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So Far, Soft Broadcast Network Ratings Not Scaring Off Advertisers

ABC, CBS and Fox are down a combined 19.5% in primetime ratings
in the preferred 18-49 demo through the first nine weeks of the new TV season. But
advertisers, like a table full of poker players, continue to ante up, and do not
look to be holding back ad dollars from broadcast either in fourth quarter or,
it appears, first quarter.

Granted, Q4 scatter buying has been softer than it was last
year, but that's due more to heavier fourth-quarter commitments in the upfront
this year by many marketers, along with the large chunks of cash spent by major
advertisers during the Olympics telecasts on NBC this summer.

Meanwhile, media agency execs say first-quarter cancellation
options by their clients show nothing abnormal compared to past years. As a
whole, advertisers usually cancel in the range of 4%-8% of their Q1 holds from
the upfront and those are the levels that are being taken, according to media

"Cancellation options were due to be acted on around Nov. 1
for first quarter but were delayed a bit because of Hurricane Sandy," one media
buyer says. "But right now, as the options are being exercised, there is
nothing abnormal. No major pullouts by clients."

Through the first nine weeks of the broadcast season, for
all live-plus-same-day primetime programming, based on Nielsen data, NBC is
averaging a 2.8 18-49 rating, up 21.7% from a 2.3 last season. CBS is averaging
a 2.3 18-49 rating, down 17.9% from last season's 2.8; Fox is averaging a 2.2,
down 26.7% from last season's 3.0; and ABC is averaging a 2.1, down 12.5% from
last season's 2.4.

And that hasn't scared off marketers who need to spend money
in the fourth quarter, particularly retailers, but also the technology
category, where the competitive battle for holiday business between Apple and
Samsung has resulted in a sizable amount of scatter dollars being dumped into
broadcast network coffers like big money stocking stuffers.

"The heavy spending by Apple and Samsung and other tech
companies has been driving fourth-quarter scatter," one buyer says.

When ratings are down and demand is up, pricing usually gets
inflated because the networks have to give out make-goods for ratings
shortfalls, which further tightens available commercial time. That hasn't
happened this year. While in certain situations advertisers may be paying
double-digit increases above upfront pricing to get into individual higher
rated shows, most primetime inventory, according to media buyers, is selling
for mid-single digit increases over upfront pricing.

That's because most advertisers did commit to more dollars
in fourth quarter in the upfront and they can now sit back and cherry-pick with
an urgency to buy. Meanwhile, the major retailers and tech companies who may
want more scatter inventory spend enough dollars and have enough clout where
the networks are not going to hold them up and risk the wrath of future
spending cuts down the road.

Many of the retail advertisers have been getting make-good
commercial units from the networks for several weeks now. "The networks in many
instances, rather than selling their inventory at lower prices, would rather
use it for make-goods," one buyer says.

"Most of the good inventory is already sold out anyway," another
buyer says. "But we are still getting phone calls from network sales people to
see if we still have some money to spend. Some clients do. There are some that
operate on calendar year budgets and have some marketing dollars left to spend
before the end of the year."

But don't expect the broadcast networks to sell only their
higher rated shows when soliciting media buyers. "If you want to get into The
on NBC, you also have to buy The New Normal," one buyer says. "If
you want scotch, you have to take the water with it."