Upfront 2010

Why the Upfront May Not Be Over So Quickly

ABC, CBS, NBC Testing Aggressive Price Demands, Buyers Say

By Published on .

NEW YORK (AdAge.com) -- Not so fast. Despite projections that 2010's upfront would be completed in just a few days, the negotiations may not be over as quickly as some might have thought. ABC, CBS and NBC are pushing for aggressive price increases that ad buyers say they'd rather not pay.

While no one on either side of the bargaining table thinks this year's upfront market -- during which networks try to sell 70% or more of their ad inventory for the coming fall season -- will take weeks or months to complete, ad buyers suggest some of the momentum behind the annual haggling session has slackened.

"Conversations are being had, and people are progressing and pushing forward, but certainly there's not been the extraordinary heat at the numbers at which the networks want to get done," one media buyer said.

Networks' aggressive push
That isn't necessarily the viewpoint from some of the networks. "We're actively writing business," said Dana McClintock, a CBS spokesman. The CW network, owned by CBS and Time Warner, said Wednesday that it was seeing brisk sales as part of its negotiations.

But the root of the issue, according to buyers, is a desire on the part of at least ABC and CBS to secure price increases similar to or greater than those of Fox. The News Corp. network, which many buyers say is more or less done with upfront discussions, was able to secure increases of 8% to 9% in the cost of reaching 1,000 viewers, a measure known as a CPM that is common in these sorts of discussions. Fox is believed to have secured in the neighborhood of $1.8 billion to $1.9 billion in ad commitments for its fall prime-time schedule. Fox was not able to offer immediate comment.

Some advertisers may have consented to higher-than-desired CPM increases, even hikes in the low double-digit range, one buyer suggested, but the bulk likely will not. "Everybody wants to be as close to double-digit as possible, and they're not going to get as close as they like," the buyer said.

Misleading early rush
One ad buyer said TV executives may have counted some of their chickens before they hatched, owing to early activity from auto makers and marketers of consumer electronics. "There are a lot of [advertisers] who came out aggressively early, and wanted to get money on the table for emotional release," said one buying executive. But there may be "less money in the marketplace than what some people were initially saying," said the executive.

Indeed, the broadcast-network upfront market appears to have bifurcated, with Fox closing early due to its limited prime-time inventory, its ability to package prime-time advertising, and demand from automakers and movie studios. Meanwhile, talks among the others are lingering. "Fox is done, and everyone else is moving fast behind it," said one media-buying executive. "The other guys are trying to get bigger increases."

Some cable networks have seen activity ramp up, according to ad buyers. Discovery Communications, Walt Disney's ESPN and Time Warner's Turner have begun to make deals or have serious conversations, according to media buyers. ESPN has already sold some inventory in its football telecasts.

Tougher time for NBC
Ad buyers say NBC is having a tougher time being aggressive. While advertisers are encouraged by the network's decision to launch more original scripted programming after trying to mount a Jay Leno talk show five nights a week last season, they are also loath to pay higher prices for material that hasn't proved itself with audiences yet. Buyers suggest NBC is being pressured to take CPM increases in the mid-single-digit percentage range and is fighting for better terms.

If ABC and NBC are seeking price hikes, CBS would likely seek increases that are higher. CBS has a more stable schedule and better ratings than those two rivals.

Most Popular