NBC Says Sales Are Up. Good Luck Figuring Out The Real Story

Here's a head-scratcher: NBC, the 4th-place network, has seen ratings drop 15% in the last year. But it claims it just booked $1.9 billion in up-front advertising for the next year -- a 5% bump.

So that must mean advertisers have a whole lot of faith in NBC for the coming year, right? Not so fast. Like all upfront claims -- and we'll be hearing a lot of them in the next few weeks -- NBC's purported sales numbers don't really have much to say about the network's prospects. Consider:

• The figures thrown out refer to commitments -- not binding contracts. Look for some advertisers to cancel later in the year if the slowdown/recession/whatever continues.
• NBC's ratings drop means it has to sell more of its overall commercial time in advance to bring in the extra dollars. The network claims it sold 80% of its total inventory -- 4% more than last year.
• More inventory sold in advance means less held back for the last-minute "scatter market", where ad rates have been 20% to 40% higher. NBC says that decision is a hedge against a worsening economy. Fair enough, but that ultimately means the network has lowered the ceiling on potential revenue.
  
• Multiple sources tell us that some ad money is moving away local "spot" advertising to national ads: Which means that while NBC's network dollars are up, some of its local stations are taking a hit.

So what will this really mean for NBC? Hard to say. The network is a division of NBC U, which is a unit of GE, which means it's harder to learn about the network's performance than rivals CBS (CBS), Fox (NWS) or ABC-Disney (DIS). But none of the networks' self-reported numbers that come out this time of year are hard to take seriously, and few on Wall Street or Madison Avenue do. "I stopped believing the numbers a long time ago; they really don't have much meaning," one prominent buyer tells us.

And the truth is, many at the networks themselves agree with that sentiment. They'd prefer not to have release, and then justify, sketchy numbers. But it's a hidebound tradition, so you're going to hear them, anyway -- you just don't have to pay attention.

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