An increased demand for fourth-quarter inventory in this year's upfront sales period meant many networks -- broadcast and cable alike -- sold out a higher level of inventory than usual. And what's behind media buyers' early gift wrapping of their budgets? Commercial ratings.
This year's preferred "C3" metric, (the new moniker for commercial live-plus-three-days time-shifted viewing), has been more of a boon than a burden for networks, which were faced with an overall decline in live ratings and an increased amount of live viewing in DVR-enabled homes going into this year's upfront. But with a significant amount of fourth-quarter scatter dollars shifted to this year's upfront, the price for those last-minute holiday ads could be higher than in previous years. As one key broadcast sales-executive said, "Fourth [quarter] is going to be tight."
David Levy, Turner entertainment's head of sales, said the strength of this year's upfront market could be chalked up to demand outweighing supply, due to a variety of circumstances. "There was a currency change; scatter dollars moved into the upfront marketplace; there's political campaigns and the Olympics next year. Budgets were up. All that played as a factor."
At the end of last week, the cable upfront was expected to be 80% wrapped up, with the marketplace predicted by several key executives to come in at $6.7 billion, up at least 3% from last year's $6.5 billion take. Syndication is also nearing an end, with executives reporting a 3% overall increase to $2.06 billion.
This year's $9.1 billion broadcast upfront was up about 5% from last year's $8.95 billion overall take. In total, the TV industry booked nearly $18 billion in this upfront.
In line with broadcast
For both cable and syndication, the cost-per-thousand viewers rates and predominance of the C3 currency are in line with what the broadcast networks wrote last month. But many cable networks did a handful of deals using program ratings rather than commercial ratings, as some marketers expressed a higher comfort level with the more traditional metric.
The MTV Networks were the conglomerate most in favor of the old-school currency going into this year's upfront, issuing a letter to clients and agencies detailing the terms on which they would consider negotiating on commercial ratings across the board for a suite that includes MTV, VH1, Comedy Central and Spike. Although the networks have since cut several deals on a C3 basis, one major buyer said the group's continued holdout for program ratings will be what drags the market's final deals into negotiations that could last as long as the end of the month.
Others, such as Nickelodeon, Bravo and the Discovery networks signed up for Starcom's minute-by-minute ratings, as the Publicis Groupe agency was the only one to offer the more granular data in this year's cable upfront.
Cable CPMs up
As for cable CPMs, the Turner entertainment networks (TBS, TNT and the soon-to-rebrand CourtTV) reported increases in the 10%-11% range; the A&E networks posted low-to-mid double-digit increases; Lifetime earned high single-digit increases; and Hallmark Channel finished with CPM increases as high as 15% to 20% due to increased fourth-quarter demand for its holiday movies.
As recently as April, Merrill Lynch analyst Jessica Reif Cohen predicted this year's kids upfront would be up 5% from last year's $950 million total. Nickelodeon was the first to move in kids business this year after striking a $100 million deal with Starcom based on minute-by-minute ratings.
Mr. Levy said Turner's Cartoon Network should finish with increased revenue and CPMs, despite spending cutbacks from key food manufacturers such as Kellogg and General Mills. "Their dollars are down for Cartoon, but their overall dollars were up," he said. Instead, increased spending from categories such as movies and gaming will help the network break even this year.