In the strongest indication yet that the upfront will net the TV sellers less than last year's $9.3 billion, NBC has finally agreed to "go negative" and started inking contracts with buyers at rates lower than those it commanded last year. It is now accepting deals at anywhere between flat and 3% down.
That could make wishful thinking of the flat-to-slightly-up projections of the TV industry. One major media-buying agency, revising original estimates, suggested the upfront could come in as low as $8.5 billion, down 7% or 8% on last year. It also suggested that NBC could end the upfront at $1.9 billion, compared to the $2.9 billion it took last year.
Last year was an Olympic year, and NBC was only expected to take around $2.3 billion in this year's upfront. Nevertheless, such a precipitous drop will be hard for the General Electric unit to swallow, especially as it will likely now have to hold back inventory and hope for strong scatter pricing-a gamble unlikely to sit well with its conservative management.
The network, which has long commanded premium pricing, had been demanding a CPM increase of at least 2% this year. Despite buyers' public insistence it wouldn't get a rise of any sort, and swift budget grabs by ABC and CBS that made NBC's position even more tenuous, it seemed NBC management was refusing to accept the reality: a rate cut.
NBC, under pressure from both the market and its corporate parent, buckled last week and went for "volume plus Olympics," as one media-buying executive put it. That means rather than maintaining the line on pricing, NBC began negotiating negative CPM costs in return for additional dollars on its broadcast network and cable siblings, plus buying into the Winter Olympics.
A network executive confirmed that NBC was doing deals for CPMs that were flat-to-2% down and was halfway done with writing business. Another buyer suggested that prices for NBC's once-vaunted Thursday night could fall much further than that.
One buyer, familiar with negotiations, noted that GE itself is a big buyer of airtime on NBC and characterized negotiations as exceedingly tough: "It's been a little more brutal or mean-spirited than they expected. They're getting slammed pretty hard. It is one thing to push them down and another to kick them while they're down."
Buying executives said a couple of big agencies were still hold-outs, though deals might have been reached over the weekend. As Advertising Age went to press June 3, a long night was expected for both sellers and buyers. In one bright spot, NBC was said to be commanding small increases for morning franchise "Today."
INCREASE FOR CBS
Another buyer said that talks were moving slowly for NBC and that they were dragging their feet with regard to other day parts.
Separately, CBS President-Sales JoAnn Ross said the network would end its upfront dealings with commitments valued at $2.5 billion to $2.6 billion, up from last year's $2.2 billion with CPM increases at between 4% to 6%. ABC also brought in additional dollars, up from $1.6 billion to $2.1 billion with CPM increases of 4% to 6%. UPN was still in negotiations with agencies and Time Warner's WB did not return calls by press time.
CBS, also surprised by the speed of business given expectations that the cable market would move first, saw an increase in demand for branded integration across the board, particularly on "Survivor," as well as increased interest in broadband video sales. Fox was expecting to wrap up its upfront sales at $1.6 billion.