After Slow Start, ABC Closes Deals

Buyers Expect Prime-Time Inventory to Wrap up Next Week

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NEW YORK (AdAge.com) -- The broadcast network upfront should be wrapping up as media agencies report that business could conclude by mid- to late next week, allowing buyers to start talks with cable and syndication in earnest.
Now that the upfront is wrapping up, focus shifts to cable and syndication.
Now that the upfront is wrapping up, focus shifts to cable and syndication.

Though ABC got off to a slow start, the Walt Disney Co. network completed significant business by last night at cost-per-thousand increases of between 3% and 4%. The lower pricing was only available to those adding volume, according to one insider. Marketers that were keeping dollars even and trying instead to enrich their programming mix were being asked to pay higher CPM rates, in some cases upward of 4%.

"Yesterday was very active," one media buyer said this morning, "All prime time will be wrapped up by mid- to late next week, and then we'll get to early morning and late night [programming]."

The right strategy?
Other agency executives question if ABC's network sales president, Mike Shaw, has the right strategy, with some claiming that the network is leaving itself open to losing "flexible dollars," given this year's fight for volume.

"He's fared fairly well in scatter because he's been able to package some prime inventory into scatter prices -- he can throw a couple units of 'Grey's Anatomy,' 'Desperate Housewives' and 'Lost' and it looks attractive in a package," said a broadcast buyer from a major media agency.

But, the buyer cautioned, the scatter market is based on supply and demand -- and this year could see a surge in supply if the networks' sellout levels drop, thanks to fewer dollars in the marketplace. An increase in scatter supply without a steep increase in demand would depress pricing.

With the upfront take likely to be flat to down compared to previous years -- TV took in $9.1 billion last year -- agencies and broadcast networks have set the groundwork for a potentially buoyant scatter market. Agencies have said they'll hang back and hold money out because many new opportunities -- particularly in digital -- arise outside the upfront period.

Holding onto airtime
While agencies are holding back, networks are also likely to limit their available inventory. The gamble is whether the money will show up later -- the scatter market has been weak, as agencies reported little or no penalty to buying outside the upfront period last season. However, Disney Chief Financial Officer Tom Staggs said on the company's results call in May that ABC's second- and third-quarter scatter market had been 10% above upfront levels.

News Corp.'s president-chief operating officer, Peter Chernin, said June 14 that Fox had sold 70% of its upfront inventory, at CPM increases of between 2%-3%. Mr. Chernin also said CBS and NBC weren't far behind. CBS pricing is reported to be anywhere between low single digits to negative, while NBC, which, along with Fox, traditionally has the highest CPM costs, at around $30 per 30 seconds, is reducing its rates by 5%-6% in a play for volume.

The new CW, created by the merger of WB and UPN, is said to be flat from compared to WB pricing and is having a tough time establishing bases with marketers that were previously with UPN, which was cheaper than the WB. The CW is believed to be around 60% done. Network reps had no comment.

Fox's new entrant, My Network TV, has so far been quiet, with media agencies preferring to deal with the network in tandem with the cable and syndication market.

Cable deals
In cable, MTV Networks and Turner Broadcasting have already kicked off business. Media agencies traditionally begin with the top-tier entertainment networks, which also include Discovery and A&E Networks. One media agency said, "It will be difficult for cable to get higher than the 3%-4%, which has been set by the networks."

Agencies now begin the process of registering their budgets with the cable groups. Discovery is 50% fully registered, while MTV is 80% registered, according to executives close to talks.
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