Why have prime-time network TV advertising prices been so strong in the scatter market — up in the double digits — after a rather lackluster upfront in 2007?

ABC’s head of sales, Mike Shaw, offered a few answers for the discrepancy between the shorter term scatter market and the longer term upfronts.  But he said a lot of it can be blamed on networks selling advertising too cheaply in last year’s upfront.

Shaw said he’d rather see a far smaller gap in prices between the two markets. “I’d like to see less of a swing in the pendulum between the upfront market and the scatter,” he told reporters after ABC unveiled a very modest 2008-09 schedule.

This year, however, the networks could face a big pushback if they try to raise prices, given the state of the economy. Shaw, while saying it was too early to predict, nonetheless seemed relatively confident when asked about upfront pricing. “We don’t see a huge change in the short term,” he said of advertising budgets.

One reason is that Shaw believes it has been “proven again and again” that companies would do better to advertise their way through an economic downturn, rather than risk losing brand recognition and customers with marketing cutbacks. “It’s much wiser to maintain share,” he said.

As for timing of deals this year (some buyers are predicting a big slowdown), Shaw said ABC had talked with advertisers but that didn’t necessarily indicate actual deals would be reached more quickly or slowly than normal.

“We’ve had conversations, but that’s not new. If you wanted to go out and write early money, you could.”

(Photo: ABC)

For years we have interviewed media analyst/newsletter editor/industry maven Jack Myers about the television upfronts. We have tried to track him down at upfront parties, cocktail napkin in hand, to get his initial reaction on the new shows trotted out by the networks while he talks to the most senior executives. We have written up his forecasts and predictions on how many billions of advertising dollars the nets will say they have booked.

And now, in what may be the most definitive sign that more than 50 years of upfront fanfare has come to an end, Myers says he will no longer prognosticate on their outcome, according to an e-mail newsletter sent round today:

This year, I am not offering predictions nor will I report after-the-fact on network Upfront revenues. The Upfront is no longer a representative indicator of network performance and the information released by the networks is, at best, questionable. If a network ever actually reports poor performance in the Upfront, then we can be assured it was a disaster.

The change of heart makes sense given the total overhaul of the television industry. Networks are selling more and more advertising for shows not only when they appear on air, but on the Internet as well. A television writers’ strike over the winter that brought pilot production to a standstill means they have very few shows to preview to advertisers this year. The introduction of a new ratings system to account for DVR use has wreaked havoc on the numbers used to set advertising rates.

And of course, there’s the economy.

But we are definitely sad to hear this from Jack, whose predictions were so on target:

My own performance has generally been on-the-money, although last year I believed the market would be considerably softer than it, in fact, turned out to be.

Aside from the specific revenue forecasts, Myers does give general conclusions about the state of upfront negotiations. Based on his talks with industry leaders, he sees a reasonably quick haggling season that should end before the July 4 holiday weekend. He expects the networks to boost their CPM pricing and incremental revenue from their new digital distribution models.

(Photo: Reuters / ABC’s “Desperate Housewives” at the more festive 2007 upfronts)

Apple’s deal to start selling HBO shows will please fans of “Sex and the City” and “The Sopranos.” But will it open up a can of worms when it comes time for renewal talks with other TV show owners?

Since iTunes’s launch, Apple has stuck by a strict policy to keep pricing simple to attract new users. But seven years since its launch, it may be time to tweak the model. For years, content owners have demanded flexible pricing — perhaps charging more for some shows than others. What works for Wal-Mart, where bargain bins overfill with discount DVDs, will work on the Internet’s busiest content storefront.

With the HBO deal, Apple appears willing to explore the time-honored retail concept. A more flexible pricing policy could also bring NBC Universal back to the U.S. store.

Keep an eye on:

• Fox forms new branch to co-produce, finance and distribute local language films in Japan, Germany, India and Russia. (Hollywood Reporter via Reuters)
• Clear Channel settlement imminent. (WSJ)
• Dish Network posts higher profit, but subscriber growth slows. (Reuters)

Instead of a big, crazy upfront presentation at Radio City, NBC Universal this year invited advertisers and media to its Experience at 30 Rockefeller Center. Here’s a guided tour:

First off, you’re greeted by a TV screen featuring clips from NBC stars like Tina Fey and Brian Williams, who make some jokes and ham it up and basically tell you to move along, which you were really going to do anyway since you’re just standing there in the hallway.

There really isn’t a lot to see in the first few rooms (promotional videos, etc) except that walking around are a bunch of people dressed in all black with, if you can picture it, video screens on their chests.

