Peter Kafka

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Crunch Time for TV: “Upfront” Sales Could Be Down 15 Percent

the_office_promo_pic_nbcBroadcast TV’s “upfront” season–the odd tradition whereby the networks try to get advertisers to buy much of their inventory in advance for the coming year–doesn’t start till next month. But once it does, it’s likely to be grim.

That’s the prediction from Barclays Capital’s Anthony DiClemente, who says that a combination of factors–first and foremost, a lousy economy–will force the networks to sell less advertising, at lower prices, than they have for quite some time. Translation: DiClemente sees a 15 percent drop in upfront sales this year–the first double-digit drop for the networks since 2002.

CBS (CBS) will be in the least vulnerable position since it has the strongest ratings, DiClemente says, and will see revenue drop 10 percent. But GE’s (GE) NBC, the ratings laggard, will see dollars drop by nearly 20 percent; the fact that it’s stripping out five hours of network programming and replacing it with Jay Leno (who will presumably be OK after his hospitalization) doesn’t help. Here’s his network-by-network breakdown (click table to enlarge):

upfront-network-by-network

One impact for Web video sites like Hulu, the joint venture between NBC, News Corp.’s (NWS) Fox, and very soon, Disney’s (DIS) ABC: DiClemente figures that the networks will start throwing in Web ads as sweeteners for broadcast buys, which should push down ad rates for Web video in general.

The “buy”-a-“real”-ad-get-a-Web-ad-for-free sales pitch is one that media conglomerates have been moving away from in recent years, but all bets are off right now. Big Media will sacrifice Web pricing in order to shore up offline sales, which are still much more important.

The good news: The upfronts are increasingly less important to the networks’ health and even less so for their corporate parents (click table to enlarge):

upfront-vs-overall

And if you’re a very optimistic network executive, you can hold out hope that the economy rebounds later on this year and the ads you didn’t sell this spring become much more valuable in the fall. Could happen, right?


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