With no end to the strong economy in sight, advertisers spent with a vengeance at last week's network prime time upfront. Based on numbers supplied by executives at each of the six networks, this year's market totaled a record $8.295 billion dollars, up 15%, or just over $1 billion, from the 1999 upfront.
Most of the other daypart markets-daytime, news, morning and late night-were also completed last week, with price increases that ranged from high single digits to mid-teens.
There were signs leading up to last week that the market would be strong. The cable upfront, which was done three weeks ago, raked in between $4.5 billion and $4.7 billion, a gain of 25% to 30%. In April, the top syndication shows generated rate hikes of up to 18% in an estimated $2.5 billion market.
Many took the strength of those markets as a signal that advertisers were looking for alternatives to what they feared would be an exceptionally pricey network upfront.
Those fears proved well founded. "It was a runaway train," said Bill Cella, executive vice president, broadcast and programming, Universal McCann. "Clearly, it was a sellers' market, and it was the quickest market I've ever seen. It was wild."
Why? "The economy is still very strong. There's a lot of retail activity and increased budgets from a lot of clients. There's just a lot of money out there. A lot of people are embracing national broadcast and network television." Even so, few anticipated the market would be as strong as it turned out to be. "It was the mother of all upfronts," he said. "It was unbelievable."
Here's the breakdown for the prime time market by network:
- ABC, $2.45 billion, up 28% from $1.9 billion a year ago;
- NBC, $2.35 billion, up 7% from $2.2 billion;
- CBS, $1.62 billion, up 12% from $1.45 billion;
- FOX, $1.3 billion, up 4% from $1.25 billion;
- UPN, $150 million, up 36% from $110 million.
- Pax TV, which is now sold by NBC, was hoping to exceed $60 million this year, but executives wouldn't provide a number by deadline. Last year, Pax did just under $60 million.
- The WB came in at $425 million. It's the only network down (6% ) from last season's $450 million, in part attributable to its loss of WGN Superstation carriage, which hurt its distribution.
- All the networks and some buyers pull together estimates for the entire market, based on their own performance and estimates for the other networks based on their own market intelligence. Some network executives said they thought the numbers being circulated by both ABC and NBC were high. But almost everybody agreed-buyers and sellers alike-that the market reached $8 billion, an incredible milestone.
The WB commanded the highest price increases, which ranged between 25% and more than 33%, a source at the network said. That's because, though its ratings declined steeply, it is charging more per rating point this year, and advertisers are paying to get The WB's young-skewing audience. UPN got increases averaging 20%. ABC was claiming price hikes ranging between the high teens and 20%. NBC was claiming price hikes between 16% and 20%. CBS got increases of 16% to 18%, and FOX was getting gains in the 15% to 17% range.
ABC sold significantly more of its inventory in this year's upfront-roughly 85% vs. 78% or 79% last year. NBC also sold a greater proportion of its time, about 81%, vs. 78% last year. CBS also sold about 83% of its inventory, in line with last year.
FOX, The WB and UPN held more time back this year, betting that the scatter market will continue to yield rates significantly above upfront prices. This year's scatter market has sustained rates of 25% to 30% above upfront prices a year ago.
Clearly, this year's program phenomenon, Who Wants to Be a Millionaire?, drove ABC's sales effort. The show will air four nights next fall, including Sunday night, where the average cost of a 30-second spot in the program will be close to $400,000, sources said.
That's not the most expensive show on network television (spots on Friends and ER are said to exceed $500,000), but it's clearly the most profitable show on the networks at this point. According to Merrill Lynch's top entertainment analyst Jessica Reif Cohen, Millionaire will generate a full-year pretax operating profit of close to $770 million on a full-year basis running four nights a week. That assumes an average unit price across the year of $250,000 and production costs of $650,000 per episode.
NBC's big driver continues to be Thursday night. This year's freshman hit, The West Wing, on Wednesday nights also drew a lot of interest from advertisers. NBC says The West Wing is now one of its four highest-priced shows.
Agency executives also said NBC pitched itself, accurately, as the network with the most upscale viewership.
Executives said CBS was helped more by its development in the upfront than any other network this year. Well-received new shows include the comedy Bette, starring Bette Midler, and dramas, The Fugitive and The District. "CBS did very well because of their programming," Cella said.
Michael Mandelker, executive vice president, network sales, UPN, said one-third of the network's upfront sales this year comprised new business and that over the past two years, UPN has broadened its client base by 50%.
Meanwhile, the daytime market last week reached about $1 billion, with price increases of 10% or more, sources said. Early morning was also strong, with hikes in the mid-teens and higher. Sources said that even CBS' third-place The Early Show commanded price hikes of 14%. Evening news shows got hikes of 13% to 15%. Late night rose 13%.
The sports market is just beginning to break, and the National Football League is said to be commanding double-digit hikes, as it did last year.