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Advertisers Eager to Buy Up Time for Commercials

During the 'upfront' sales period, some are paying prices more than 15% higher than last year for prime-time ads airing next season.

May 22, 2003|Meg James | Times Staff Writer

Despite a wobbly economy, advertisers are on pace to spend a record $8.7 billion to $8.9 billion this week for prime-time commercials during the upcoming television season, TV executives said Wednesday.

Network executives have been stunned by the amounts advertisers are paying -- in some cases agreeing to rates more than 15% higher than during last year's "upfront" market, the week when networks sell more than three-fourths of their prime-time commercial inventory for the season that begins in the fall. The executives said they also have been surprised by the lightning-quick pace of the purchases.

Last year, the networks sold $8.1 billion in commercial time during a weeklong period in late May and early June. This year, networks began selling ad packages earlier -- on Monday night. NBC and Fox Broadcasting executives predicted that the bulk of their available ad time would be sold out by this morning.

"This has moved very, very quickly," said Fox Television Entertainment Group Chairman Sandy Grushow. "For whatever reasons, there just seems to be a tremendous amount of money in the marketplace."

Advertisers said they were willing to pay higher rates because they were afraid of sitting on the sidelines and possibly having to shell out even more money later in the season, in the "scatter," or spot, market.

Typically, networks hold back 15% to 25% of their prime-time commercial inventory to sell during the season. During the last season, prices for those commercial slots were as much as 25% higher than the amount charged during the upfronts.

"There are a lot more people getting into the market because they can't take the risk of getting burned later by higher prices in the scatter market," said Mike Drexler, chief executive of Optimedia International, a major advertising buyer. "It's a dogfight."

General Electric Co.'s NBC, for example, is charging an average of 15% more than last year, despite the fact that the network's ratings have fallen. NBC expects to sell more than $2.9 billion in prime-time ads -- up from $2.7 billion last year.

News Corp.'s Fox also has hiked its rates by an average of 15%. The relatively young network, which programs fewer prime-time hours than the rival Big Three networks, expects to sell $1.6 billion in ads, up from $1.3 billion last year. Fox, in the ratings cellar in the fall, roared back this year with its unscripted hits.

Even struggling ABC, which entered the upfront market hoping to get rate increases of 10% to 12%, was elated when advertisers agreed Wednesday to pay an average of 14% more.

"The demand is incredible, beyond any of our highest expectations," said Lloyd Braun, chairman of ABC Entertainment Television Group. Executives with the Walt Disney Co.-owned network could not yet estimate the amount of ABC's total upfront sales.

A CBS executive also said it was too soon to provide numbers. CBS began its sales Wednesday night. The executive said the Viacom Inc.-owned network was getting rate increases of 14% to 19%. Sister network UPN also began selling its ads Wednesday.

The crown for the steepest rate increase, 23%, will probably go to the WB network, which posted the biggest ratings gain during the last season.

Executives with the WB -- owned by AOL Time Warner Inc. and Tribune Co. -- said its available ad time would be sold by this morning. Tribune publishes The Times.

Last year, the WB sold $570 million in ads during the upfront season. Now the network, which this year turned a profit for the first time in its eight years, is shooting even higher.

"We're going to break $700 million," predicted WB President Jed Petrick. "More and more advertisers are addressing the need to market to teens and young adults -- the next generation of consumers."

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Times staff writer Brian Lowry contributed to this report.

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