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ABC to Hold Back Upfront Inventory for Scatter

Disney CFO: 'Major Advertisers Remain on the Sidelines'

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NEW YORK (AdAge.com) -- Walt Disney's ABC intends to sell less advertising inventory in its upfront negotiations than it has in previous years, the chief financial officer of Disney said in remarks delivered during a conference call with investors.

"We are still in the midst of our upfront process. We are comfortable with the rates ABC has been achieving," said Tom Staggs, senior exec VP-chief financial officer of Walt Disney Co. "We anticipate selling less of our inventory in this year's upfront than in recent years," he said. Mr. Staggs indicated that Disney believed it would fare well in the so-called scatter market, in which advertisers commit money for advertising much closer to the time it is slated to air. He also said that "major advertisers remain on the sidelines" in the current upfront marketplace.

Separately, Robert Iger, Disney's president-CEO, said the company was "comfortable with how this year's advertising upfront is playing out."

Change in strategy
The move shows ABC changing its strategy to accommodate a lesser demand for ad time bought in advance of the fall TV season. In 2008, ABC sold more inventory than it did in 2007 to secure about $100 million more for its prime-time schedule, and approximately an additional $25 million for other dayparts, Mike Shaw, ABC's president-sales and marketing, told Advertising Age at the time. ABC sold between 80% and 85% of its ad inventory last year, said Mr. Shaw, including sports sales. In 2007, ABC sold between 77% and 82% of its inventory.

When scatter is robust, advertisers typically put more money into upfront buys, in an effort to avoid paying higher rates for unsecured ad inventory. Last year, marketers seemed eager to lock in lower prices for TV time rather than deal with expensive scatter market later on, when many might be facing a shaky economy. This year, they see little reason to part with their cash when prices are holding steady or even falling below what they paid in 2008.

ABC has been more aggressive in this year's upfront market, according to media buyers, and has in many cases refused to offer the deeper price rollbacks on ad time many buying agencies have sought. All of the broadcast networks have been willing to sell ad inventory at a discount to last year's CPM rate, or the cost of reaching 1,000 viewers.

After many weeks of haggling, networks and advertisers seem about ready to wrap up negotiations over this week and next.

"Over the past week it appears buyers and sellers finally made progress in the upfront," said a research note from Wells Fargo issued Wednesday. "Fox, NBC and The CW should finish selling by the end of the week, with ABC and CBS by next week. Prime-time CPMs appear to be generally in-line with our view of down -1% to 4%. ... However, there appears to be more flexibility in other dayparts. Within cable, we think networks will be willing to book as little as 45% this year vs. 60% [or more] last year."

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