"The pricing proposition won't change until you have a change in the demand," said Tim Spengler, director of national broadcast at Initiative Media. He was joined in the panel by two analysts and two network executives during the opening session of the two-day Media Summit in Manhattan.
Spengler said that advertisers respect network TV for its ability to build brands despite declining ratings. He said that in 2004, network television remains an agency's first stop, and is still the lion's share of the media buy.
David Poltrack, executive vice president of research and planning at CBS, said that since 1980, network television's composite growth rate has been about 7 percent a year, with some up years and some down years. Three years ago, for instance, was a down year.
"This wide discrepancy about pricing is a phenomenon of just about a year or two," Poltrack said.
He added that a lot of the money of the past two years had been moved out of the scatter market, where prices were significantly higher than if advertisers had bought ahead of time at the upfront.
"You saved money if you moved money from scatter to the upfront," Spengler agreed. But he didn't agree with Poltrack about the cost differential, particularly as cable TV gains market share against broadcast TV. "That differential is growing each year, where the ratings differential is shrinking."
Mike Shaw, executive vice president of sales at ABC, said that his network's sales executives have gone back to the basics in presentations with agencies and advertisers. In the past four weeks, the focus has been on answering the question: why buy network TV? Shaw said that about 95 percent of the presentation doesn't meet with any question from buyers and clients.
"Clients are voting with their checkbooks based on what they think will build their business," said Initiative's Spengler.
Stefanie Kane, a partner in the entertainment and media practice at PricewaterhouseCoopers, said that fragmentation has been challenging cable networks, who are trying to get more ad dollars. In the current climate, broadcast networks will benefit.
"There's nothing comparable out there," she said.