Meg James of the LA Times has written a piece detailing the tremendous decline in television adveritsing sales volume over the last two years; a decline that would seemingly mirror that of the American economy. The decline in sales volume has put significant pressure on the bottom-lines of America’s big television networks (FOX, ABC, NBC, and CBS) which have been forced to reduce the prices of advertising slots, even during prime-time hours.
Buckling under the pressure of a weak advertising market, the broadcast networks have cut prices for commercial time, a rare setback for companies used to commanding ever-higher prices. It shows how the 1 1/2 -year-long recession is finally catching up with the networks, which rely on a rise in ad revenue to cover the escalating costs of prime-time, news and sports programming.
The retrenchment marks the first time in years that ABC, CBS, NBC and Fox have failed to leverage their large audiences to boost ad prices during the industry’s annual bazaar for TV commercials. In previous years, advertisers grudgingly paid the higher rates despite years of declining ratings because the networks still delivered larger audiences than any other media outlet.
Network executives estimated on Thursday that this year’s sales volume would be down between 15% and 20% compared with last year, when the five English-language broadcasters, including the CW network, rang up a combined $9.2 billion in prime-time sales. That would put this year’s advance, or “upfront,” prime-time commercial sales around $7.5 billion — a level not seen since 2001. Networks declined to provide individual sales figures.
Payout Perspective:
The networks cannot afford to address this situation from a singular perspective, and thus they must evaluate other solutions in order to recover some of their bottom-line that has seemingly dropped out from underneath them over the last two years.
Cost-cutting is being looked at as one solution. In particular, a move from the expensive scripted television shows to unscripted or “reality” programming that is far more economical – and in some cases, a far greater ratings driver. Here’s where MMA enters the equation.
It’s quite possible that network television could become more receptive to the idea of MMA programming because of its cost effectiveness and the strength of its ratings in the crucial 18-34 and 18-49 year-old demographics. The sport has also demonstrated an unparalleled immunity to this latest economic downturn which is to suggest that the growth MMA has experienced over the last few years might be dwarfed by the growth to come – once some semblance of disposable cash can return to American household budgets.
The UFC is actively searching for a network partner and said to be “looking for the right deal.” If the latest negotiating concessions on the advertising front are any indication, the real deal may be just around the corner. Dana White has even go as far to acknowledge as much; saying last week, “I’m liking what I’m hearing now, more than ever before.”
This window of opportunity isn’t exclusive to the UFC, either. There are organization likes Strikeforce and Bellator that are looking to step up to the next level and initiate some of that corollary programming to boost the potential of future PPV dates – network TV would help.
CBS may now be far more willing to come to the table with Strikeforce and hammer out a firm date for the organization’s first appearance on network TV. Similarly, if the success of Bellator Fighting Championship on ESPN Deportes this spring is any indication of future potential, they may find their deal with ESPN will evolve.
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