TV Upfront Market Starts to Move

ABC Deals First With Starcom, Zenith; OMD Up Next

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NEW YORK ( -- TV's upfront marketplace has broken in earnest, according to media buyers and executives. Most parties continue to predict a flat-to-down market, with many marketers registering reduced budgets that will end up focused on fewer media outlets overall.

In many cases, discussions are still in their initial stages. Still, Walt Disney's ABC has written some business with media buyers Starcom USA and Zenith Media, both owned by Publicis Groupe, according to people familiar with the situation. The Walt Disney network declined to comment. Zenith executives did not return calls seeking comment. A Starcom spokesman declined to comment.

Meanwhile, Omnicom Group's OMD is expected to announce several upfront deals soon, according to a person familiar with the situation, and Time Warner's Turner cable operation is seeing budgets being registered at a healthy clip, though pricing has not been decided yet, a person familiar with the matter said.

Another person familiar with the marketplace said that Turner has been particularly aggressive this year, touting its original programs such as "The Closer" as replacements for broadcast prime time and in some cases seeking bold price increases that haven't always gained traction. General Electric's NBC Universal cable outlets have also been aggressive, this person said.

Executives believe the marketplace will move more quickly next week, although the expectation is that broadcast networks, at least, will not be able to secure price increases higher than mid-single-digit percentages. One senior media-buying executive predicted that the leading broadcast outlets in many cases would not be able to notch more than 4% to 6% increases in the cost of reaching a thousand viewers, or CPMs, a common measure in these types of negotiations. ABC was seen securing CPM increases of 7% to 9% in last year's market.

If ABC were to have struck some deals already, it would not be terribly surprising. The network runs some of the most highly rated programs, and movie studios are notorious for getting antsy each year about putting money down in top-rated programs. One top buyer said studios have been showing similar behavior this year. Starcom works for Walt Disney and its film operations, so a move to put down Disney money on Disney's TV network would seem natural. Zenith works for News Corp.'s 20th Century Fox. Starcom and Zenith each have a history of moving early in the upfront.

Stutter-stop activity
So far, media executives characterize this year's marketplace as the stutter-stop variety; few are in a rush to get money down when deals are much more complex and marketers have a broader array of media outlets to consider.

The flailing economy is putting a crimp on spending, according to executives, which could force marketers to place money down in narrower fashion. Rather than sprinkle money across dozens of TV outlets, one person familiar with the situation said, advertisers are likely to put more emphasis on the better performers. "If you're a second-tier cable network or you don't have that great broadcast prime programming, those brands are going to feel it more than the platforms that are must-haves," this person said.

Networks typically sell 75% to 80% of their inventory in the upfront market, with the rest sold in "scatter," or ad time sold on an as-needed basis. Upfront money really means very little overall; it represents commitments to purchase advertising, but can easily be repurposed or withdrawn depending on the ultimate lineup on a network's schedule. Most analysts use the upfront as a means of tracking advertisers' interest in TV advertising, not as a sign of revenue flowing to the networks' parent companies.
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