• by May 3, 2002

The annual advertising-media mating dance is about to begin, and murmurs of hope are emerging that the worst may be over.

Network executives began their posturing on Thursday ahead of the "upfront," where ads are sold in advance of the coming fall television season, by painting a cautiously optimistic picture of the advertising market.

"We're feeling relatively bullish," said Thomas Staggs, chief financial officer of Walt Disney Co. (DIS) at a Banc of America media conference in New York. "Signs are positive but it's too early to say exactly what until it comes out. I think there will be single-digit pricing increases in the offing."

The upfront, which starts later this month, should be telling of the state of the advertising industry after it suffered the worst slump in recent history in the last year.

Many executives have taken a conservative stance lately, looking to set low expectations and outperform rather than raise expectations and fall short.

Several media executives have declined to offer detailed long-term forecasts, afraid of disappointing Wall Street and seeing their shares pummeled further if they are dealt an unexpected blow. Many had not expected the ad slowdown to last as long or be as severe as it has been.

"We are seeing a lot of good signs but I would like to have more time on those signs before I call a trend," said Viacom Inc.'s (VIAb) Chief Financial Officer Richard Bressler at the conference. He said he would call the increases a trend if they continued for a month or two.

On the radio side of Viacom's business, Bressler said second-quarter advertising revenue would be up. The company saw lower single digit revenue growth in April and was on track for better than that at upper single digits growth for May in the radio part of its business, Bressler said.

RADIO AD BUYING INSPIRES CONFIDENCE

Bressler said he was seeing the same signs of low single digit revenue growth in television as well, but the growth was not as strong as in radio. Advertisers were coming to the company and talking more about one to three month media plans rather than just a week ahead, Bressler added.

"What gives us a level of confidence is that it's not just absolute radio dollars, but how they are buying," Bressler said.

In its earnings conference call, Interpublic Group of Cos. Inc. (IPG) Chief Executive John Dooner characterized upfront negotiations as much more vibrant.

A broad group of industries was buying ads, including autos, pharmaceuticals and retails with some business from travel companies beginning to pick up, Bressler added.

"Visibility has improved a little bit," said Fox Entertainment Group Inc. (FOX) Executive Vice President of Investor Relations and Corporate Communications Gary Ginsberg at the media conference. "We are seeing buying much earlier than we were seeing six months ago."

The comments were in line with what Jack Myers, editor of the Jack Myers report, said he was hearing from the sector.

"Overall, it's going to be one of the most complicated (upfronts) in history," Myers said. "Each network has some real issues. Not everyone can win in this market. Strategy is going to be difficult."

Myers said NBC would have to replace the Olympic dollars it saw last year while ABC and FOX were dealing with ratings erosion. CBS would have to take advantage of its recent ratings growth and demographic improvements.