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Network Execs Looking at Commercial Price Increase - Broadcasting & Cable

Network Execs Looking at Commercial Price Increase

Widespread belief they can charge more for the second consecutive year
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With upfront
season kicking into high gear this week, network execs are expecting to be able
to charge more for commercial spots than last year, reports The New York Times.

In 2010, the
networks took in $500 - $700 million more than in 2009. This year execs are
predicting a gain of $600 - $800 million (some are even saying $1 billion).
This comes at a time when three of the networks (NBC especially) could have to
scramble to fill a possible void that the impending NFL lockout may create.

Other factors that
have some scratching their heads as to where the execs think the money will
come from are: low consumer spending due to rising prices for gasoline, food,
clothing; decling ratings among younger viewers; digital media that lures
advertisers away. Media buyers also may choose to combat rising ad prices by
putting their dollars somewhere else, like YouTube and Hulu.

Nevertheless, car,
fast food, movies, retail and telecommunications marketers have increased their
budgets in the past few quarters. Analysts point to scatter advertising prices
as a big reason for broadcaster's optimism. Those rates have been 20% to 40%
higher than in past years. Agreements made during the upfronts also allow the
buyer the ability to cancel their commitments; this is especially important
considering the current uncertainty with the NFL.

The rise of social
media sites like Facebook and Twitter have actually brought a renewed interest
in watching television, since most of these sites serve as a outlet for viewers
to give their thoughts on the newest episode of American Idol or Chuck.

It's not just the
big five that forecasters are predicting a strong upfront. Cable and
Spanish-language channels are expecting to increases as well. Cable is expected
to rise 10% to 15% and Hispanic networks are looking at almost a 12% gain.

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