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NBC Universal Moves Needle on Upfront Talks With Cable Deals

Agrees to Lower Pricing to Sell Inventory, While Other Networks Still Hold Out

By Published on . 1

NEW YORK (AdAge.com) -- NBC Universal is selling cable at a brisker pace than others in the upfront advertising marketplace, and could be as much as 40% done, according to a buyer familiar with negotiations. The development shows how some marketers are choosing to put down money on top-tier cable outlets rather than wait for broadcast networks to capitulate to pricing demands in what has fast become a protracted series of negotiations.

An NBC Universal spokeswoman declined to comment on the status of negotiations. The buyer said NBC Universal was selling cable ad inventory with slight rollbacks in the cost of reaching 1,000 viewers, or CPM, a common measure in upfront talks. The buyer suggested NBC Universal was willing to sell with CPM declines in the range of 1% to 3%.

After some hope that broadcast negotiations might move forward after July 4, most indications suggest the market is still at an impasse, with most big networks holding firm against taking deep CPM discounts.

"While last week it appeared that the broadcast upfront was breaking, now it seems to have hit another bump in the road, with buyers and sellers again at an impasse over pricing," according to a research note from Wells Fargo Securities issued today. "Even though the broadcast nets have eased their demands on pricing, the current bid/ask spread will likely mean upfront negotiations will continue to drag well into July. CBS continues to ask for flat to up [on pricing], but a more negotiable stance from Fox [and] ABC may make that a challenge."

Observers are left wondering just who will blink first. One the one hand, said one TV executive, some agencies may be holding out for larger CPM discounts because they promised certain clients they would be able to win such things handily. Indeed, said two executives involved in upfront negotiations, big media agencies may have promised lower CPMs as part of recent new-business pitches or to keep longstanding clients on board for another term. Meanwhile, said one buyer, CBS won't go negative unless it's certain Fox and ABC will do the same.

It's not clear NBC's maneuvers will spark the market during a tough economic time. In a typical year, WPP's Group M likes to do deals with NBC Universal (the two sides have acknowledged they're in talks, but say no deal has been completed). That often drives others to the table for fear NBC will take share of volume while others dither about. This year, that hasn't been the case. "NBC is kind of their own marketplace," said Peter Knobloch CEO of RJ Palmer, an independent New York media firm. It's also not clear that other large cable outlets have done large pieces of business at the present time.

The broadcast upfront usually wraps up by mid-June, with buyers moving on to cable and syndicated TV in the middle and later parts of the summer. The delay in wrapping up broadcast threatens to keep executives and junior staffers on both sides of the talks in their chairs until the end of the summer.

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