• by July 9, 2001

As the dot-com advertising bonanza fades into distant memory, the just-concluded advertising market for next fall's TV season is sure to set the tone for other media sales through the rest of the year: slower, longer, and more stressful.

The major broadcast networks have mainly wrapped up their pre-season sales blitz, known in the industry as the "upfront," and the results are worse than many had been expecting.

Current estimates call for a total take by ABC, NBC, CBS and Fox of just under $7 billion, down about 14% from the $8 billion in commitments taken in at the same time last year. Many analysts had been predicting a drop of up to 10%.

It was the first major decline in a decade, but even so the spending numbers were in line with the levels of about two years ago, before wild spending by Internet companies and the booming economy flooded the advertising market with money.

"Last year it was a mass hysteria," says Jack Myers, chief economist and CEO of Myers Reports Inc., a leading media research firm. "Within days after networks announced their lineups, buyers just rushed right in. This year it was more methodical."

No one doubted the market for network advertising would be weaker this year -the question was by how much. Buyers and sellers of advertising couldn't agree on pricing at first, and for several weeks there was a standoff as networks insisted on keeping prices in line with last year.

NBC finally broke the stalemate by agreeing to buyers' demands for sizable discounts, and other networks followed suit. CBS insists that it held the line on its pricing, demanding higher rates because of its big rating gains with hits like "Survivor."

In the end, NBC agreed to discounts of about 6% of the costs to reach every thousand viewers, according to estimates from Merrill Lynch, while ABC, which had suffered a ratings decline from last year, discounted its rates 7%. CBS eked out a price gain of about 1%.

For many participants, this year's market was tougher to read since the adjustment was so great from the frenzied pace last year.

"I think the vendors had to go through a process of going through the negotiations before they saw how much money was being taken off the table," said Mel Berning, an advertising buyer for MediaVest Worldwide. "You've got more rational spending -They're not spending monopoly money any more."

While there was more haggling going on between buyers and sellers, the market also dragged out far longer. Last year the sales season was wrapped up in an amazingly short three days; this year it took more than a month.

The dropoff in the upfront market -where networks sell up to 85% of their fall season advertising in advance -bodes poorly for sales in other sectors of the media. Ad sales for cable TV are just getting under way, and industry watchers are also predicting double-digit declines there.

In recent weeks several forecasters have lowered their estimates for full year advertising spending, and many are predicting declines over last year. Zenith Media and Merrill Lynch both just cut their forecasts, predicting contractions of 2% and 0.7% in U.S. advertising spending.

With network advertising now mainly sold through the middle of next year, many companies are looking well beyond this year and well into 2002 before holding out any serious hopes for a turnaround.

"Things may not be getting any worse, but it still looks like we're scraping along the bottom," says Katherine Styponias, media analyst at Prudential Securities. "There aren't enough data points yet to say when we might see a recovery."

- The Associated Press