ABC cuts Oscar ad rates

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Last year a 30-second commercial could command as much as $1.8 million. Now, just days before the broadcast, individual spots have been selling for $1.4 million to $1.7 million.

This year, Oscar is a little less golden.

The ABC network, in a move that reverses years of escalating prices and underscores the worsening economy, has shaved the cost of a commercial for Sunday’s annual Academy Awards show, one of TV’s most-watched programs.

Once considered invincible to downturns, big events such as the Academy Awards and the Super Bowl, which attract tens of millions of viewers, can no longer command automatic rate hikes. NBC in January found itself peddling unsold commercial inventory in the Super Bowl just days before the big game. It even had to slash rates to attract last-minute sponsors.

Last year ABC sold commercial time in the Academy Awards show for as much as $1.8 million for a 30-second ad. Now, with the recession in full swing on top of five consecutive years of declining Oscar ratings, ABC has had to lower its rates. Individual spots have been selling for $1.4 million to $1.7 million.

The telecast should generate about $68 million in revenue for ABC, according to TNS Media Intelligence, which tracks ad spending. But that would be a 16% decline from last year, when the show yielded $81 million in revenue.

“It’s more than just the economy,” said Peter Sealey, a marketing professor at the Peter Drucker Graduate School of Management at Claremont Graduate University and a former movie industry executive.

“The academy has a problem here. The show is way too long, and the films this year are not spectacular,” he said. “If this year’s ratings are down, it could be the tipping point and they will have to make changes.”

In recent years, the Walt Disney Co.-owned television network could bank on about $15 million in profit from the one-night extravaganza. The show’s producer, the Academy of Motion Picture Arts and Sciences, benefits too. Advertising revenue from the show underwrites the organization’s activities, which include industry archives for scholars and educational events for the public.

Several longtime Academy Award sponsors, including troubled General Motors Corp. and L’Oreal Paris, bowed out of this year’s telecast. So did Dove soap. American Express Co., traditionally one of the biggest advertisers in the Oscars, purchased only one spot. American Express, like other large financial firms, has been pulling back on promotional spending.

Read More at LATimes