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TV Networks Brace For Declining Ad Sales

Dow Jones reports that U.S. television networks - CBS, ABC, NBC, and Fox - made their best efforts this week to wow advertisers with their fall programming lineups, but the hype may do little to boost advanced ad sales.

The TV ad market is changing, and the importance of the "upfront" ad market appears to be in decline. Cable, the Internet, and digital video recorders are challenging the dominance of the traditional 30-second TV spot. "The most obvious proliferation of new distribution platforms is increased leverage for advertisers, who now have more options when putting their budgets to work," Merrill Lynch & Co. analyst Jessica Reif Cohen said in a report.

But the question is whether the upfront market matters as much amid an onslaught of new media alternatives and resistance from advertisers. Traditionally, about 80 percent of broadcasters' advertising space is sold for the coming season at the upfront market, which takes place months before the shows are aired in the fall. The remaining inventory gets sold in the so-called "scatter" market, generally for a premium.

Some big advertisers are now indicating that they're not going to participate in the upfront ad market, a sign that the power is shifting to buyers. Johnson & Johnson, which spends an estimated $500 million on network TV ads, earlier this week told The Wall Street Journal that it will wait until August to make its media-buying decisions. Coca-Cola Co., which spends an estimated $191 million on network TV ads, said it was also considering skipping the upfront process.

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