Fox Make-Good Bill Comes Due
Network gives advertisers extra $50 million in spots to compensate for ratings shortfall in fourth quarter
By Steve McClellan -- Broadcasting & Cable, 11/24/2002 7:00:00 PM
Commercial make-goods are a fact of life for broadcast nets. This year is no exception, with estimates that make-goods in the fourth quarter will total roughly $60 million. The brunt of that load is falling on Fox, although buyers and sellers say just about every other network, with the possible exception of The WB, will have to offer advertisers extra spots to make up for ratings shortfalls.
|Season to date through Nov. 17|
|*From 2001-02 season
Source: Nielsen Media Research
After Fox, which is said to be issuing close to $50 million in "audience-deficiency" spots, UPN has the next biggest load, estimated to be about $5 million. ABC, CBS and NBC have had only sporadic make-goods so far this season.
The networks say they set aside more than enough time to compensate for whatever under-delivery issues they have and still participate in the high-demand fourth-quarter scatter market, which yielded price increases in the 25%-30% range over upfront market prices.
The good news is there are a lot fewer make-goods than a year ago, when both ABC and Fox imploded and, between them, had to make good on about $140 million in ad time in the fourth quarter.
ABC still has a lot of issues: Thursday is a black hole; the weekend needs work, as does the first hour of Monday night. But the network improved its lot significantly on Tuesday and Wednesday nights, where it's up 15% and 16%, respectively, among adults 18-49. Tuesday's gains are driven by 8 Simple Rules; Wednesday's driver is The Bachelor.
Fox executives declined to comment on the situation last week. The network's major problem was the failure of the much anticipated new show Girls Club, from David E. Kelley, on Monday nights. But News Corp. sources say that more than half Fox's make-good load—$30 million to $35 million—was taken care of in the World Series. The series went seven games and provided a little breathing room on the inventory side. So far, the network has been able to take care of the balance through prime time inventory reserved for that purpose, sources say. "Everybody with an under-delivery issue has been made whole," says one source.
So far, anyway. The question is, to what extent Fox's make-good situation will trickle into the first quarter. That will depend on ratings between now and then. But, clearly, the network is looking forward to the first quarter, with the second installment of summer hit American Idol debuting in January. If it performs anything like the summer edition, Fox executives think they can avoid make-goods altogether in the second half of the year.
Sources say UPN's ratings under-delivery this season is roughly 15%-20% below guarantees. Word is, the network expects to spread its make-good load over the fourth and first quarters.
Overall, though, make-goods are less painful this year for buyers and sellers alike. "The numbers are much more manageable than a year ago," says Mel Berning, Mediavest president of U.S. Broadcast. Last year, Berning says, shortfalls hit Fox and ABC "out of the blue" and affected every quarter. "It was almost December before they had a chance to react to just how low the ratings were going to be."
Bob Riordan, senior vice president, national broadcast, MPG, New York, assesses this season's make-good picture as "not good but not as severe as last year." Make-goods, he observes, "contract the marketplace. There are fewer gross rating points to buy." The result is other dayparts and media (like late night and syndication) get tighter and higher priced. "It's almost like the networks get rewarded for not performing. It's happening this year, just not as severely."
Other factors are tightening inventory this season as well, including the larger amounts that the networks sold upfront. Also, advertiser options to dump first-quarter upfront commitments were exercised at less than half the normal rate.
Meanwhile, UPN doesn't have any problems that higher-rated programming wouldn't cure. "Five Enterprises would do it," quips Riordan. Shari Anne Brill, Carat vice president, director of programming services, says the weblet "flip-flopped with The WB in terms of ratings performance this year."
She says UPN would have been better off keeping Roswell on Tuesdays after Buffy, which did better than its replacement, Haunted. But she doesn't envy UPN's position on Tuesdays, a "fiercely competitive night." UPN's best move there, she says, is probably the one the network has signaled it will try: counterprogramming with comedy.
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