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If These Shows Are Hits, Why Do They Hurt So Much?


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IF THESE SHOWS ARE HITS, WHY DO THEY HURT SO MUCH?

As network viewers defect, advertisers may not foot the big bills

To understand the state of play in TV Land, look no further than the kids' market. Normally, the annual negotiations to set ad rates for children's network TV shows wrap up in February, with over 90% of all the ads sold. But at the end of March, as a crush of new channels from WB to the new Fox Kids Network were depressing ratings, many advertisers were still waiting for ad prices to sink lower. "The market is soft. Why should we rush into it?" says Bill Croasdale, president of Western Media International, which buys ads for clients that include Home Depot, Acura, and Walt Disney.

Not surprisingly, it is with some apprehension that the TV industry is heading into this year's so-called prime time "upfront market," where networks trot out their shows for September and advertisers line up to buy as much as half of the networks' $14 billion in advertising time in advance. This year, the line isn't expected to form so quickly. Network ratings are down once more. And just as in the kids' market, primetime is packed, with cable channels such as USA and TNT and upstart networks like WB. Today, just over half the country's 97 million homes tune into NBC, ABC, CBS, and Fox, down from 75% only eight years ago. "From where I am sitting, it looks like a buyers' market," says Croasdale.GRIM SPRING. Meanwhile, the networks' programming costs are spiraling after a winter of heavy bidding to win the rights to air such programs as National Football League games, ER, and Mad About You. The likely result: plummeting earnings. Merrill Lynch & Co. analyst Jessica Reif Cohen expects operating earnings for the Big Four to plummet 68% in 1998. Only CBS will show an improvement, and the network will still post a loss.

Prices for the upfront market won't be determined until late May. But already, the maneuvering is starting. NBC, trying to offset the $13 million it's paying for each ER episode, is said to be asking $650,000 for a 30-second spot. ABC, CBS, and Fox are asking for 20% hikes for spots on their football telecasts to help pay for their $18 billion, three-year deal with the NFL. However, odds are the networks won't get that much. Instead, networks will likely use the ultra-expensive shows, such as ABC's Home Improvement, as loss-leaders to prop up or promote other shows.

The Big Four began courting advertisers in late March with flashy cocktail parties and video clips of pilots in development. NBC is mulling which show to use to rebuild its Seinfeld-less Thursday night lineup, while ABC is overhauling huge pieces of its still-struggling prime-time programming. CBS is developing sitcoms with an eye to younger viewers starring such actors as Melanie Griffith and Arsenio Hall, while Fox hopes to reverse a 10% drop in its ratings with a futuristic animated show from Matt Groening, creator of The Simpsons.DUELING DOCS. But even if all the shows work, the competition is gaining. Cable, which last year sold $2.4 billion worth of ads in the upfront market, has near-network ratings with shows such as Comedy Central's South Park, which command $70,000 for a 30-second spot. And by September, the TNT cable network will be showing reruns of ER five nights a week, including a planned Thursday night airing opposite the NBC original.

The Big Four will have other competition this fall. Univision, a Spanish-language network, took $200 million last year in upfront ad buys and will likely do better this year. Meanwhile, ratings at WB have exploded, gaining 27% on the strength of a Tuesday night lineup that includes teen hits Buffy the Vampire Slayer and Dawson's Creek. The latest Beverly Hills 90210 wannabe, Dawson's Creek, has been able to sell 30-second spots for an impressive $200,000.

Despite their ratings slide, network executives still think they can negotiate rate hikes. "Our strength will always be that we can deliver more eyeballs," says Joseph D. Abruzzese, president of network sales for CBS. NBC Chairman Robert C. Wright made the same point to reporters in January, just after he plunked down $850 million for three years of ER. That was right after he opened his remarks by getting down on his hands and knees in a mock prayer to ask the TV gods to deliver Helen Hunt and Paul Reiser for another year of Mad About You. They did, and it cost Wright $2 million a week for the two stars. His next prayer should be for the networks' ratings to perk up.By Ronald Grover in Los AngelesReturn to top


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