The sharp run-up in broadcast TV ad rates has hit a speed bump: Automakers and other advertisers are making an abrupt and dramatic shift to cable.
Sources say broadcast ad rates during "upfront" bargaining - the annual period when advertisers start buying commercial time for the new TV season - are rising only 3 percent to 5 percent this year. Automotive spending on broadcast ad time is up slightly.
Talks between advertisers and the networks are continuing. But if the trend holds, networks will fall far short of the 15 percent rate increase they got last year.
There were double-digit rate increases in three of the last four years.
In 2003, advertisers spent a record $9.3 billion on upfront purchases with broadcast networks.
Meanwhile, cable TV continues to cash in.
Car companies and other advertisers are shifting money to cable because it lets them target specific audiences, auto industry officials say.
Networks are losing out because of shrinking audiences and sticker shock among advertisers. Last year cable TV passed the broadcast networks in total viewers.
Among automakers, Toyota, Hyundai and Mitsubishi are leading the move to cable TV.
Sources predict that upfront spending on all cable commercials will reach nearly $7 billion this year, up nearly 20 percent from 2003. One cable source says his network has sold as much as 80 percent of its upfront inventory, "with automotive leading the way."
An automotive source adds: "Cable spending has gone way up, and that has affected the major networks. When cable delivers similar ratings at half the cost, it doesn't make economic sense to stay in network."