Super Bowl Ads Selling for Record $2.4 Million
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News Corporation’s Fox television network is charging a record average of $2.4 million for advertisements on the Super Bowl in February, 6.7% more than last season’s National Football League championship game.
Anheuser-Busch, maker of Budweiser and Bud Lite beer, is buying 10 of the game’s 58 30-second commercial spots at that price, said Tony Ponturo, vice president for global media and sports marketing at the St. Louis-based company.
The February 6 Super Bowl may generate $139 million in revenue for New York-based Fox, based on that rate, and help the network boost sales as viewers spend more time on cable TV, the Internet, and video games. The Super Bowl has been the best-rated TV show every year since 1995, giving advertisers an opportunity to appeal to a mass audience, Mr. Ponturo said.
“It’s the brightest of bright lights,” he said. “The Super Bowl always draws giant ratings in this fractionalized market.”
Fox’s president of sales, Jon Nesvig, declined to comment on the price for the ads.
Fox, the fourth-ranked network in audience ratings, had sold about 90% of its Super Bowl ads as of yesterday, said an ad buyer at McKee Wallwork Henderson in Albuquerque, N.M., Karen McCallum. Ms. McCallum said she has negotiated ad purchases on the broadcast for clients she declined to identify.
News Corp.’s television unit, which includes Fox, company-owned TV stations, and the STAR TV network in China, accounted for 19% of the parent company’s $5.19 billion in revenue in the quarter ended September 30.
News Corp. shares fell 7 cents yesterday to $19.15 in New York Stock Exchange composite trading.
PepsiCo Inc., based in Purchase, N.Y., and Visa International in San Francisco are also buying Super Bowl advertisements, Ms. McCallum said. Closely held GoDaddy.com, an Internet domain name registration firm, is among the companies advertising during the broadcast for the first time, she said.
The Super Bowl’s average ad price will probably rise as game day approaches because advertisers may be willing to pay more for scarce spots, Mr. Ponturo said.
The broadcast rotates between Viacom’s CBS, Fox and Walt Disney’s ABC. The 2006 game, to be played in Detroit, will be on ABC.
Super Bowl ad prices have risen each year since the January 2002 game, when lower demand for advertising after the September 11 terrorist attacks cut the price 4.8% to $2 million from a year earlier.
In 2003,the price rose 5% to $2.1 million for commercials on ABC’s broadcast. CBS charged $2.25 million, a 7% increase, for spots on the 2004 game between the New England Patriots and the Carolina Panthers in February.
The 2004 program drew the highest Super Bowl audience ratings since 2000, with 41.4% of the 108.4 million American households with televisions tuning in.
The broadcast was marred by a halftime show during which singer Janet Jackson’s breast was exposed, prompting 200,000 complaints to the Federal Communications Commission in the first week after the game. Viacom is fighting a proposed $550,000 indecency fine by the FCC.
“I have ensured that all my spots have in-game placement and could not possibly fall into the halftime show,” McKee Wallwork’s Ms. McCallum said.
The NFL is completing the seventh year of an eight-year, $17.6 billion contract with Fox, CBS, ABC, and Disney’s ESPN cable channel to broadcast football. Fox is paying $550 million a year for its portion of the agreement to broadcast games.
News Corp. loses money on its direct investment in football, said Paul Kim, an analyst at Tradition Asiel Securities in New York. The broadcasts let the company package ads for other programming and promote DirecTV Group, the satellite-television service it owns a 34% stake in, Mr. Kim said.
“You kind of use it as a loss leader to solidify your other more distribution oriented businesses,” said Kim, who rates News Corp. shares “hold” and doesn’t own them.
Last month, the NFL agreed to a six year extension through 2011 of its Sunday afternoon television broadcasts with CBS and Fox. CBS will pay $3.7 billion to continue to broadcast American Football Conference games, while Fox will pay $4.3 billion to retain the National Football Conference games.
The NFL last week said it’s still in negotiations for the prime-time packages on Sunday and Monday nights, games currently shown on ESPN and ABC.
“Fox has grown tremendously by its emphasis on big league sports,” said Peter Jankovskis, research director at Lisle, Ill.-based Oakbrook Investments, which manages $1.1 billion, including shares of News Corp. “Some popular programs have benefited from their initial launch on the Super Bowl.”