NBC First to Cut Ad Rates in Upfront Stand-off

21 June 2001

In an effort to breathe some life into the upfront sales of fall TV ad time, NBC has lowered its rates – the first TV network to do so.

NBC has consequently sold about half its inventory; more than any other network but far below the 75%–80% usually shifted during the upfront season.

The rate reduction by NBC may prompt similar moves by its rivals. This year’s upfront has been prolonged – it usually finishes in early June – by a stand-off between networks sticking to their rates and advertisers with an eye on the economy refusing to pay them.

“All of the networks will now acknowledge that supply indeed outstrips demand – because they really haven’t until this week,” commented Dan Rank, managing partner of media buying shop OMD. Indeed, Viacom-owned CBS is now the only network actively resisting rate cuts.

NBC, however, has slightly more room to manoeuvre than rival networks. Having attracted the highest audiences for the all-important 18–49-year-old age group, it set higher rates in the first place, and so could make cuts and still bring in more money than competitors. “We had to give some price concessions to get an even bigger share of the market,” revealed NBC TV network president Randy Falco.

An alternative explanation is that NBC’s forthcoming schedule has not met with rave reviews from media buyers – lowering its rates first ensured that it would nonetheless gain a decent market share.

However, Keith Turner, NBC’s president of sales, warned media buyers not to expect many more cuts by the network: “Going forward, there will be fewer price concessions because so much of our important business has already been written.”

News source: Wall Street Journal