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Media titans say television ad recession nearing end

AOL Time Warner, Disney and Viacom seemed to have encouraging news last week. The ad recession that has done so much damage to media companies over the last two years is almost over, executives said.

"We're seeing early signs of a marketplace that's strengthened," Disney President Bob Iger told analysts.

But don't break out the champagne just yet. It's unclear whether the economy is really entering springtime, or whether media giants are posturing for the key upfront ad sales season.

This month, ABC, CBS, Fox, NBC, UPN and WB will unveil their prime-time programs for this fall. That kicks off weeks of often-frenzied negotiations in which they could sell about two-thirds of their best ad spots for the 2002-2003 season. Last year, that came to $6.9 billion, down 15% from 2000-2001.

Broadcasters say that upfront sales in prime time, as well as the price advertisers pay for each viewer, will be up by as much as 10%.

Prices for ads sold at the last minute in the scatter market are about 15% higher now than last year.

The market stabilized in November, "and there's been a big upturn in April," says Joe Abruzzese, president of sales for Viacom's CBS and UPN. "We're sold out for the second quarter. Last year at this time, we had $100 million to go."

But advertisers, who also have a stake in managing expectations, say the networks shouldn't get cocky. "We're predicting that demand will be pretty much flat," says Carat North America CEO David Verklin. "Prime-time ratings for the Big Four networks are down by 10%. Friends will be gone soon. Ally McBeal is gone. Where will the new shows come from?"

Some are more bearish. Jack Myers, who edits the Jack Myers Report, says broadcasters can expect a drop of 3.3%. "We've still got a generally weak economy," he says. "There's uncertainty about the Middle East, Venezuela and Enron."

Prices are up now, he says, because many advertisers yanked ads after Sept. 11 and are making up for lost time.

And most of that cash is flowing to CBS and NBC. Ratings have been so disappointing at ABC and Fox that they've had to give extra time to advertisers who bought spots in last year's upfront market, leaving the struggling networks with few slots to sell.

Whatever the outcome, the sales season could be a cliffhanger.

"Marketers are keeping money until the last minute," says Joe Mandese, who edits Media Buyer's Daily.

Omnicom CEO John Wren seems to agree. "From a client perspective, spending has really stabilized," he said Tuesday. "There are a number of clients ready to increase their spending, but no one wants to be first."


David Lieberman and Michael McCarthy, USA TODAY. May 1, 2002

Copyright © 2002 USA Today. All rights reserved.