NBC was commanding 5 to 6 percent more than in 2003, below the 7 to 8 percent that analysts had predicted.
To no one's surprise, CBS appeared to be the big winner. Feeding off a string of successes led by its "CSI" dramas, the Viacom (VIAB: Research, Estimates) network was securing rate increases of 9 to 10 percent over last year. Jill Krutick, a research analyst at Citigroup Smith Barney, predict that CBS could wind up with more than $2.4 billion in advance sales.
Fox posted the next biggest rate hikes, according to Citigroup estimates. The network, owned by Fox Entertainment (FOX: Research, Estimates), was cutting deals at prices that were 7 to 8 percent above last year. Despite the higher rates, Citigroup analysts expected Fox to sell $1.6 billion worth of ads, or roughly the same dollar volume it sold last year, as it shifts to year-round programming.
Industry underdog ABC, the No. 4 prime-time network controlled by The Walt Disney Co. (DIS: Research, Estimates), defied some expectations with ad rates that were 5 to 6 percent higher than a year ago. Citigroup had estimated ABC would, at best, be able to raise rates 2 percent.
That said, ABC's upfront ad sales are expected to be flat, at $1.7 billion this year.
Dennis McAlpine, an independent stock analyst, predicted that ABC would opt to sell less air time now in the hopes of selling ads at higher prices closer to the broadcast date. Networks typically set aside roughly 20 percent of their inventory to sell later in what is known as the "scatter" market.
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