TV ads on a stronger footing than last year

The biggest US TV networks locked in about $8.7 billion (Dh32 billion) in advertising commitments for the season starting in September, an 8.1 per cent increase that would have been bigger without signs of a weakening in the economy. CBS, owner of the network with the largest overall audience, commanded the highest rate increase, averaging 13 to 15 per cent, said a person familiar with the results. Comcast's NBC, Walt Disney's ABC and News Corporation's Fox raised prices from nine to 11 per cent, according to people not authorised to speak publicly. The advertising market was the best in years, said Michael Morris, an analyst with Davenport and Co in Richmond, Virginia. The results met his expectations and would have exceeded them if not for economic reports of rising unemployment and concern over housing prices that unnerved advertisers in recent weeks. "In general, the networks asked for the moon and they got very healthy increases," Morris said. "It just wasn't ahead of expectations." Overall sales rose from about $8.05 billion last year, based on amounts provided by people familiar with each network's results. Advertisers make commitments ahead of each television season, setting a benchmark for rates. The pledges can be altered based on factors including schedule shifts and options advertisers can exercise to pull back on spending. CBS was said to receive $2.65 billion in prime-time commitments, up from about $2.5 billion last year. ABC's haul increased to about $2.4 billion from $2.2 billion, and NBC took in about $100 million more than last year's $1.6 billion. The network had fewer slots available for upfront sales this time because it will carry the 2012 Olympics from London. Fox, which programmes two hours of prime time each weeknight, a third than its rivals, was said to receive $1.95 billion in commitments, up from $1.75 billion. The network, the leader in the 18-49 age group advertisers target, finished its sales last week. Advertisers are on stronger footing than last year, said David Bank, an analyst with RBC Capital Markets in New York. "The networks exceeded expectations, especially CBS, from what the Street expected a month or two ago," Bank said. "And they achieved these increases in a very fragile macro-economic environment, making it even more impressive." Home prices in 20 US cities dropped in March to the lowest level since 2003, according to the S&P Case-Shiller Index report on May 31, a sign that housing remains mired in its slump almost two years into the economic recovery. The US jobless rate rose to 9.1 per cent in April from 9 per cent, Labour Department data showed last week. "The macro environment showed signs of getting weaker, and I believe advertisers were coming back saying, ‘We're not going to overpay,'" Morris said. The networks also risk losing viewers if the National Football League and the National Basketball Association can't resolve contract disputes with their players that threaten to cancel their coming seasons. While games air mostly outside of primetime, the networks rely on them to promote their entertainment lineup to younger, male viewers. The US entertainment and media industry last year grew 3.1 per cent, its first gain since 2007, as marketers returned to advertising on-line and on television, according to the accounting firm PricewaterhouseCoopers LLP. The US media sector, which includes movie studios, TV networks, radio stations, newspapers and the Internet, will grow 3.5 per cent this year, New York-based PWC forecast in its annual industry overview. On-line advertising and web access, pay-TV subscriptions, billboards and movies will lead the industry to mid-single-digit percentage gains between 2012 to 2015, PWC said. Spending on recorded music and newspapers will be lower in 2015 than in 2010. Overall growth will average 4.6 per cent compounded annually, with sales rising to $555 billion in 2015 from $443 billion in 2010, according to PWC's report. Digital products will account for 59 per cent of worldwide growth in the media industry during the next five years, while they contribute about 25 per cent now, PWC said. In the US, digital products will account for 29 per cent of entertainment and media spending in 2015, compared with 21 per cent last year. US advertising spending climbed 5.4 per cent in 2010 after declining 14 per cent in 2009, PWC said. From / Gulf News