FOX WRAPS UP UPFRONT TALKS WITH MOVIE STUDIOS

Advertisers Increase Cable Ad Buys By as Much as 30%

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NEW YORK (AdAge.com) -- The Fox broadcast TV network, part of News Corp., has already wrapped up negotiations with all the major movie studios as part of the ad buying-and-selling bazaar

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known as the upfront, according to two buyers in this year's upfront market.

One agency executive, who buys on behalf of a movie studio, said, "Fox is almost done for movies; the rest [of the major studios] went down last night." The executive said he believed deals had closed quickly, because of the desire for exclusivity during each commercial break, or pod, and the need to get into top Fox shows, such as The Simpsons, which draw a younger, marketer-coveted audience and has few commercial pods.

Biggest buyers
Movie studios are among the biggest buyers in the upfront broadcast TV buying period, trying to buy commercial airtime during critical Thursday night programs, to better promote their weekend movie debuts.

The "upfront" refers to the freewheeling auction that takes place each spring as the TV broadcast networks try to sell between 75% and 80% of their commercial airtime ahead of the new fall TV season.

A Fox spokesman said, "We are not confirming anything until we're done."

While executives from Fox declined to comment on the upfront, executives from two other broadcast networks conceded there was some activity ahead of the Memorial Day Weekend. Both refused to comment on the record, but it appears the automotive category is also now heating up.

The upfront process
The first stage of the upfront process is when agencies tell the networks how much money they have to spend on behalf of their clients, then the networks send out their plans, which include such things as where marketers want to place their money and what the demographics are. The third stage is the negotiation and then the deal.

"Broadcast is starting to compile budgets, [but] with the exception of Fox and WB, they haven't sent out plans yet," the movie studio executive said. In addition to Fox and WB, part of Time Warner, other networks include Viacom's CBS and UPN, General Electric Co.'s NBC, and Walt Disney Co.'s ABC

Bill McOwen, who negotiates on behalf of clients such as Volkswagen, Audi and MCI for Havas-owned media agency MPG, said last night: "The movie studios are the serious negotiators ... autos will come next." He said discussions with auto marketers had taken place well into last night.

No panic
"What we are not seeing is any kind of panic," he added. "It [the broadcast market] has started moving, but I think [the market] is going to pace itself. I don't see anybody jumping."

Increased spending by movie studios and aggressive automakers has also helped fill the coffers of top-tier cable network this week, with buyers reporting that they're due to wrap up negotiations with select outlets.

A senior executive at USA Networks, now part of the newly merged NBC Universal, said: "We are pretty much done, as are most of the top 10 cable networks." The executive estimated that the top-tier cable channels are seeing cost-per-thousand (CPM) increases in the high single digits, with volume up 15% to 20%.

Spending on cable
"We're seeing the biggest spending increases in movies/DVDs, which are up 30% year to year; fast food and autos are also up, though pharmaceutical is seeing a downward trend after a couple of years of increases," said the USA Network executive, who added that 25% of this year's deals involved some form of brand integration.

One senior agency buyer from a major agency said his agency had done early cable deals with money taken out of the broadcast pot. "We've been done with 50% of our cable money for about three weeks. We set our strategy in a way that we would attack three major cable groups. We decided that money from the broadcast networks would probably flow over to these networks. So we did business with them earlier, before they started to really feel the flow of money coming from broadcast."

Procter & Gamble Co., which is the No. 1 spender in cable, is understood to have closed some early deals, though neither P&G nor its agency would comment. P&G has had a long-running deal with Discovery Networks. According to buyers, demand for Discovery's makeover-show-oriented channel TLC has been among the strongest.

One estimate put CPM increases at TLC up 14% to 15%. "Cable money is coming from folks trying to offset their prime-time increases on the broadcast networks," said the agency buyer. "Though our agency has been shifting money [to cable] for the past two to three years."

Revised outlook
Few buyers or sellers, however, think cable will take an additional $1 billion, a figure widely predicted just weeks ago. Last year, cable took $5.2 billion in the upfront, while broadcast networks collectively raked in $9.5 billion. Many executives have repeatedly expressed surprise that cable deals have been tied up in advance of the start of the broadcast network market.

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