CBS, Fox Make Gains in Prime-Time Ad Rates

The TV advertising market heated up Thursday, with CBS and Fox winning modest rate hikes while the once-mighty NBC was forced to cut its prices after a bruising season.

In years past, NBC’s dominance had allowed it to raise its rates 7% to 15% year after year for commercials during prime time. But after falling from first to fourth place in the key demographic group of 18-to-49-year-old viewers, NBC on Thursday did what once would have been unthinkable: roll back its rates.

“They’ve crossed the barrier into the negative land,” said a top ad buyer, one of three sources who confirmed the rate decrease. The buyer asked not to be named because he was still negotiating deals with NBC.

NBC declined to comment.

Wall Street now expects the network, owned by General Electric Co., to take in $500 million to $600 million less than the $2.9 billion it reaped during last year’s so-called upfront market, the period when the networks sell the bulk of their prime-time commercial spots for the coming season.

Dropping ad rates on its flagship network could also hurt NBC Universal’s ability to hike ad rates for its cable channels, according to a report released Thursday by Mike Gallant, a media analyst with CIBC World Markets.

Walt Disney Co.’s ABC network is this year’s big winner, boosting its upfront haul by $500 million to $2.1 billion for prime-time entertainment programming. ABC, which raised its rates 4% to 6%, finished its sales earlier this week.

Viacom Inc.’s CBS and News Corp.’s Fox Broadcasting expect to wrap up the bulk of their deals today.

CBS, which made gains this year by attracting more 18-to-49-year-old viewers, said it had negotiated rate increases for next season of 4% to 6%. The network expects to finish the week with more than $2.5 billion in prime-time ad commitments, up $100 million from a year ago.

“The market went very well,” said Jo Ann Ross, CBS’ network sales president. “I’m sitting here with all of this money.”

Fox said it was garnering rate increases comparable to ABC and CBS, but CIBC’s Gallant said most of Fox’s increases were 2% to 3%.

Overall, the TV ad market appears softer and slower than in years past, in large part because prime-time ratings for the Big Four networks are near parity, with no one network having a clear advantage. That allows advertisers to shop around more.

In addition, several big spenders -- including automakers, pharmaceutical and consumer goods companies -- have scaled back on their network buys. So network executives have been forced to accept less money than they had hoped.