Posted on 05/20/2004 9:16:49 AM PDT by Pikamax
For Fox News, Ad-Sales Market Isn't Fair, Balanced
Despite Ratings Lead, Network Has Hard Time Winning Top Rates for Its Shows By JULIA ANGWIN Staff Reporter of THE WALL STREET JOURNAL May 20, 2004; Page A1
NEW YORK -- Paul Rittenberg, head of advertising sales for the Fox News Channel, got on the phone recently to counter a lowball offer. Chrysler wanted to buy nearly $2 million of commercials -- but at a cut-rate price of $8 per thousand viewers.
Mr. Rittenberg pushed for $11.98, almost a dollar below his original asking price. Chrysler turned him down. As he hung up the phone, Mr. Rittenberg said nervously, "I hope CNN didn't get it."
The haggling illustrates a frustrating paradox for Fox News. No longer a struggling upstart, it is beating Time Warner Inc.'s Cable News Network handily in the ratings. But in the peculiar market for television advertising, where the usual rules of supply and demand don't always apply, it has trouble commanding the same rates as its rival.
Attracting a large audience can often let a TV show charge higher rates, because advertisers place a premium on the ability to reach a large number of people at one time. That's why giant events like the Super Bowl or the final episode of "Friends" command such high rates.
But a large audience is not a guarantee of garnering premium prices. Media buyers say they generally pay Fox News ad rates that are about 75% to 80% of what they pay CNN -- even though CNN has only about half the audience of Fox News. And for all the inroads Fox News has made as a news organization, Mr. Rittenberg has to contend with advertisers who use CNN as a yardstick of quality.
Behind the disparity in pricing and perception is a vast TV marketplace guided by its own unusual dynamics. Unlike the stock market, where prices fluctuate minute by minute, the bulk of television ads are sold once a year during a period, starting this week, called the "upfront." The starting point for upfront negotiations is last year's price.
Since Fox News sold its ads for extremely low prices during its early years, and can boost them only incrementally each year, it must negotiate from a lower starting point than CNN. Similarly, CNN is negotiating from the high prices it established during its heyday as the only 24-hour news channel. Although Mr. Rittenberg has whittled down the price gap tremendously, he admits he hasn't been able to close it altogether. He says he hopes to reach parity during this year's upfront negotiations.
(Excerpt) Read more at online.wsj.com ...
The dirty little secret of corporate life is that these guys aren't raving republicans as the Dems would like to have us believe. Most upper management graduated from Ivy league style campuses, and the result is they're far more left than many people believe.
It's not the "big businesses" that support republicans (and buy ads on CNN). It's the small businesses.
There seems to be a problem in perception at fox.
I would think that if you can offer MORE of a BETTER product at a LOWER cost ......
What is wrong with accepting a 'low-ball' price (after some haggling) FOX would get more and more of the advertising dollars. Could it be that FOX is in collusion with the slime-ball 'alphabet' betworks to maintain price-fixing?
That would be the only reason to flatly refuse an offer...other than losing money on a deal of course.
Advertisers on CNN are not reaching me at all. I haven't watched it sing my cable got FNC.
sing = since
Dear P: Very interesting post. The audience size is obviously one of the measures for ad pricing, but wouldn't the amount of product or service sold be a factor as well. For instance, if CNN sells more cars per hour of advertising than Fox, it could charge higher. Doesn't someone somewhere keep track of those things for major advertisers?
Ad dollars are a legal form of political payoffs to leftie news organizations.
The ad rates may be smaller per thousand viewers, but the cost of the ads are actually more on Fox. Assuming 1 million views vs. a half million, if Fox is only getting $8 per thousand, while CNN is getting $12 per thousand, an ad on CNN would cost $6,000 while on Fox it would be $8,000.
It's not price fixing to try to understand what the market rate is and then charge that rate. It is price fixing if there is collusion between competitors to set that rate.
On, Off, or grab it for a Media Shenanigans/Schadenfreude/PNMCH ping:
http://www.freerepublic.com/~anamusedspectator/
OK, I get the whole "Behind the disparity in pricing and perception is a vast TV marketplace guided by its own unusual dynamics. Unlike the stock market, where prices fluctuate minute by minute, the bulk of television ads are sold once a year during a period, starting this week, called the "upfront." The starting point for upfront negotiations is last year's price." thing.
But I'm still confused by the "half the audience, for more dinars" thing. ;-)
Then there's that Orwellian "CNN-Airport", the continuously chattering voice in your ear that you cannot silence while you're waiting for a plane.
CNN's tentacles are widespread and have many markets in a death grip. It will take time to solve this problem.
Not really. Fox is banking on the hope that a different advertiser will buy the time at their asking price.
And stupid Chrysler will be paying more to reach fewer viewers. Shareholders should be angry.
That would be difficult to track. You would have to correlate the viewing habits of every consumer and the ads they actually saw to the products they buy. I couldn't even do this for myself.
"and the result is they're far more left than many people believe."
Which is truly telling about the heart of the left... they aren't as caring about their fellow man as many would have you believe either.
And if there is any doubt that upper mgt, etc at companies is not left leaning, just look at benefit packages at companies anymore.
Would you not pay more to advertise to a market that was easy to deceive? rather than one that was used to actually thinking about what they see and hear...
I see 4 dollars a share again in their future.
I rarely fly, but I was exposed to this a few weeks ago, and its Orwellian nature is devastating.
If I want my children to be exposed to propaganda, I can make that decision myself. But travelling should not REQUIRE me to expose my children to these b@stards.
You are quite correct. A simple rule of thumb is that the larger a corporation becomes, the more it comes to resemble a federal agency.
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