NBC Ad Sales Said to Be Less Than in 2004

As expected, NBC finished its spring advertising sales drive with less than $2 billion in prime-time advertising commitments, network sources said Monday.

The General Electric Co.-owned network was the last of the Big Four to complete its sales, which totaled about $900 million less than it secured in 2004.

For years, NBC had been the market leader, raking in hundreds of millions of dollars more than rivals ABC, CBS and Fox Broadcasting. Its decade of dominance, particularly on lucrative Thursday nights, allowed NBC to command the highest ad rates in the television industry.

“That worked against them this year,” said Steve Grubbs, chief executive of ad-buying firm PHD North America. “Their rates were 5%, 10% and even 20% higher than the other guys, and it was hard to justify those kinds of prices -- particularly now that they are the No. 4 network.”

Last year, during the annual “upfront” advertising market, NBC was in first place in prime-time ratings in the key advertising category of 18-to-49-year-old viewers. But last month when the market opened, the network had dropped behind its rivals.

In an interview, Randy Falco, president of NBC Universal Television Networks Group, declined to confirm sales totals, but he described NBC as “still healthy.”

“The ‘Today’ show and the ‘Tonight Show’ are still No. 1, and we’ve been No. 1 during twelve of the last 18 years,” Falco said. “We’ll continue to work at it.”

Ad buyers said NBC initially asked for 2% rate increases, even though its prime-time ratings had dropped 17% among 18-to-49-year-olds. Advertisers balked. They said NBC eventually cut its rates to 3% lower than what it charged last year.

NBC ended up selling less of its commercial inventory than it had in past years, when it sold about 80% of its prime-time spots. This year, sources said, NBC sold a little more than 70%.

The network is gambling that one or two of its new fall shows will take off, allowing it to charge more in the fall.

Several advertisers said they had withheld money from NBC, with one buyer estimating that her firm bought 60% less NBC ad time this year than last year. Some buyers credited Viacom Inc. co-President Leslie Moonves with affecting the way they viewed NBC. During CBS’ presentation of its schedule, Moonves detailed the steep declines of NBC’s Thursday-night shows, adding: “And they just renewed the entire night.”

Wall Street has closely monitored NBC’s predicament. Merrill Lynch analyst Jessica Reif Cohen noted in a recent research report that NBC was “widely viewed as having little negotiating power in this year’s market.”

“It’s going to be tough for NBC, but it’s not insurmountable,” said Brad Adgate, research director for ad-buying firm Horizon Media. “It’s not like they’re in distant fourth place. It’s become a very tight race.”