Networks square off with advertisers
The upfront media buying frenzy is upon us. Can new hits alleviate concerns about the technological changes afoot?
By Paul R. La Monica, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) - Spring may only recently have sprung but for major TV networks and advertisers, their attention is already starting to turn to autumn.

Next month, the top broadcast networks will officially unveil their prime-time lineups for the 2006-2007 season that begins in September. It is a period known as the upfront, when networks and media buyers engage in negotiations in order to sell a big bulk of the available commercial time for the upcoming season.

The return of football to NBC on Sunday nights this fall could boost ratings for the struggling network.
The return of football to NBC on Sunday nights this fall could boost ratings for the struggling network.
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Media buyers are curious to find out what the lineup of the new CW, formed from the merger of WB and UPN, will look like.
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There is already some speculation in the industry about what shows might be added to the fall schedule. And one thing is certain. Media buyers said that NBC, which continues to struggle in the ratings, particularly with the 18-49 year old demographic which advertisers find most attractive, is in sore need of several hits.

During last year's upfront negotiations, NBC, which is owned by General Electric (Research), reported a steep decline in advertising commitments.

"It is critical for NBC, given where they are right now, to have a breakout show," said Bill Carroll, vice president and director of programming for Katz Television Group, a media consulting firm.

NBC is ready for some football

Carroll said NBC has some good reason to be hopeful though. That's because the network will air National Football League games on Sunday nights. The return of football to NBC should make it easier for the network to turn itself around.

"NBC has significant needs but with Sunday night football, that's a night of programming they don't have to worry about putting together in the fall," he said. "And it brings them an audience they might not have reached otherwise that they can expose to new series."

Brad Adgate, research director with Horizon Media, a media buying firm, said that NBC does have a few potential hits that are likely to make its fall lineup, including crime drama "The Black Donnellys" and "Studio 60 on the Sunset Strip" a drama with "Friends" star Matthew Perry that features "West Wing" creator Aaron Sorkin as an executive producer.

But as always, competition will be fierce for viewers when the new season launches. And Adgate said that other networks also have some promising shows in development.

He cites "Smith" and "Shark," two dramas starring Ray Liotta and James Woods, respectively as being possible hits for CBS (Research). "Vanished", a show about a Senator's wife that goes missing, could be big for News Corp (Research).-owned Fox.

Adgate also said that "Aquaman", a spin-off of "Smallville," which chronicles the life of Clark Kent (Superman) as a teen also has a good shot of succeeding on the CW, the new network that is being created by the merger of CBS-owned UPN and the Time Warner (Research)-owned WB. (Time Warner also owns CNNMoney.com.)

On the comedy front, Adgate said two shows featuring former cast members from "Everybody Loves Raymond" have potential. Fox has a sitcom called "'Til Death" starring Brad Garrett, while Walt Disney's (Research) ABC is considering adding a sitcom (yet to be titled) starring Patricia Heaton to its schedule.

"Hopefully, there isn't a Raymond curse like there is a Seinfeld curse," Adgate joked, referring to the fact that there have been several notable ratings-flops featuring former cast members of "Seinfeld."

Channel surfing moves to the Web

The major networks are all trying to find new hits at a challenging time for the industry. More and more viewers are using digital video recorders (DVRs) to zoom past commercials, a phenomenon that obviously is irritating to advertisers.

And many viewers, particularly younger ones, are increasingly shunning prime-time TV for the Internet and mobile devices like Apple's (Research) iPod when looking for entertainment.

All of this has led advertisers to be less inclined to pay up for prime-time commercials as of late. Lyle Schwartz, an analyst with Mediaedge:cia, a media buying firm, notes that interest in the so-called "scatter market", commercial time that was not sold during the upfront period was light this year.

The networks are trying to adapt to this change in consumer behavior though. Several have started to sell downloads of shows through Apple's iTunes store, and ABC is even going to experiment with putting some of its top programs, such as "Desperate Housewives" and "Lost" online for free (with unskippable commercials) beginning next month.

All of these technological changes are likely to be an important topic of debate during the upfront discussions, buyers said. But it's unclear if ad rates will be drastically affected this year or not.

"I think the issue of DVRs and online will be a component of negotiations, but the impact on ad prices remains to be seen," said Schwartz.

Carroll added that even though online video is getting a lot of attention, it's really not that crucial of a negotiating point just yet, especially for stable networks like CBS and ABC, which can still show advertisers that they have a group of shows with large, loyal audiences.

So he said that it's simply too soon for the networks and marketers to effectively judge how ad rates should change as a result of new forms of distribution.

"We really don't know what downloads and online streaming will mean for the networks. That's down the road," he said.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.