NBC Universal Wraps Upfront Sales

Advertising Volume for Broadcast Network Down 15%-20%; Cable Is Flat

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NEW YORK (AdAge.com) -- NBC Universal has substantially completed its upfront sales, according to a person familiar with the situation, and anticipates total dollars committed to all its properties to be down between 5% and 9%. In a better-than-expected turn, the volume of dollars allocated to its cable outlets is expected to be flat with last year's total. Meanwhile, volume committed to the NBC broadcast network is expected to be down significantly.

NBC Universal expects to take in slightly less than $4 billion overall in upfront commitments across all its properties, this person said, down from slightly more than $4 billion in last year's marketplace. Upfront volume at the company's cable entertainment properties, which include USA and Syfy, is expected to be flat, while upfront volume in the overall broadcast market could be down as much as 15% to 20%, this person said.

Media buyers have estimated broadcast upfront commitments for all the networks could be off between 10% and 20%, with overall cable commitments off 7% to 12%.

The results will likely boost NBC Universal's efforts to put more focus on its cable properties, which these days account for a majority of the company's operations, even though its venerable NBC broadcast network reaches a broader audience than any single cable cousin and continues to draw more scrutiny.

What contributed to drop
Using the projections as a guide, it's possible to estimate roughly that NBC saw upfront commitments for its prime-time schedule fall to between $1.52 billion and $1.61 billion, compared with approximately $1.9 billion in last year's upfront. The company's decision to sell less prime-time inventory -- about 10% less, according to the person familiar with the situation -- would play a role in the lower volume. Last year, NBC sold about 80% of its inventory in the upfront. NBC's broadcast CPMs, or cost of reaching 1,000 viewers, declined by mid to high single digit percentage range compared to last year's rate, the steepest of any of the networks, media buyers reported.

Other factors would include the fact that NBC isn't broadcasting the Super Bowl this year; is selling a five-nights-a-week program featuring Jay Leno that is expected to bring in fewer ratings at 10 p.m. than scripted dramas once shown at that time; and also has less traditional prime-time inventory to sell overall due to its coming Winter Olympics broadcasts.

In addition to cable, NBC Universal did see some more robust demand for its Telemundo Spanish-language network and some of the company's digital properties, according to the person familiar with the situation.

Hope for scatter sales
NBC Universal is anticipating that scatter ad sales, or sales for inventory bought much closer to air date, will be more robust as the year moves on and the economy stabilizes or improves, this person said. The company has seen "decent" scatter sales in the first three quarters of the year, according to the person, and believes that some marketers that may have sat on the sidelines during the upfront will gain more confidence later in the year and the TV season.

Other media companies, including Walt Disney Co. and News Corp., have stated that they, too, are selling less inventory in the upfront in hopes that they can gain better pricing for scatter time. "We would rather keep availability for scatter than to lower our rates," Rupert Murdoch, chairman-CEO of News Corp., said in a conference call with investors and media Wednesday. Fox has also confirmed that it's winding down its upfront sales. The network "achieved its prime-time revenue goal," Jon Nesvig, president-sales, Fox Broadcasting Co., said in a prepared statement.

CBS, meanwhile, is "nearing the finish line of our upfront discussions and we're very pleased with how things have progressed," said Leslie Moonves. CBS Corp. CEO, during a conference call with investors. He noted that "total volume is down this year," and that CBS expects to sell around 65% of its inventory in the upfront, compared with 75% to 80% last year. Using those figures as a guide, it's possible that CBS could see its total dollar volume fall 10% to 15% to between $2.13 billion and $2.25 billion; last year, the network secured approximately $2.5 billion.

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