The screens had games that you could play; one told you what character you’d be in “The Office,” and another asked you some trivia questions (I approached it like school, took some wild guesses and got two out of three).

Things soon picked up. First a screening room featuring trailers of some of the upcoming releases like “Momma Mia” and “The Incredible Hulk,” then a “Deal or No Deal” exhibit featuring the gameshow’s models walking about in sequined red dresses.

And later there was KITT, the car from Knight Rider; a couple huge American Gladiators doing battle with one of those stuffed medieval looking weapons; a mock voting booth (the computer was on the blink when I walked past, so nobody was actually casting a vote); dozens of TVs showing scenes from the Olympics; a Champagne bar.

Plus, there were a ton of giveaways, which usually please a crowd. Here’s what was pushed at me: USA Network M&Ms; a “Today” earth-friendly bag; a picture between two mummies (they don’t look very frightening, I look sort of confused); a little taster of duck and mushroom from the “Top Chef” booth; a “Friday Night Lights” button; a golf ball; a chocolate bar, and a football signed by Tiki Barber, John Madden, Cris Collingsworth, Jerome “The Bus” Bettis, and Al Michaels.

I also got a picture with Janice Dickinson, who was there promoting her show on Oxygen and inviting all comers to jump up on the stage with her and snap a photo. So I did. Why not?

Unfortunately, the picture didn’t take the first time, so I had to get back up on Ms. Dickinson’s stage for another attempt. She was very kind about it (”Oh, I screwed it up on purpose, so you’d come back,” she joked) though the scene was still a little awkward and I found myself wishing that I’d just skipped that particular stop.

But none of that — the entertainment, the giveaways, the shift away from the traditional upfront — means much in the end. What counts is not whether advertisers enjoyed the NBC Universal Experience, but whether they’ll hand over the big bucks for commercial deals.

(Photo of Rockefeller Center: Reuters)

Sirius Satellite Radio and XM Satelite Radio want the FCC to know that they are ready.

Like REALLY REALLY READY.

Sure, combined they racked up $230 million in losses in the first quarter. And they added 600,000 net subscribers, to make a combined total of over 17 million.

So what?

What everyone wants to know is when their proposed merger — you know the one announced back in the 1990s in February 2007 will finally close. After 15-months, the individual performance of each company, while important, takes a backseat to knowing when they can combine their efforts. Or,  should the deal fall apart, when they can go back to scratching and clawing for the next hot media property (like the “Dr. Phil Channel” or “The 24-hour World Series of Poker Channel.”)

Each company hosted 45-minutes-short conference calls and sent their respective CEOs up to the microphone to say, “We are Ready“, like the Father at a holiday feast proclaiming that the time has come to stop horsing around –he is about to carve the roast beast.

XM’s Nate Davis seemed to say, “You are great, but I hope this is goodbye.”

Let me just say while the process has clearly been a protracted one, we remain hopeful that we are nearing the end of the process and that this will be the last stand-alone quarterly earnings call we will have.

Sirius’ Mel Karmazin comments were a little more, shall we say, pointed.

This is our fifth quarterly conference call since we announced the merger and…

I share the sentiment I hear from many of you regarding the length of time it is taking to complete our transaction. It is almost 350 days on the FCC clock from when it was put on public notice. (Mediafile: He said the FCC usual mulling time is 180 days). We also share the outrage that some have expressed to me regarding press reports of opportunistic parties trying to take advantage of the process and extract value for themselves that properly belongs to Sirius subscribers and shareholders.

I am optimistic that we are getting close to the finish line and will be able to close the deal.

The only problem is, noone knows how close “close” is.

According to Cowen and Co. analyst Tom Watts, that could be, any day now… or not.

The next step toward an FCC approval will be an Order for Circulation issued by FCC Chairman Martin where he will circulate his recommendation and proposal to fellow Commissioners. While timing of this Order is uncertain, its importance implies that an FCC meeting is not necessary to approve the merger.

(Photo: XM CEO Nate Davis, XMRadio.com; Sirius CEO Karmazin, Reuters file)

In William Shakespeare’s play The Tempest, Prospero the exiled sorcerer frees the spirit Ariel from a tree. In much the same way, Ariel Investments has freed itself from a tree as well.

The Chicago-based investment firm reported in filings with the Securities and Exchange Commission that it no longer owns any shares in Journal Register Co, the publisher of 20-some newspapers in the United States, including the New Haven Register.

