What a difference a year makes.
Heading into last year’s upfront season, the economy was booming, dot-com biz was exploding and all signs pointed to yet another strong sellers’ market.
The “Who Wants to Be a Millionaire?” craze hadn’t yet peaked and the buzz surrounding the hit quizzer cast a glow around broadcast TV. Boosted by “Millionaire,” ABC was the marketplace leader, reaping an all-time upfront record of $2.3 billion.
It turned out to be a banner year all around, with the six broadcast nets raking in over $8 billion in the upfront, nearly a 15% gain from 1999’s record booty of just over $7 billion.
But, after seven years of good times, the champagne has lost its fizz.
While media buyers are still waiting to finalize client budgets, the early prognosis is that after years of healthy increases, the broadcast nets will be lucky simply to match last year’s windfall tally.
“It’s a correction year. The money is down. The economy is down. Even forgetting the strike, we’re looking at the upfront being $400-500 million less than last year,” says John Lazarus, director, national broadcast at Gotham-based TN Media.
And that’s not even taking into consideration the one wild card that’s hovering over the proceedings: the prospect of a writers and/or actors strike, which would throw network skeds out the window and drive prices down. If there is a strike, nets plan to rely on reality series, news and sports programming to beef up their skeds.
“The networks are pretty well prepared, but whatever they offer won’t be as good as a non-strike schedule,” says Bob Igiel, president, broadcast division, the Media Edge.
The upfront mating dance won’t officially begin until the primetime schedules are introduced to advertisers in Gotham next week. But, even network sales execs seemed resigned to the fact that it’s going to be an uphill battle to get CPM increases.
“To say there isn’t a weakness, you’re putting your head in the sand,” says UPN’s exec VP of network sales Mike Mandelker. “The question is: is it as weak as the buyers are hoping? Probably not.”
In recent weeks, media analysts have issued dire forecasts. Myers Reports predicted that the seven broadcasts nets’ overall take will dip 4%-7% from last year, marking the first significant decrease for the upfront market since the 1993-94 TV season.
Media analyst Niraj Gupta at Salomon Smith Barney is betting that 2001 will be one of the weakest upfronts in the past decade, with fewer dollars being spent overall and pricing that’s flat or up slightly.
Last month, Merrill Lynch made it official, and declared it an advertising recession in broadcasting.
Saying he “refuses to participate in a recession,” Viacom prexy Mel Karmazin has been vocal about his upfront strategy — if the prices aren’t high enough, he’ll simply hold back inventory to diminish supply.
Karmazin has said that CBS could sell just 55% of its inventory in the upfront, significantly less than the net’s usual 75%-80% rate.
Of course, Karmazin’s plan relies on the notion that the economy will pick up in fourth quarter and the Eye net will be able to command higher prices during scatter. There’s no guarantee that will happen.
Plus, buyers threaten that if CBS holds back, they can buy elsewhere.
“He’s making a terrible mistake. If we feel like spending the money, we’re gonna spend it. We’ll just take it and put it on the other networks,” says TN Media’s Lazarus.
Pointing to the success CBS has had with “CSI” “The District,” “Yes, Dear,” as well as “Survivor,” CBS Television Network’s ad sales prexy Joe Abruzzese says, “I’m confident in our position that we’ll outpace the marketplace.”
CBS Television prexy Leslie Moonves has said he anticipates that the Eye net will get the biggest percentage increase of the Big Four nets.
Likewise, Mandelker points to UPN’s strengths going into the upfront: its Monday night of African-American targeted shows like “Moesha,” the recent acquisition of “Buffy the Vampire Slayer” from the WB and “Enterprise,” the next series in the “Star Trek” franchise, which is expected to bow on the netlet next fall.
“Hopefully, we will attract a substantial number of new advertisers because of ‘Buffy,’ ” Mandelker says. “We’re not just for guys anymore.”
Buyers say that UPN, Fox and the WB are in relatively strong positions because they attract younger demos. UPN and the WB also have less inventory to sell, which helps drive up prices.
The WB could feel the loss of “Buffy,” but “7th Heaven,” “Charmed” and “Dawson’s Creek” are still steady performers and attract young femmes. On the strength of “Boston Public,” “Titus,” “Malcolm and the Middle” and “Dark Angel,” Fox will enter the upfront on much steadier footing than last year when the web was still rocky from the losses of “Beverly Hills 90210” and “Party of Five.”
NBC’s ad sales prexy Keith Turner is cautiously optimistic the Peacock net will hold its own, even though up against “Survivor” and “CSI,” its Thursday night lineup is no longer “Must Buy TV.” Thursday nights are especially crucial to nets because that’s where the movie companies spend big money.
“Since I’ve been in this job, people have been talking about trying to shift money from NBC’s Thursday night. The reality is we still deliver the most upscale demos in primetime,” Turner says. “We’re still No. 1in late night, early morning, news and daytime.”
Meanwhile, now that “Millionaire” is no longer drawing young auds, it’s unlikely the Alphabet net will match its 2000 take.
As the posturing continues, there’s one thing that both buyers and sellers agree on: it’s gonna be a long, hot summer. Both sides concur that there’s no way that the upfront will wrap as quickly as last year’s, where inventory was snapped up within four days.
“Why should we rush in when they’re going to be selling this thing for a long time?” Lazarus says.