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ABC Sales of Prime Time Ads to Rise 30%

June 01, 2005|Meg James | Times Staff Writer

Television's comeback kid, ABC, on Tuesday became the first network to sell out its available prime-time commercial spots for the coming season, which will haul in 30% more revenue -- or an extra $500 million -- than a year before.

Buoyed by a string of prime-time hits, primarily "Desperate Housewives," "Lost" and "Grey's Anatomy," ABC took in $2.1 billion in commitments for its prime-time entertainment programming for the season that begins in September, ABC sales chief Mike Shaw said. That's up from $1.6 billion a year ago.

"ABC became the must-buy network this year," Shaw said. "We had great momentum."

The flurry of sales was a dramatic contrast from recent years, when the Walt Disney Co.-owned network's poor ratings had forced it to fight for every ad dollar.

ABC's improved fortunes bode well for Disney's bottom line, say Wall Street analysts, who closely monitor the spring sales season known as the "upfront" market because it offers a barometer for the health of the entire advertising industry.

"This gives us increased confidence that Disney's earnings will continue to rise," said Richard Greenfield, Fulcrum Global Partners' media analyst. "A good chunk of the company's financial improvement is clearly coming from the network."

ABC's turnaround was especially welcome news to its longtime chief, Bob Iger, who will take over as Disney's chief executive in the fall when Michael Eisner retires. Iger had been dogged by complaints from shareholders and former ABC executives who said he had failed to maintain the network's luster.

Taking into account ad revenue from sports telecasts, including "Monday Night Football," and special events such as the Academy Awards, ABC booked $2.7 billion for prime-time commercials in the 2005-06 season. This figure doesn't include the approximately 20% of prime-time spots that the network holds in reserve for possible later sale.

Overall, ABC expects to collect more than $3.5 billion in ad revenue for all programming. ABC's renewed stature in prime time also has helped lift ratings throughout the day, including "Good Morning America," "World News Tonight With Peter Jennings" and late night's "Jimmy Kimmel Live."

ABC made a strategic decision this year to settle for modest rate increases of 4% to 6% despite posting 17% higher ratings. That decision in effect set the ceiling for rival networks, whose sales executives were left scrambling to get rate hikes of 2% to 5%.

"Our rate increases reflect how we were reading the market," said Anne Sweeney, president of Disney-ABC Television Group. "We are really comfortable with where we ended up."

Despite ABC's good news, Disney's shares fell 44 cents to $27.44.

As ABC hung a "sold out" sign Tuesday, executives at CBS and UPN, both owned by Viacom Inc., Fox Broadcasting, owned by News Corp., NBC, owned by General Electric Co., and the WB, owned by Time Warner Inc. and Tribune Co., said they were still making deals.

One big question remains: how much revenue NBC will lose after falling to fourth place among advertisers' favorite target of 18- to 49-year-olds. Industry experts expect NBC to take in at least $500 million less than the $2.9 billion it sold last year for its prime-time spots when it was No. 1. NBC declined to comment.

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