Missteps At Upfront Cost NBC Dearly, Say Buyers

As the broadcast upfront market neared completion last week, media buyers said NBC made a major miscalulation by taking a hard line at first against dropping its CPM ad rates after suffering its worst season in decades in the ratings. Misreading the market may have cost NBC hundreds of millions of dollars, sources said. NBC relented on Wednesday and started selling, well after ABC wrapped up and CBS and Fox were close to done. Overall, the network upfront market is estimated to be down about 2 percent on last year, to $9.1 billion. NBC initially assumed its status as lead network among viewers 18-49 with $100,000-plus incomes would guarantee CPM increases. So while NBC watched, ABC and CBS, which both averaged 4.1 ratings in 18-49/ $100K viewers this season, compared with NBC's 4.4, made effective arguments to media agencies to shift dollars away from NBC. ABC and CBS pointed out that virtually all of NBC's shows declined, while most of the CBS shows are up, and ABC has four first-year shows among the leaders in the demo. According to media agencies and network executives, ABC took away some $400 million in ad business from NBC, CBS $150 million, and Fox and the WB $50 million together. With NBC having to write business at negative CPMs, it appears that when its upfront sales are completed, the GE-owned network may take in as little as $2 billion, down more than 30 percent from last year's $2.8 billion. One buyer who bought NBC at a lower price this year said the network got off to such a late start because it was stunned that ABC and CBS came in with lower-than-expected prices. "They had to go back and rethink their model," the buyer said. While ABC, CBS, the WB and Fox had completed their upfront selling last week, and UPN was close to being wrapped, NBC was said to be only about 50 percent done. NBC did not write its first upfront business until June 1, five days after ABC was essentially wrapped. Sources said NBC was writing its prime-time upfront business at CPM decreases of 3 percent. NBC officials would not comment. The other problem NBC faces is the dwindling supply of remaining broadcast network dollars in the marketplace, and how much inventory it can sell, even if it wants to. Some media agencies projected that NBC might only be able to sell 65 percent of its available prime-time ad time. CBS had nearly completed its upfront selling by June 2, just as NBC was beginning. Adweek initially learned from Viacom insiders that CBS had sold about $2.3 million in prime-time inventory at 4-5 percent CPM increases, but CBS sales president JoAnn Ross later announced that CBS's take came in at $2.5-2.6 billion. Ross used a higher CPM increase (up 6 percent over '04-'05 rates) and vowed she had sold 85 percent of available inventory in the upfront, on the highest end of all networks. Several media buyers took issue with the $2.6 billion figure, based on the business they had done with the network, placing its total at closer to $2.45 billion. Fox and the WB also wrapped, taking in $1.55 billion and $675 million, respectively, on CPM increases of 3 percent. UPN was still doing some business at 3-5 percent increases, according to buyers, but was not prepared to discuss details last Friday.

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Missteps At Upfront Cost NBC Dearly, Say Buyers

John Consoli

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John Consoli