License-fee increases outstrip ad gains

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Heading into upfronts this May, network, cable and syndication chiefs said
they expected solid upfront sales but conceded that the cost of TV programming
continues to make for a tough business model.

That message was delivered at the Hollywood Radio and Television Society
Newsmaker luncheon in Beverly Hills, Calif., Thursday.

NBC Entertainment president Jeff Zucker said he expects license fees for
prime-time programming to increase by 10 percent this fall, while Jon Mandel,
co-managing director and chief negotiating officer at MediaCom Worldwide, said
he expects upfront revenues to increase by only 3 percent.

License fees continue to go up at a rapid clip because networks still make
all of their programming decisions for fall based on a two-month pilot season
during which every network is competing for the same talent and, thus, driving
up prices, Zucker said.

But because the country is in what Universal Television Group chairman
Michael Jackson called a "corporate recession, not a consumer recession,"
television advertising remains relatively strong.

"Advertisers are scared that they won't be on the air," Mandel said in
explaining why last quarter's spot and scatter markets were so
strong.

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