TV Upfront Standoff: Networks Want Up to be the New Up

Buyers Willing to Ride It Out Until They Get Roll Backs

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NEW YORK ( -- While other media put forth the notion that "flat is the new up," the nation's big TV networks still want to believe that "the new up" should be -- of all things -- up. And that's caused a standoff in the TV upfront market the week after the broadcasters presented their schedules for next season.

The networks are looking for cost-per-thousand rate increases. "Right now, everyone is posturing not to reduce prices," said one media buyer. Marketers and media buyers, however, are putting out signals that they are hoping for substantial rollbacks, several buyers said.

More difficult marketplace
The situation serves to emphasize how much more difficult the terrain is in this year's upfront marketplace, during which the broadcast networks typically try to sell between 75% and 80% of their ad inventory for the coming fall season. The roiling economy, however, has forced many advertisers to hold on to ad dollars; many are releasing money only at the very last minute. Network ad chiefs have suggested they may hold back a more inventory than usual to sell later on in the year as scatter, or advertising that is sold much closer to air date.

Here's where the market seems to be: Networks are seeking price increases in the single-digit percentage range for CPMs. But buyers are seeking rollbacks, sometimes in the double-digit percentage range, one buying executive said. With networks determined come in below last year's pricing, this buyer suggested -- perhaps optimistically? -- that advertisers may settle for rollbacks in a single-digit percentage range.

Networks are reluctant to give in to those terms. Already, CBS Corp. CEO Les Moonves predicted during a recent conference call with investors that CBS would secure price increases, thanks to its ratings performance this season. And Jon Nesvig, president-sales at News Corp.'s Fox Broadcasting Co., said last week during his network's presentation, "Fox Broadcasting has not rolled back any upfront CPMs for deals made in the current TV season," which buyers have taken as a hint of Fox's upfront stance.

'Ride it out'
No matter what the tenor of negotiations, buyers are prepared to take an unrushed approach to the proceedings. "Most of our clients have told us to ride it out," one buyer said. "If [the networks] want to go early, we'll go early, but if not, we are willing to ride it out and actually wait until somebody caves. When someone caves, you're going to see a free-for-all. It will happen in hours, if not days."

Other reasons exist for the slower pace of this year's upfront market. Advertisers and buyers have been more focused on last year's upfront orders. Each quarter, clients have an option to pull or approve a portion of the ad time purchased in last year's market. More ad time was pulled in the second quarter than usual, and buyers said clients have been slow to firm up third-quarter orders, and in many cases have asked for extensions of several weeks.

Also adding to the slower pace is the fact that many clients are still figuring out their budgets for TV ad time, some buyers said.

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