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Looks like upfront, at last

It looks like networks and advertisers are ready to talk turkey. Most advertisers last week submitted their proposed spending plans with the networks for the upfront market. And guess what? Those budgets are a lot lower (that is, double digits lower in many cases) than last year's.

Network executives said they'd be working over the weekend to respond to the spending plans with proposed pricing and placement schedules for the advertisers.

The real fun starts this week, when network sales executives and media buyers are expected to start negotiating. But that said, several networks, including Fox, ABC and CBS, have already done a small amount of business. CBS for example has re-upped most of the nine sponsors it had this season for Survivor. Most of those sponsors committed $25 million (apiece) to be in Survivor
III and IV, both scheduled to air next season.

Network sources contacted last week said the market would likely drag on over a number of weeks.

One of the unanswered questions is how much money advertisers are holding back for the scatter market. Several network executives said last week they expect to sell less inventory upfront and more in scatter. Typically between 75% and 80% of the network inventory is sold upfront. But some sales executives suspect the advertisers are withholding some additional money that may be sprung loose in the course of upfront negotiations. "The hardest part of this upfront is gauging how much money they're sitting on and how much they move to scatter," commented one network sales chief. "Three hundred advertisers can't all be down the same percentage. It doesn't work that way and yet that seems to be the pattern," in the budgets that have been submitted, he added. Many of those budgets are prepared by the same agencies.

Meanwhile, Universal McCann's Robert Coen, one of Madison Avenue's most respected ad forecasters, drastically cut his projections for 2001 last Thursday (June 14). "I have to confess it's a lot worse than I thought it would ever be," Coen said of this year's ad market. "The economy has weakened to such a degree that it is unrealistic to think advertising will outpace it" as it has in recent years, he explained.

Last December, when Coen made his initial projection, he believed the four major networks would post a 1% gain for the year. Now, six months later, he predicts a 2.5% decline in ad spending on the Big Four, to $15.5 billion.

For national spot TV, he now sees a 6% drop this year to $11.5 billion and not the 1% falloff he forecast in December. Cable will be up 8% to $11.8 billion instead of the 12.5% initially predicted. And syndication may climb 3% to $3.2 billion, but not the 6% originally forecast.

Separately, Competitive Media Reporting, the New York ad tracker said first-quarter domestic ad spending was down 5.2% overall to $22.6 billion. Network TV was down 2.2% to $5.2 billion. And despite predictions of a big falloff for syndication TV this coming upfront, the medium posted a 5.5% gain in the first quarter to $811.2 million. Cable TV posted a 6.6% gain to almost $2.5 billion. National spot TV was down 15% to $3.5 billion.