(FORTUNE Magazine) - Jeff Zucker used to be one of the most confident emcees at the annual broadcast television "upfront" in New York, where networks unveil their forthcoming seasons to advertisers.

The CEO of the NBC Universal Television Group would strut around the stage of Radio City Music Hall, trade quips with stars like "The Apprentice's" Donald Trump, and make sweeping pronouncements to media buyers and marketing executives about the Peacock's latest can't-miss roster of new shows.

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Now that NBC has crashed from first place to fourth in primetime, Zucker is no longer quite so brash. When I caught up with him several days before this year's upfront, which began on May 15, he ducked my questions about how NBC's fall schedule would fare with advertisers.

"I'm not going to talk about anything to do with that," Zucker said in a telephone interview. "We are just focused on our [television programming] development right now."

Perhaps Zucker has good reason to be cautious. At last year's upfront, the six broadcast networks - NBC, CBS, ABC, FOX, UPN, and the WB - sold $9.1 billion of primetime advertising, a paltry 2 percent increase over the 2004 event, according to Merrill Lynch estimates. Executives at ad agencies that buy television time say this year's upfront will be even grimmer for the networks.

"We are telling our clients that the upfront market will be either flat or down slightly," says David Verklin, CEO of Carat Americas, a media-buying agency with more than $5 billion in billings in the United States.

That would be a blow for the broadcast networks - and a sign of how rapidly the media world is changing. Each spring, hordes of media buyers and marketing chiefs gather in New York for the upfront. They crowd into Radio City Music Hall and Carnegie Hall for the broadcast networks' star-studded presentations. They drink their fill at the networks' lavish afterparties. Traditionally, a buying frenzy ensues.

As recently as three years ago the networks sold more than 80 percent of their advertising spots within 72 hours of their upfront extravaganzas, doing deals with media buyers at 4 A.M. over cold pizza and whatever could be scrounged from the hotel minibar.

Nobody expects such a short selling window this year, though. The broadcasters didn't introduce many hits last season. Advertisers continue to shift money to the Internet. Meanwhile Nielsen is finally including digital-video-recorder users in its ratings this year. Advertisers fear that these people are skipping commercials altogether.

"It's going to be a very long upfront," says Brad Adgate, research director for Horizon Media, a New York ad buyer. "It won't be done by Memorial Day, I can tell you that. There are a lot of other things that have to be negotiated besides the 30-second spot on 'CSI.' "

In such a climate, some advertisers are pushing to replace the glitzy upfront with something a little more prosaic: an online auction in which they can bid for ad slots the same way eBay users compete for used golf clubs. It's easy to see why advertisers would prefer such an arrangement. They would probably get a much better price. For the networks, however, it would be a nightmare.

But it's still premature to predict the death of the upfront. The big four networks - CBS, NBC, ABC, and Fox - are more resilient than the media buying crowd would have you believe. The reason last year's upfront wasn't stronger is simple: NBC's Thursday night schedule imploded when it lost "Friends" and tried to fill the void with the ill-fated "Joey." The network tumbled from first to fourth place with primetime viewers between the ages of 18 and 49, the most coveted demographic among advertisers, according to Nielsen Media Research. As a result, NBC watched ad sales decline by $900 million during last year's upfront.

But if NBC had a miserable time, some of its competitors had strong sales. Coming off an extraordinary season in which it introduced "Desperate Housewives" and "Lost," ABC's primetime ad sales rose by 31 percent, to $2.1 billion, according to Merrill Lynch. (That's excluding sports.) CBS's sales climbed 10 percent, to $2.6 billion. Even UPN saw a 13 percent increase. Not bad for the supposedly endangered traditional-media species.

No landscape-changing shows like ABC's two hits emerged last season. But the broadcasters didn't do that badly. NBC is still struggling. CBS and Warner Brothers (a unit of Time Warner, owner of Time Inc., FORTUNE's parent) decided to merge the marginally profitable UPN and the money-losing WB and create the CW.

But the remaining networks' aging schedules performed well enough. CBS's "CSI" franchise continues to pull in viewers. And more people than ever - 30 million a night - are turning on Fox's "American Idol" to watch Simon Cowell bicker with Paula Abdul, Randy Jackson, and Ryan Seacrest. Oh yeah, it's also a singing contest.

The bigger news this spring is that the networks will be holding their first real digital upfront. In the past the broadcasters have sold some Web ads at the upfront. This year they will be aggressively pushing ads for their newly developed broadband programming, their cellular-phone shows, and those that can be downloaded on services like iTunes.

So CBS packages its 30-second spots on "Two and a Half Men" with ads on innertube, its recently launched broadband video site.

"We're not just relying on our primetime schedule," says JoAnn Ross, CBS's president of network sales.

Fox plans to cross-sell ads on shows like "24" with promos on MySpace, the popular social-networking site that News Corp., its parent company, acquired nearly a year ago.

This will lead to prolonged negotiations with media buyers. What can CBS charge for ads on innertube when the site doesn't have much of an audience yet?

Simon Assaad, co-CEO of Heavy.com, a broadband video site targeted at young men that has more than ten million unique visitors a month, says the networks may end up wishing they'd invested less in new-media offerings. "Some of them will be successful," he says, "and some of them will waste hundreds of millions of shareholder dollars."

Broadband video advertising is taking off fast - eMarketer predicts spending will climb to $640 million in 2007. But it is still in its very early stages. Much of the programming on the Internet is sophomoric, and the production quality isn't much better than what you see in "user-generated content" on YouTube.

CBS can be as sophomoric as any of its Internet-based rivals (consider innertube's "Greek to Chic," a reality show about frat brothers who are given fashion makeovers). But the production quality is light-years beyond such Heavy.com fare as "Behind the Music That Sucks." That is surely part of the reason innertube launched with the support of major advertisers like Cadbury Schweppes and Verizon. Presumably the site will win more sponsorships during the upfront.

Negotiations about the value of ads on shows that are watched by digital-video-recorder users will be even fiercer. The good news for broadcasters is that more people are counted as watching top-rated shows like "American Idol" and "House" now that Nielsen is including DRV viewers. The bad news is that the media buyers don't want to pay for time-shifters.

"People who are watching television in those environments are fast-forwarding through the commercials," insists Carat's Verklin.

Yet Nielsen is adding DVR viewers so slowly that there aren't that many of them for the networks and advertisers to fight over. So ultimately, this may be an issue that can be pushed off to next year.

That gives the networks time to come up with more hit shows that will really drive their business - on the air and in the digital arena. If they can't, the upfront may be replaced by an online auction.

Surely that terrifies network-television executives. No more schmoozing advertisers over martinis at Tavern on the Green during upfront season? If that doesn't prod the networks to come up with better shows, nothing will.

Devin Leonard, a senior writer at FORTUNE, can be reached at dleonard@fortunemail.com.