NEW YORK — NBC’s fall from first to fourth place in the ratings translated into a $900 million decrease in upfront advertising sales for the coming year.
NBC sold approximately $2 billion in ads for the coming season, a 30% decrease from the $2.9 billion it sold last year, said a source familiar with the matter.
By Monday, NBC had completed the majority of its upfront deals, ending a drawn-out process in which its sales team had to defend the healthy premiums it inherited over the many years it led the network sales market, driven by highly rated shows like “Friends” and “Frasier.”
The net, which saw ratings drop 17% in the past year, was squeezed by advertisers, which negotiated first with ABC, CBS, Fox, UPN and the WB, determined to win a rollback on NBC’s traditionally high ad rates.
NBC’s CPM rates — the rates it charges to reach 1,000 viewers –dropped by 2%-3%, but even with those decreases, the net still enjoys a premium over its network competitors.
“Even though they went negative, they had pretty good CPMs,” said Andy Donchin, director of national broadcasting for ad buying firm Carat Americas. “They wrote less than they wanted to, but they had to show some kind of correction.”
Pressed by media buyers and sensing money being held back, NBC withheld some ad inventory, selling about 75% of its ad time for the coming year, down from its typical 80% sellout rate.
By holding back ad time, NBC is betting that one of its new shows, such as “The Apprentice: Martha Stewart,” “My Name Is Earl,” “E-Ring” or “Inconceivable,” will become a breakout hit and the money will come back in the form of last-minute buys in the so-called “scatter” market.
It’s a strategy ABC pursued — or was forced to pursue — last year when it was in NBC’s position, in fourth place and negotiating last with media buyers.
It paid off for the network as “Desperate Housewives” and “Lost” became breakout hits and popular buys in the scatter market.
NBC struggled on Thursday night, advertising execs said, where it kept a fading lineup intact, including “Joey” and “Will & Grace,” and faces stiff competition from Fox’s “The OC,” and CBS’ “Survivor” and “CSI.”
NBC’s $2 billion puts the total network upfront take at close to $9.3 billion, about level with last year. ABC set the market pace early, claiming $2.1 billion in nonsports advertising and CPM rate increases of 4%-6%, and the rest of the market fell in line.
CBS, which finished No. 2 in the 18-49 demographic, took $2.6 billion, while Fox claimed $1.6 billion in upfront spending. Weblets WB and UPN took $675 million and $375 million, respectively.