TV upfront: Broadcast wraps up, syndication starts

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As the broadcast market wraps up, syndication upfront negotiations are expected to start in earnest this week, followed by media agencies returning to cable to finish up deals there.

This year's total broadcast upfront is expected to top out at $9 billion to $9.1 billion, with cable outlets expected to take between $6.2 billion to $6.3 billion.

Syndicators are said to be asking double-digit cost-per-thousand increases for their top shows, though one senior buyer said, "If they don't behave, they'll get punished."

some deals still pending

While most networks and agencies were preparing to call out the final upfront numbers, two major buying shops, Interpublic Group of Cos.' Magna Global and WPP's Group M, had not finalized their deals by June 11. Magna Global and Group M control two of the largest TV budgets slated for the broadcast prime-time upfront, estimated by executives to account for nearly half the total market.

The networks have been solidly sticking to CPM increases of 9% and 5%, respectively.

Larry Blasius, exec VP-negotiations, Magna Global, refused to comment, referring calls to CBS and ABC, which also refused to comment. Knowledgeable executives, however, noted that the picture could change at any moment, with both sides expected to work through the weekend.

other options

Overall, Jon Nesvig, Fox Network's president-sales, reflected the widely held view that the broadcast networks still did pretty well, even if the upfront take is down from last year's record $9.3 billion. "We're pretty satisfied in the light of the stories that were floating around a couple of months ago. "That's still the second biggest upfront in the history of TV, but we can't expect it to keep growing," he said.

While movies and autos were buoyant, pharmaceutical and package goods were down this year.

Major marketers such as Procter & Gamble Co., General Motors Corp., Coca-Cola Co. and American Express, seem to be keeping their promise to commit to options other than broadcast TV. The branded-entertainment trend, and the promise of strong midseason replacements led some companies to hold back money, according to Ray Warren, managing director of Omnicom Group's media buying shop OMD.

Procter & Gamble Co. is said to have spent less on broadcast, and will devote those dollars to cable and spot TV. A P&G spokeswoman said the company would not comment while upfront negotiations were still in progress. The company said it fully expects to re-sign a multimillion-dollar agreement with Viacom Plus.

General Motors Corp. spent more lightly on network TV, according to some agencies with auto accounts, also preferring to move money into local. "[GM] is going after every gross rating point in local markets," one GM sales rep said.

According to the Television Bureau of Advertising, GM increased its spot buying in the first quarter of 2004 by 16.25%. The company spent $99.9 million on spot buys in the top 100 markets during that period. A GM spokeswoman said the automaker wouldn't discuss its upfront strategies or buys.

One insider at American Express, a major branded-entertainment player, said the company planned to spend less on network TV. An American Express spokesman said the company had decreased its overall reliance on TV advertising, but added, "TV continues to be an important medium. ... We've been trying to develop content and engage consumers in the ways they like to be engaged."

Coca-Cola Co. is also reported to be spending less on network TV but recommitted to its Fox "American Idol" sponsorship.

Fox Network took in an estimated $1.6 billion and sold at CPM increases of 7% to 8%, but sold less inventory than last year, "low 80s as opposed to high 80s," Mr. Nesvig said, referring to the percentage of inventory sold.

CPM increases

NBC this year sold an estimated $2.9 billion and got CPM increases of 6% to 8% and sold 78% of inventory compared with 82% to 83% in 2003.

ABC is expected to pull in up to $1.6 billion and CPM increases of 5%. Bob Iger, president-chief operating officer, Walt Disney Co., told a Deutsche Bank conference last week, "We will use less inventory or fewer units this year in the upfront than we sold last year." The network estimated to have sold between 76% and 78% of its inventory in expectation of a strong scatter market.

Time Warner/Tribune Broadcasting and the WB will land on $675 million, down from last year's $700 million, with CPMs at 7% to 8% and around 75% of inventory sold.

The picture at CBS was less clear, though the network looks likely to increase its total take to more than $2.2 billion on the back of strong ratings last season and a solid 2004/2005 lineup.

contributors: jean halliday, jack neff

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