Ariel officials declined to comment on why they sold their shares, but perhaps it had something to do with the fact that Journal Register was recently delisted from the New York Stock Exchange after its stock belly-flopped amid a ridiculously bruising advertising sales climate.

Not only that, Journal Register said in a filing last week that it might violate its debt covenant by July 23, 2008 if it doesn’t amend its credit agreement or see a substantial improvement in its business.

Don’t blame Ariel for losing faith in a newspaper company, however. Journal Register’s stock was around $16 a couple of years ago, but recently it has bottomed at $0.16.

In somewhat more stable situations (Tribune Co, McClatchy Co), Ariel has stuck by its newspapers. But in the case of Journal Register, it’s hard to hang on when a stock price has fallen that far and the company could default.  

(Photo: Reuters)

It looks like Norman Pearlstine couldn’t resist the glamorous life of journalism. After two years in the private equity business at the Blackstone Group Carlyle Group (D’oh!), Pearlstine is joining Bloomberg LP as “chief content officer,” where, as Bloomberg said in a press release, he will work with “Editor-in-Chief Matthew Winkler to seek growth opportunities for its
television, radio, magazine and online products and to make the most of the
existing Bloomberg News operations.”

Pearlstine used to be the editor-in-chief of Time Inc for 11 years, and before that spent 23 years at The Wall Street Journal. More details on his CV, directly from the release :

He was the paper’s top news executive for nine years, serving as Managing Editor and then Executive Editor. He previously worked as the founding editor and publisher of The Wall Street Journal/Europe, the first Managing Editor of The Asian Wall Street Journal, and the Tokyo bureau chief.

Pearlstine was founder of Smart Money magazine and worked as an Executive Editor of Forbes. He is the author of OFF THE RECORD: The Press, the Government, and the War over Anonymous Sources , published by Farrar, Straus and Giroux in 2007.

We don’t know what to make of this. Our immediate questions:

- Will he succeed Winkler, with whom he worked at the Journal?

- Will he put Bloomberg into M&A mode?

- Will he work on an effort to take Bloomberg LP public? (This idea has come up at least once before)

Pearlstine wasn’t available for comment, so we’ll just publish our questions here and invite comments, but Bloomberg’s top editorial executive, Matt Winkler, did  call. Here’s a bit of what we talked about:

Q: Why Pearlstine?

A: Nobody brings as much experience in so many different ways as Norm does… Our hope is that Norm can give us a lot more awareness and guidance on ways we can deliver [our news] well beyond the Bloomberg.

Q: When did you first meet him?

A: The meet-and-greet was probably in the halls of Dow Jones & Co when I arrived in 1980, and he was the national news editor at The Wall Street Journal. People would point him out to me as a really important person you ought to know, so maybe on the way to the men’s room I was able to introduce myself. (They started working closely together in 1982 when Pearlstine was planning the European edition of the WSJ and asked Winkler to go to London)

Q: What do you think of him?

A: I would say that everything that I know that’s worth anything in this business, the news business, I can attribute to Norm.

Q: Does his new job at Bloomberg mean that you will retire?

A: I would hope that I’m just getting started, actually.  The first 18 or so years went by really fast. I think the biggest opportunities are ahead of us. I can’t wait to go at them with Norm at my side.

Q: By the way, is there a hiring freeze at Bloomberg?

A: Not exactly. The management committee at Bloomberg… saw what was unfolding with the financial world — they could see what was coming last July — and said, ‘what we want to do for the coming year is effectively freeze the headcount.’ (This does not mean that they are not hiring as people leave, however) We’re determined to find and identify and bring to Bloomberg the most talented, skilled journalists we can.

(Reuters photo shows Pearlstine on the left in his role as president of the American Academy in Berlin, German Chancellor Angela Merkel in the middle and former U.S. ambassador to Germany Richard Holbrooke on the right.)

(Disclaimer that you’ve probably read before: Bloomberg and Thomson Reuters are competitors in providing financial news and data.)

I did a phone interview last week with Kara Walsh, chief executive of Metromix, and learned a little bit about what the online entertainment guide is up to these days. Metromix is owned by Gannett and Tribune, the newspaper publishers and broadcasters that own, among other things, USA Today, the Los Angeles Times and Newsday.

Metromix is set up so that people who live in various cities where it is active can look up restaurants for reviews and locations, and perform similar searches for other entertainment information. The sites rely on users for contributions, as well as from hired help in the markets where it’s active.

Metromix is one of the “vertical” sites co-owned by the two companies, and just like quadrantONE, the national advertising network site for their local and national papers and TV stations, it is designed to help them reel in advertising as their print products see it decline.

