Madison Avenue pulled hundreds of millions of dollars out of primetime TV and sent them to streaming venues in the industry’s recently completed “upfront” market, the latest sign that one of the media sector’s most stable mediums is in an era of severe flux.

Ad commitments for primetime broadcast TV fell 3%, to $9.595 billion, compared with $9.91 billion in last year’s market, according to Media Dynamics Inc., an advertising consultancy that tracks the upfront, when U.S. TV networks try to sell the bulk of their commercial inventory for their next programming cycle. Cable TV saw even worse erosion, with advertisers committing $9.52 billion for primetime TV, down 7% compared to the $10.23 billion in commitments secured last year.

In all, advertisers pulled 5% of the ad dollars they committed to primetime TV last year, with total primetime commitments falling to $19.12 billion for the 2023-2024 TV season, compared with commitments of $20.14 billion last year.

The big owners of TV networks were saved by their streaming assets. Ad commitments devoted to streaming totaled nearly $8.03 billion, up 31% from the $6.13 billion the media companies secured for broadband viewership last year.

In all, ad commitments for primetime TV and the streaming associated with it rose 3%, according to Media Dynamics, up 3% to $27.14 billion. compared to nearly $26.27 billion in 2022. The company estimated that advertisers placed another $10 billion to $12 billion alongside morning, daytime and late-night TV.

Streaming and linear TV are starting to become interchangeable in advertisers’ view, said Ed Papizan, president of Media Dynamics, in a statement. “What we are witnessing is both forms of TV content access — linear and streaming — coming together in the thinking of major national TV advertisers and their time buyers. TV is no longer thought of as being simply a combination of broadcast TV and cable, with various dayparts and program genres to meld together into a total TV buy. Now, streaming has come of age, with sufficient scale to be considered a third alternative, which is why the FAST and AVOD services scored sizable ad revenue gains despite their high CPMs. It’s all TV now.”

TV networks had to grapple with a weak market. Advertisers continued to threat about the threats of inflation and the possibility of a recession, and were not encouraged by the effects of the current Hollywood talent strike. Indeed, at a May upfront presentation, Fox was unable to show any scenes from new shows it planned to put on its next schedule.

To generate deals, the networks had to hold the equivalent of a fire sale. According to five executives familiar with recent negotiations, upfront talks called for CPM increases of around 5% for the strongest TV properties, like sports, and for rollbacks going as deep as -5% for weaker linear inventory and even for digital. Reductions in these rates, known as CPMs and used to measure of the cost of reaching 1,000 viewers, have generally been extremely rare, and offer a signal that the continued migration of viewers to streaming and digital-video options is eroding the marketplace leverage of both traditional TV companies and some of their new-tech rivals as well.

In a sign of how much weaker the market for TV advertising has become, TV networks in 2022 struck deals that called for CPM increases ranging from 8% to 12%.

Many of the TV companies claimed some form of victory, with Fox, Paramount Global and Warner Bros. Discovery all suggesting their overall total of ad commitments increased. Still, NBCUniversal and Disney, media companies with two of the biggest portfolios in the sector, noted that the commitments they secured were “in line” with the totals they had generated last year, and that much of their activity was centered around sports properties like the Paris Olympics and ESPN.

Should current strikes by Hollywood labor unions WGA and SAG be settled in the near future, the networks may have new cards to deal. An influx of new, original content in the fourth quarter — around the critical holiday season — could spur advertisers to invest in “scatter,” or advertising that is bought much closer to air date. TV networks generally seek to charge a higher price for such inventory.

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