Media Agencies Looking for Rollbacks From Networks

Holdouts Seem Willing to Gamble on Scatter

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NEW YORK ( -- The broadcast network upfront market is slowly becoming a market of who will go negative and who won't. Sensing an advantage, media agencies are holding out for broadcasters to give them rollbacks in cost-per-thousand rates as an incentive to make big commitments.
According to media agency executives, NBC and CBS have written select deals at negative rates.
According to media agency executives, NBC and CBS have written select deals at negative rates.

According to media agency executives, NBC and CBS have written select deals at negative rates, while ABC is still holding out for increases of 4%. It is unclear whether Fox has bowed to agencies looking for negative CPMs. Some report Fox, the No. 1 network in adults aged 18 to 49 years old, is commanding 2% price increases. A CBS executive refuted reports that the network was doing any negative deals. NBC declined comment.

While it comes as no surprise that NBC had to re-adjust to the market by offering to cut its CPM rates -- one executive said NBC has done deals in the range of negative 4%-5% -- that CBS would have to come down would be a surprise. The network airs many of the top-ranked shows in prime time, including "CSI" and "Without a Trace." It also has one of the most promising new shows slated for Thursday night, the James Woods vehicle "Shark."

CBS's 18-to-49 issues
An agency executive said one reason CBS could have been forced to go negative is buying the key advertiser 18-to-49 demographic at CBS is not as efficient compared to other networks, because CBS has traditionally had an older viewership, even though it has worked hard to bring down the average age of its viewers.

Still, it might be a smart strategy if CBS has rolled back rates. The network has moved way ahead of the market, with some pegging the deals it has already finished totaling around $1 billion. That would mean a significant portion of its upfront business has been done. Market talk suggests that Group M and OMD have both completed deals with CBS.

Group M did not return calls for comment. OMD did not return calls for comment, but the media buyer generally moves early to get its client roster deals with whichever network is broadcasting the Super Bowl. This year it is CBS.

CBS, by far the most important chunk of parent company CBS Corp., needs to secure major upfront dollars this year to maintain the interest of Wall Street investors. If overall dollars in the market are flat or down as most expect, CBS needs to show gains from somewhere, and some suggest the best target is ABC.

ABC: Waiting for scatter
Meanwhile, ABC has slightly less to worry about on the financial front. Walt Disney Co.'s stock price hit $31 on June 7, a 52-week high for the company. One TV-side executive told Advertising Age that ABC President-Sales and Marketing Mike Shaw would be willing to wait to sell in the scatter market. "Mike is holding out at 4%, but buyers want him to drop to 3%. He's reportedly saying 4% or see you in scatter." A media buyer also reported that position reflects ABC's stance. A spokeswoman for ABC was not able to respond immediately for comment.

By holding out for increases of 4%, Mr. Shaw is gambling that marketer dollars won't move elsewhere. Media buyers have been playing ABC against CBS in negotiations this past week. Two buyers put forth the theory that Mr. Shaw is holding firm because he's seen the amount of money that's been registered and may believe there's more money in the marketplace than expected.

But that could be a risk as more marketers signal they plan to commit fewer dollars to the broadcast TV market. Procter & Gamble Co. plans to cut its upfront spending by 10% this year, while media agencies are also reporting softness from movie studios, telecom, domestic autos and pharmaceuticals, with one media buyer suggesting pharma marketers could be holding out for scatter.

Johnson & Johnson said before the network's upfront presentations that it planned to sit out the upfront, though its executives did attend the presentations. Among the stronger advertising categories in this year's upfront are retail, foreign autos and fast food.

Turning to cable
With the rest of the market quiet, media-buying executives are turning their attention to cable, following OMD's $300 million deal with MTV last week. Turner Broadcasting is also reported to have done some early business with Starcom. With time on their hands, agencies and cable executives say they have time to talk through the finer points of their deals.
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