Metromix has been active in Chicago for a while, but last year began its expansion into more cities. Walsh said the expansion — with the goal of being in 25 of the nation’s top 30 markets — is going according to schedule. Here’s what else I learned:

Number of monthly unique visitors according to:

- comScore: 951,164

- Nielsen: 1,149,000

Number of monthly pageviews according to:

- comScore - 8,052,000

- Nielsen -  6,655,000

Walsh said page views are up 37 percent, and unique visitors are up 25 percent.  Metromix won’t share its revenue, but it’s up 88 percent in the first four months of 2008, compared with last year.

Sites like these have to be kept full of fresh information in order to remain relevant. Does Metromix work for you? Let us know.

When Rupert Murdoch said the other day that he wasn’t investing in newspapers anymore, we assumed that he was being ironic, especially as it came in the same telephone conference call with News Corp analysts and reporters in which he said that he thought his agreement to buy Newsday from Tribune Co was all but sewn up .

That goes to show you what they say about assuming things.

The Wall Street Journal reported on Saturday , and we subsequently confirmed , that News Corp isn’t going to chase Newsday after all. Instead, it’s pulling its $580 million bid, paving the way for Cablevision to likely take over its fellow Long Island media outlet. New York Daily News owner Mortimer Zuckerman is in the race still as far as we know, but it’s hard to see how Tribune will take his $580 million bid when Cablevision has a $70 million sweetener on top of that.

Why? Apparently the economics were unjustifiable. What could that mean? The short list: Tribune’s quarterly financial results, which came out late Friday, show the company continuing to lose advertising revenue at its newspapers; media ownership laws might make it tough for Murdoch to take the paper yet keep his New York-area television broadcast licenses; and finally, a bid higher than $650 million is already a higher valuation for a newspaper than most sensible financial folks see as feasible.

That didn’t seem to bother Murdoch before. Here’s what he said on the News Corp earnings call (reproduced from our earlier blog entry ):

No, I don’t think Cablevision will prevail. Just be patient for a couple of days (inaudible). We’re certainly not in the business of getting into an auction here …

We’re hoping to wrap it up within the next week. And I don’t mean the end of next week, I mean within the next seven days … It takes two to agree. But we’re at a pretty advanced stage. I’ll just leave it at that at the moment.

Here’s what he subsequently said at the Time 100 dinner later that week, according to the New York Observer (whose owner Jared Kushner also was interested in bidding, though a source close to Kushner Properties told us recently that he has no idea what he wants to do about a bid right now — we’re guessing nothing):

“Yeah, I might have gone a little too far saying it was a certainty,” he told The Observer. “I was telling the truth, but you don’t know until …”

Until Saturday.

One thing you can bank on next week is that the TV networks won’t be showing off dazzling pilots of new shows at the upfronts, as we highlighted in a preview.

Executives have made no secret of the fact that pilots are costly, and, it seems, not all that useful. Already, NBC previewed their season with little more than a few very, very short clips. CBS, ABC and Fox aren’t expected to offer a whole lot more.

So what do advertising buyers think of this brave new world without pilots? Are they and their clients comfortable shelling out big bucks without seeing a full episode of a new comedy or drama.

Here’s what several had to say on the subject:

Aaron Cohen, Director of Broadcast at Horizon Media:

It worries me, but it’s similar to when replacements are made for programs that aren’t working.

It hasn’t been for a while that you’ve been able to lay down a schedule and say ‘This is what I’m buying and it’s going to be there for four quarters.’ You know you want to reach this particular demographic and you know they have an affinity to watch these forms of programming more than others. That’s what you’re looking for.

   
Stacey Shepatin, Senior Vice President, Director of National Broadcast at Hill Holliday:

It always makes you feel better when you can see the full pilot. The goal will be to be able to see a full episode to make sure that it is appropriate for our brands, there are no content issues and the storyline fits with what our consumers are looking for. So that will all come into play when we look at what shows to purchase.

You’re not going to just run blindly into something, you’re going to want to see what the production quality is, what the storylines are, all of that.

Donna Wolfe, Chief Negotiations Officer at Universal McCann:

The interesting thing is for years we were able to view new pilots. but the failure rate for new shows was extremely high. On average, 70 percent of the new shows fail. All the testing that the networks do, and all the pilots, it doesn’t necessarily spell success.

But I think we have to be comfortable that the content will be appropriate for our clients. It’s in their best interest and the network’s.

(Photo: Reuters)