This Year’s Upfront Tally Could Lag 2006

NEW YORK The broadcast networks’ upfront revenue take could decline this year to about $8.5 billion from last year’s $8.75 billion for a number of reasons.

Contrary to conventional wisdom, that drop has little to do with any ratings shortfalls this season, or the perceived strength or weakness of the medium.

Upfront commitments will be down, in part, because many advertisers plan to hold back dollars for digital and cross-platform opportunities that may arise (see main story).

But also because the networks, emboldened by the tightness of this season’s scatter market (even though it’s due mostly to ratings shortfalls), will take an aggressive pricing stance in upfront negotiations.

Most networks—particularly ABC, CBS and Fox—could initially open upfront negotiations by asking for cost-per-thousand rate increases north of 7 percent. While those hikes will certainly be negotiated down, some advertisers may decide to again take a chance in scatter.

“There isn’t a single broadcast network I know who is going to be willing to cut prices for overall share of revenue this year,” said one network sales executive. “If you are neotiating in a strong marketplace, you can’t cutprices. Ratings don’t matter as much as demand, and the demand right now is strong.”