And They're Off! … Well, At Least One Broadcast Player Is

Fox Gets Balky TV Upfront Bazaar Started

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After a long delay at the starting gate, the 2015-16 upfront horserace has begun, as Fox has lurched out onto the track ahead of the rest of the field.

Media buyers confirmed that Fox has begun nailing down deals in advance of the fall broadcast TV season, while rivals ABC, CBS, NBC and sprightly filly the CW remain in their stalls.

Fox is selling its 15 weekly hours of prime-time inventory along with a portfolio of cable networks that includes FX, FXX and National Geographic Channel. While initial reports indicate that the broadcast pricing is flat-to-down versus the year-ago rates—one buyer suggested that Fox has shaved as much as 2% off its legacy CPMs—it's worth noting that the Fox Cable inventory is said to be fetching higher rates than it did last June.

'Empire'   Credit: Fox Broadcasting

The Fox broadcast network is understood to have one of the highest average CPMs on the broadcast dial—UBS analyst Doug Mitchelson believes it enjoys "a 10% premium versus [its] peers"—and the company's quarterly earnings statements support that assertion. (Despite having 364 fewer hours to sell than the other members of the Big Four, Fox generates more annual ad sales revenue than ABC.) Thus, a slight reduction in rates is seen as a small price to pay, and again, any CPM hikes registered on the cable side should more than balance things out.

(As we noted in the run-up to Upfront Week, every number attached to this occult ritual is to be taken with a pillar of salt.)

The broadcast-and-cable bundling strategy was made manifest at the very start of Fox's May 11 upfront presentation here in New York. As buyers and clients took their seats inside the Beacon Theatre, the first image that appeared on the screen was the visage of actor Billy Bob Thornton, who starred in Season 1 of FX's hit serial "Fargo."

While Fox is the first horse to kick up a little dirt, its gait is more of a lope than a gallop. "They aren't going to get everything wrapped up this week—hell, they may still be at it a month from now—but they should have a nice, orderly upfront," said one rival ad sales executive, who added that concessions on broadcast CPMs could go a long way toward ensuring a smooth ride through to the finish.

As various complications and/or complexities have kept the other networks at a virtual standstill, Fox isn't necessarily a harbinger of a sudden flurry of deal-making. If anything, it's likely that this year's bazaar will progress at an even more leisurely pace than the 2013-14 upfront. That year, NBC wrapped the last of its business on July 30, and ABC crossed the finish line on the first of August.

Last year, the Big Four were already headed into the first turn on June 4. Time was, the completion of the first bit of business lead to every network tear-assing out onto the track en masse, as a sort of institutional momentum held sway. But for reasons explored elsewhere, that headlong rush to write deals now seems like a thing of the past.

Fox declined to comment on its upfront business. Ad Age alum Brian Steinberg was the first to report on the network's CPM haggling for Variety.

That Fox was the first horse to break isn't necessarily significant. Each network has its own unique price and dollar-volume objectives to meet, and there is no incentive to rush the negotiations. Renowned for its steadfast unwillingness to bend on its target CPM range, ABC in 2013 wrapped its last bit of business on August 1, and while that was a bit later than the traditional/wholly unoffical July 4 "deadline," it still provided ample time to get holds converted to orders in time for the start of the 2014-15 broadcast season.

Like Fox, ABC and NBC package their respective broadcast inventory with a roster of cable properties. CBS has far fewer cross-network opportunities, as its largest cable holding is the non-ad-supported premium net, Showtime.

All told, seasonal C3 ratings declines have reduced the number of saleable GRPs in this year's upfront by 9%. Overall dollar volume is expected to be down in this year's bazaar, although ad sales execs are confident they can make up for any upfront shortfall in the scatter market. The same sentiment became a rallying cry a year ago, although scatter pricing was never strong enough to offset the weak upfront.

Sellers also are banking on a boomerang trend in digital spend, as clients who've radically pared down their TV budgets in favor of cheaper buys have begun missing their quarterly sales targets.

Analysts predict the 2016 TV market will be up slightly, with broadcast and cable ad sales revenue piling up to around $41.2 billion, per Pivotal's Brian Wieser.

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