$43.6B U.S. agency revenue
If there's anyone to keep an eye on during this upfront, it's Donna Speciale.
Elevated to Turner Broadcasting's president-sales just weeks before the annual negotiating dance with advertisers, she takes over as the company faces a paradox: It's got the reliably big audiences valued by advertisers, but viewers are being drawn by pedestrian programming rather than the boundary-breaking fare agencies and marketers are increasingly seeking.
The currency of the upfront is still eyeballs, and Turner has plenty, boasting three of the top 10 cable networks among adults 18-to-49 with TBS, TNT and its Adult Swim programming block on Cartoon Network. It's buzz that Turner is lacking at a time when high-quality original series from the likes of FX, AMC and History, among others, are making social chatter a more important metric to advertisers.
Jeff Bewkes, CEO of Time Warner, parent of Turner, conceded as much on the company's recent earnings call. "Over the past few years, we didn't take enough creative risk with its programming and, as a result, TNT has lost ground with younger viewers," he said.
The programming problem, along with continuing ratings erosion at TruTV; an audience falloff at TNT; an overreliance on "The Big Bang Theory" on TBS; and a floundering CNN, puts pressure on Ms. Speciale, who was promoted amid a shakeup that saw the exit of Greg D'Alba, a 27-year vet who handled ad sales for news and digital. And management is still in flux -- there has been no successor named for Steve Koonin, president of Turner Entertainment Networks, who oversaw programming for all Turner channels outside of news before his unexpected departure April 13.
Ms. Speciale, previously president of ad sales for Turner Entertainment and Animation, added oversight of digital and CNN ad sales to her purview of entertainment, kids and young adults. With all of Turner's brands aside from sports now under her, the network group will go to market for the first time as a single portfolio, allowing media buyers to strike deals more easily across networks and platforms. It's a strategy other cable network groups like NBC Universal have been implementing in recent years.
"The timing is right," Ms. Speciale said. "What we are finding is that our conversations with clients are now holistic conversations about everything. So it isn't making a lot of sense to make our sales teams be too vertical."
Ms. Speciale is an experienced silo-buster. Before joining Turner in 2012, she was president of investment and activation at MediaVest, pushing the media agency into video agnosticism by aligning digital and video units under one umbrella. And in her two short years at Turner, she blew away most of the barriers that existed among the entertainment, kids' and young-adult networks, which had gone to market independently.
Buyers say the shift is more reflective of how today's media is bought. "This type of structure lends itself to more flexibility to move money across networks," said David Campanelli, senior VP-national broadcast, Horizon Media.
Bringing Turner's digital assets, which include Funny or Die and Bleacher Report, alongside the TV networks gives the company an opportunity to reach an audience that's difficult to target on TV—and one it may not be reaching with older-skewing shows, said Team One Media Director Kirsten Atkinson.
TNT, in particular, has struggled in recent years to maintain its foothold. Its prime-time audience has fallen more than 13% since 2009, averaging 1.8 million viewers, according to Nielsen. And its median age is up to 51 from about 46 in the same period in 2009.
TBS has showed more strength, ending 2013 as the most-watched cable network among adults 18-to-49, surpassing USA in the demo for the first time, and continuing its winning streak into the New Year. But much of the network's success comes from reruns of "The Big Bang Theory."
"At some point the gravy train is going to run out. That's what happened with 'The Office.' What will replace 'Big Bang'?" Mr. Campanelli said.
TBS is also skewing older, with its median age at 44.1 from 34.8 in 2009.
Narrowing pricing gap
Turner's broadcast-replacement strategy was geared towards positioning the company as more cost-efficient than the networks, while delivering substantial reach. But media buyers say the pricing gap between Turner's originals and broadcast TV's offerings has started to narrow.
Media buyers also expressed concern that Turner has forsaken more risqué content for reach. "TNT is somewhat like the CBS of cable -- ratings are strong but buzz on some of their shows isn't there," Mr. Campanelli said.
TNT's most-prized possession is basketball, with deals to broadcast NCAA tournament and NBA games (the latter of which expires at end of 2015-2016 season). Both significantly contribute to ratings. But TNT still hasn't filled the void left when popular police drama "The Closer" ended two years ago. And its current top programs like "Rizzoli and Isles" and "Falling Skies" skew older.
"Those aren't the 18-to-34 shows that are really, really buzzing," Ms. Speciale said, referring to "Rizzoli and Isles" and "Falling Skies." "And I'll be honest, I think that's what Michael [Wright, head of programming for TBS, TNT and Turner Classic Movies] is focusing on. I think it's great to have a buzz show and we want one, trust me. We all want one."
That's put all the focus on TNT's summer slate, which includes "Last Ship," "Murder in the First" and "Legends." Just last week, both TNT and TBS green lit several series: TBS ordered "Angie Tribeca," a satirical look at police procedurals from Steve and Nancy Carell; "Buzzy's," a workplace comedy from the creators of "Will & Grace;" and the family comedy "Your Family or Mine." TNT picked up "Public Morals," a 1960's-set police drama, and "Proof," a supernatural drama.
Filling a need
It's a tricky balancing act, and Turner President David Levy stressed the networks won't give up their foundation, and their success with originals and sports is what will allow Turner's networks to start taking some risks.
"What I'm happy about is we have consistent originals that have been on for multiple seasons. It's great to have a buzz and we all want it, but one show doesn't make a network," Ms. Speciale said.
Media buyers acknowledge programs like AMC's "Breaking Bad" and "The Walking Dead" don't come around often. And even though TNT's ratings are down, it still regularly attracts audiences other networks wish they had. This helps fill the market's desperate need for ratings points, and as a result media buyers say TBS and TNT will continue to attract big bucks from advertisers.
Adult Swim has also become a hot prospect for marketers looking to reach the elusive 18-to-34 demo. With animated series like "The Boondocks," Adult Swim posted its most-watched year in 2013 and expanded its programming block to start an hour earlier, at 8 p.m.
TruTV is also in the midst of a revamp under the leadership of President and Programming Head Chris Linn, after losing more than 30% of its total audience in prime time since 2009. Those efforts won't materialize in time for upfronts, but Ms. Speciale is bullish. "TruTV will be a network to be reckoned with. In a year from now it's going to be a different network," she said.
Then there's CNN. Under the helm of Jeff Zucker it's been repositioning itself and broadening beyond breaking news with original documentaries and series like Anthony Bourdain's "Parts Unknown."
Despite these efforts, CNN's ratings remain challenged. In fact, Turner's umbrella strategy is expected to be most opportunistic for the cable news network, which buyers say is having trouble going to market on its own.
"It will help news by putting it with entertainment," Mr. Campanelli said. "CNN is not strong enough at the moment to stand on its own anymore."
"We're not just going to live in the news marketplace," Ms. Speciale said. "Of course you will have the news marketplace, but there's a whole other host of advertisers that are now going to look at this -- advertisers we are working with on TNT and TBS that don't necessarily buy CNN that way right now."
Media buyers have expressed some concern and confusion over the departure of Mr. Koonin and Mr. D'Alba, both well-liked and respected in the industry, so close to the upfront. But Mr. Levy and Ms. Speciale don't expect the shakeup to have an effect on negotiations. "No [advertiser] buys a network executive, they are buying ratings and content," Mr. Levy said.
Both say turnover can allow the company to try new things, with Mr. Levy alluding to a potential change in the way Turner will market its brands. He declined to elaborate, but no doubt Turner is hoping for a big bang.