TV Upfront Puts Cable in Back Seat

As ad-sales season winds down, the big networks have more than hung tough.
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The broadcast networks held their ground and more this year in television's upfront ad season.

The broadcast networks have signed up billions of dollars in business for the coming prime-time season. Meanwhile, their cable siblings have been largely relegated to the sidelines by their softening ratings and perhaps unrealistic bargaining stance.

On the back of well-received programs and thanks largely to a decision to price its broadcast inventory favorably,

Disney's

(DIS) - Get Report

ABC was able to nab a greater number of advertisers and bigger piece of the $9-billion-plus pie this year.

Viacom's

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CBS has done $2.6 billion and generated more advertiser interest, while

News Corp.'s

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Fox brought in $1.6 billion, and

Time Warner's

(TWX)

WB and Viacom's UPN together are over $1 billion -- all seeing rate increases.

But it was ABC, with hit creative properties such as

Lost

and

Desperate Housewives

, that drew advertisers in droves. They committed to $2.1 billion this year vs. $1.6 billion last year, a 30% increase. That figure doesn't include the network's sports programming, which includes next January's Super Bowl, or other daytime programming revenue totaling hundreds of millions of dollars.

ABC Sales President Mike Shaw asked for modest increases of between 4% and 6%, a strategy that paid dividends across the board at the once-struggling network. If anyone was in a position to ask for more, it was Shaw and ABC. The network ended up making the market, and it was the cable vendors who have been overplaying their hands so far.

Cable networks are eager to make hay on declining broadcast viewership patterns and media buyers' lukewarm attitudes toward the big networks' programming. In recent times, cable networks have done their best to chisel into broadcast dominance by doing deals earlier. Typically, broadcasters write business first, followed by cable, and finally syndication TV deals are placed.

But cable hasn't gotten much traction so far, thanks to some declines in cable ratings for the past season and an awkward insistence on price parity with broadcasters.

"At the cable networks, anyone who had a tough ratings year is going to feel some pain," says one media buying company research president. "For example, TLC is writing very little business, because its ratings were down 40%."

"Cable is looking for more than they can realistically get at this point," says another media company executive.

Viacom's MTV Networks is champing at the bit to write business, but according to sources, it is looking for too much of a price increase, given its ratings. But one buyer says that the fact that MTV Networks is "looking at global deals and cross-promotion vehicles will help. Even though their numbers are down, they will do some good business across the board."

Disney's ESPN, Time Warner's Turner and Liberty's Discovery have seen ratings declines this season. Ultimately the market has to move, and once MTV and Turner start to actively deal, the rest of the cable market will follow.

GE's

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NBC, meanwhile, the last broadcaster to write business, has been playing a game of who-blinks-first with buyers who want to pay the network less because of significant prime-time ratings declines this past season. NBC will be down off its high perch for the first time in a decade this year, but execs have less need for an increase than they have had in the past. "If they offer 1% increases or flat rates, they'll start to do some business," said one buyer.

Overall, the broadcasting market appears to be healthier than some had anticipated, and cable still has a way to go to achieve parity with the big guys.