Commercial Sales Soar at NBC

In a suddenly flush and frenzied advertising market, NBC on Thursday captured a network record for commercial sales while even struggling ABC was able to snare hefty rate increases -- a sign that advertisers believe the economy will strengthen next year.

In just three days, NBC sold $3 billion in commercials for the TV season that begins in September, compared with $2.7 billion last year. The network, owned by General Electric Co., parlayed its slate of programs that appeal to the most affluent viewers as well as its coverage next year of the Olympics to nab rate increases of 15% to 16%, said Randy Falco, NBC Television Networks group president.

“Advertisers are making a bet that the economy is going to improve,” Falco said. “They’re voting with their dollars.”

This week, advertisers shelled out a record $9.3 billion for prime-time commercials on the six major networks, $1.2 billion more than last year. The flurry of sales, known as the “upfront” market, ended the period when networks sell more than three-fourths of their prime-time commercial inventory for the upcoming TV season.

“This is a sign that the economy is inching its way back up,” said Bill Cella, chairman of the ad buying firm Magna Global USA. “Companies that are doing well are spending more money.”

Networks and advertisers attributed the strong demand for TV time to several factors. Last year, advertisers who sat on the sidelines during the upfront sales got burned when they tried to buy network time on the spot, or “scatter,” market. Prices shot up more than 25% above what networks charged during the upfronts.

Next year also offers several marquee advertising events, including the presidential election and the Olympics. In addition, dozens of major advertisers plan to launch new products, including pharmaceutical companies planning to introduce new drugs.

Fast-food restaurants, retailers and Hollywood movie studios also were part of the stampede. This year, studios allocated more money to market DVD releases of their movies, launching big promotional campaigns that were unheard of a year or two ago.

“People keep using us to plug their products,” said Jon Nesvig, Fox Broadcasting’s advertising president.

With so much money in the market, networks sold more of their inventory than ever before -- nearly 85% of their prime-time commercial spots for the year.

Like NBC, Fox reeled in 16% rate increases, for a total of $1.6 billion, Nesvig said. Last year, the News Corp. network sold $1.3 billion. Fox typically picks up fewer dollars because it programs seven fewer hours in prime time than do ABC, CBS and NBC.

CBS kept with its tradition of starting later and sticking to its price demands. The Viacom network was on track to finish its deals this morning, said JoAnn Ross, CBS network sales president. CBS was achieving rate increases comparable to those of Fox and NBC and was on track to bring in $2.2 billion, up from $1.9 billion last year.

Walt Disney Co.’s network beat its own forecasts with rate increases of 14% to 16%, said ABC Television Network President Alex Wallau. ABC ended its upfront Thursday with commercial sales of $1.7 billion, up from $1.5 billion last year.

Unlike the other networks, ABC separately sells most of its sports and special events, including “Monday Night Football,” NBA basketball, NHL’s Stanley Cup playoffs and the Academy Awards ceremony. Ad time during those events are not included in the upfront but represent an additional $500 million in prime-time revenue, Wallau said.

Meanwhile, the WB network brought in $710 million, up from $570 million last year. The network posted the industry’s biggest rate increases, in some cases as much as 23%. The WB is owned by AOL Time Warner Inc. and Tribune Co., which also publishes the Los Angeles Times.

Viacom’s UPN had not finished its sales by late Thursday. Industry insiders estimated that UPN would collect $210 million to $240 million.

The networks’ bounty quieted critics who just two weeks ago predicted that cable television channels, which continue to draw viewers away from network TV, also would grab a bigger share of the advertising pie.

“When advertisers want to launch a new product, they want to make that big splash and get instant ratings, and network TV is still the place to do that,” said Tom DeCabia, an executive vice president with media buying firm PHD USA.