An Upfront That Wraps in Two Days? Never Again

Cable Market Can't Make Gains on Last Year's $6.5 Billion

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NEW YORK (AdAge.com) -- It's the most drawn-out upfront since 2001 -- and it's not ending with particularly good news for cable, which will finish flat to 2% below the $6.5 billion it brought in last year.
National Geographic was one cabler that did well, up double digits.
National Geographic was one cabler that did well, up double digits.

What's more, after years in which the selling period known as the upfront became increasingly important to cable networks, many see this year as the beginning of the end.

52-week marketplace
"I don't believe we'll see an upfront marketplace that wraps up over a two- to three-day period," said David Levy, president-ad sales at Turner Entertainment and Sports, who said his networks grew volume in the mid-single-digit range on flat to slightly up cost-per-thousand rates. "[Upcoming markets] will be spread out over a couple of months ... and it will be moving to a 52-week marketplace."

Viacom, meanwhile, picked apart its upfront performance for analysts in its second-quarter earnings call: It sold about 50% of its inventory with CPMs flat to slightly up and a low-single-digit increase in volume, helped by strong interest in Viacom's digital properties.

Still, some say this year is just the nature of a down market.

"It was a soft marketplace -- advertisers realized it early, and agencies did a masterful job in playing the market," said Bruce Lefkowitz, exec VP-ad sales at FX, whose volume was flat, and National Geographic, which was up double digits. "They took a confluence of events -- a soft economy, the digital-video-recorder issue and the threat of digital opportunities -- and that allowed them to gain negotiating pressure."

The good news
Viacom CEO Tom Freston said that while the upfront isn't going away, business is shifting to a year-round cycle -- and that could be good news.

"More and more advertisers, like AOL and Johnson & Johnson, for example, have just decided to stand outside," he said on the call. "On one hand, you'd like to be able to lock in as much business as you could ahead of time, but generally we find that scatter pricing is higher than what you can get on an upfront basis. ... We're ready to do business 52 weeks a year."

Of course, if there's one constant about the upfront, it's the fuzzy math. Several buyers scoffed at the idea that volume at multiple cable networks could be up mid-single digits in what is clearly a flat-to-down year.

One cable exec had an answer: Some networks -- though none admitted this to Ad Age -- aren't counting marketers who sat out the upfront, such as Coca-Cola or AOL, in their base comparisons to last year.

"I just didn't see the money there," said a buyer. "If it was, CPMs wouldn't have been flat."
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