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NBC Advertising Sales Set Record

TV: Surprisingly strong market allows network to increase rates 7% to 9% from a year ago. ABC, Fox prices also exceed expectations.

June 04, 2002|MEG JAMES | TIMES STAFF WRITER

In an advertising market suddenly flush with dollars, NBC grabbed a network record for commercial sales while even lagging ABC and Fox Broadcasting were able to lasso advertisers for higher rates than what network executives had hoped even a week ago, industry officials said Monday.

In less than three dizzying days, NBC sold $2.7 billion in commercials for the TV season that begins in September. The top-rated network, a unit of General Electric Co., sold more than four-fifths of its advertising inventory and commanded rate increases of 7% to 9% over last year, said Randy Falco, president of the NBC network. Last year, NBC's advanced sales came in at just under $2 billion, he said.

"I've been at this network for 26 years, and I've never seen anything like it," Falco said.

Industry experts predicted that broadcasters will enjoy a $1-billion infusion in advertising dollars over last year's total of $6.9billion. This year's spike in spending could approach the record $8.1 billion in advanced sales of commercials two years ago, at the height of the dot-com spending boom. Broadcasters typically sell about three-quarters of their overall inventory in May and June, in what is known in the industry as the "upfront sales."

The extra money in the market prompted the Walt Disney Co.-owned ABC network and Fox Broadcasting to boost their rates while sales were in progress Friday and Monday, network sources said. ABC, which watched its prime-time ratings fall by more than 20% last season, launched its sales Friday by asking rate increases of 4% over last year, and quickly bumped that amount to 6% in several instances, ABC sources said.

"We've been the beneficiaries of a stronger-than-anticipated market," said ABC's president of sales and marketing, Mike Shaw. Advertisers embraced the network's family-oriented shows, such as a new Tuesday night comedy with John Ritter called "Eight Simple Rules for Dating My Teenage Daughter" and the Bonnie Hunt show "Life With Bonnie," he said.

The network is expected to haul in $100 million less than last year's total of $1.6 billion.

ABC is expected to finish its sales today, earlier than most industry experts had predicted.

"ABC's schedule is still very weak by most standards," said David W. Miller, a media analyst in Los Angeles with investment firm Sanders Morris Harris. "The story is that the buyers caved, and they caved early."

Fox, which also saw a decline in ratings last season, began its sales Friday by asking for a 6% increase and quickly nudged that up to 8%, said Jon Nesvig, Fox's president of sales. The network finished the season second, behind NBC, among viewers 18 to 49, the demographic most prized by advertisers trying to build brand loyalty.

By 7 a.m. Saturday, after a frenetic 24 hours, Fox sold all of its upfront inventory, amounting to about $1.3 billion, which is in line with the network's total last year.

"Our strategy was to hang tough and tuck in behind NBC," Nesvig said. "NBC had a great year, and that allowed us to come along for the ride. It's a sign of a strong market if you can move your prices up as you go along. Momentum breeds momentum."

Movie studios and car makers led the charge, the networks said. Broadcasters also benefited from several new entrants in the upfront market, including cell phone service providers.

CBS, meanwhile, has been slower to close its deals than its rivals. The Viacom Inc.-owned network is demanding rate increases of more than 10%, said sources at CBS and other networks. Last year, CBS also held out for higher rates and ended up selling $1.3 billion, only two-thirds of its inventory, during the summer months. The network anticipates $1.8 billion in upfront sales this year.

"Things are going as planned," Joe Abruzzese, CBS' advertising president, said of this year's sales. "The goal is higher rate increases and higher volume."

Smaller networks--WB and UPN--are pulling in rate increases of 15%, sources at the two networks said. The WB network, owned by AOL Time Warner Inc. and Tribune Co., is expected to sell more than $560 million in ads. UPN, which is owned by Viacom, is on track to sell about $250 million in ads, a network source said.

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