Cable competition aids advertisers

NETWORKS' AD DOLLARS DRY UP

June 12, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- Not so long ago, this was the time of year when the television networks flexed their muscles. Big-name companies were summoned to network headquarters in New York, given a peek of next fall's prime-time lineup and told to place their orders for advertising slots. A day or two later, all the slots were gobbled up.

But now, as this year's "upfront" advertising season gets under way, the tables are turned on the networks. If the past two summers and surveys for this year are accurate guides, advertisers will drag out the negotiations over weeks and haggle over the prices. And many won't even bother buying the slots at all.

Explanations for the demise of this rite of summer range from pessimism about the economic recovery to a dearth of projected hits for the fall lineup. More serious for the networks is the simple fact that they don't matter as much anymore. After dominating 90 percent of the television market for years, the big three networks have seen their control cut by cable to only 60 percent and now must share the network label with youth-oriented Fox.

"Things have changed from a seller's market, which it was for years and years, to a buyer's market," said Steve Grubbs, who heads television advertising buying for BBDO Worldwide Inc. "The networks don't have the clout they once had."

The poor outlook for early ad sales is reflected in a survey of 150 advertisers done by Fairfield Research Inc. this month. The results showed that, although spending on TV advertisements is expected to increase 7.7 percent, all of that increase is accounted for by shows on cable and syndicated television, which should see 16 percent increases in spending each.

Network officials declined to comment on the upfront buying season. But the Fairfield study showed that network spending is due to decline slightly, by 0.1 percent, to $2.6 billion. And of that money, only 39.9 percent will be spent during the current upfront season, compared with 42.7 percent last year. In previous years, more than half of network ad dollars were committed in the June upfront buying season.

Instead of locking into ad slots now, more advertisers are waiting until the fall for last-minute "scatter" buys that they figure will be available.

"There are some hot shows that you risk missing if you don't participate in the upfront, but it's basically possible to buy late and still get decent shows," said Peter McLoughlin, director of media service for Anheuser-Busch Co.

Cable provides another option, Mr. McLoughlin said, especially for targeting specific consumers. Many beer drinkers, for example, can be reached through sports channels.

A lack of sure-fire hits has compounded the problem. Only three new shows -- ABC's "Grace Under Fire," NBC's "Frasier" and Fox's "My Girls -- are seen as likely ratings winners. The lean expectations for fall hits is based on preliminary audience-share estimates from ad agencies, which consider a show a hit if it draws a share of more than 20. A show's share is the percentage of televisions in use that are tuned to the show.

Mr. McLoughlin said programming content has caused some advertisers to be selective. Anheuser-Busch, for example, avoids shows with explicit sex.

But Mr. McLoughlin and other advertising executives did not report a major backlash against violence or other much-criticized aspects of prime-time viewing.

Whatever their flaws, network programs still provide the only sure way to reach a mass audience, said Mike Neavill, director of advertising for American Telephone and Telegraph Co. "If you have a mass product, it's a terrific way to reach a lot of people," he said.

The economy is the biggest problem for the networks as they try to hawk time, Mr. Neavill said.

Before the economic downturn started in 1990, the upfront season was suffering from the popularity of cable, but it was still important. Now, concern about the recovery has turned the upfront season into an anachronism of network television's glory days.

"If you think there will be a rush for ads, you buy now," Mr. Neavill said. "Otherwise, you might as well wait for the fall and pick up time then."

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