Buyers: 'Healthier' Upfront Market 20%-50% Complete

Top-Performing Networks Getting Bulk of Spending

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NEW YORK ( -- The upfront market is in full swing, and buyers suggest the market is anywhere from 20% to 50% complete, with marketers focusing the bulk of dollars at top-performing networks.

News Corp.'s Fox and Walt Disney's ABC have been setting the market, with Fox in some cases securing price increases in the low double-digit percentage range in the cost of reaching 1,000 viewers, according to a person familiar with the matter. (A Fox spokesman said executives were not available for comment.) ABC has already been able to secure price increases of around 9% in the cost of reaching 1,000 viewers, or CPM.

Media buyers say the market is "healthier" than expected, with one executive noting that budgets that came in "at the tail end of the budget window" actually "ended up being higher than many people expected them to be. Certain categories are actually more robust than anyone had anticipated."

To the winners the spoils
With the threat of a recession looming and broadcast networks experiencing massive erosion of ratings, buyers were expected to keep a tight hand on the purse strings. The pressure to keep spending down still exists. What seems to be happening is that advertisers are focusing their spending on better-performing outlets, rather than sprinkling dollars far and wide.

Indeed, according to executives on both sides of the table, marketers seem to be putting more money on media outlets with proven records and programs, and taking dollars away from those venues with difficulties. The CW, the fledgling network co-owned by Time Warner and CBS Corp. and which has had noticeable ratings difficulties, is seeing dollars fly elsewhere to cable and perhaps even other broadcast outlets, media buyers said.

CW has gone into upfront negotiations with some uncertainty hanging over it, as its Sunday night programming was turned over to an independent company. A person familiar with the situation said the network is seeing "strong" demand for programs such as "Gossip Girl," "90210" and "America's Next Top Model," and sees wireless, movies, retail and health and beauty leading the way in discussions.

Meanwhile, CBS Corp.'s CBS network and General Electric's NBC are believed able to secure CPM increases that tuck underneath what ABC has been able to get.

Impact might be felt in scatter
Networks may be trying to drive volume, suggested Ed Atorino, a media analyst with The Benchmark Co. "They like to get in as much dough in the till as they can early, and then cross their fingers," he said, adding: "The fact that there's a lift in price is a little bullish in the short run." If the economy continues to stutter, he said, networks may find less demand for scatter, or ad time booked on an as-needed basis, later on in the year.

Indeed, one buyer suspects that some scatter money may be coming into the upfront market, leaving open the question of whether the networks will see volume for the year move upward or not. Other marketers may be feeling positive about their prospects and want simply to lock down prices now, this buyer said.

Certain categories of advertisers were looking more solid than expected, according to buyers. Movie studios, pharmaceutical makers and even the beleaguered auto category are turning in healthy budgets, according to one buyer, with the auto makers taking dollars previously earmarked for local markets and moving them into national.

Certain cable outlets are being quite aggressive, sensing that the time to strike against broadcast rivals is nigh. Broadcast networks have suffered ratings erosion and, thanks to a recent Hollywood writers strike, have a distinct paucity of brand-new programs to roll out in the fall.

Turner's premium package
Time Warner's Turner has begun to write business, one familiar with the matter said. Separately, buyers said Turner has offered a package that it touts as a replacement for broadcast time. The theory is that marketers would get ad time in the best of Turner's programs -- which could include "The Closer" and new fall show "Raising the Bar," but none of the lesser-performing slots in other dayparts and programs. Turner has sought a premium for this package, media executives said, and it's not clear that buyers like the price yet.

Upfront money represents commitments to purchase advertising, but can easily be repurposed or withdrawn depending on the ultimate lineup on a network's schedule. Networks typically sell 75% to 80% of their inventory in the upfront market, but most network ad-sales executives say they focus on their year-end revenue and profit, not their upfront take. Most analysts use the upfront as a means of tracking advertisers' interest in TV advertising, not as a sign of revenue flowing to the networks' parent companies.
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