ABC wrapped up its upfront deals late last week with the surprisingly modest cost-per-thousand increase of 4% to 6%, dictating a range that was quickly followed by all the other networks as they started to ink deals. NBC, however, was left on the sidelines, buyers report, due to its demand for a CPM increase of at least 2%.
In a sales strategy overseen by president-sales, Mike Shaw, ABC opted for a swift budget grab by accepting only 4%-to-6% CPM increases, muddying the picture for rivals who might have hoped for more. According to buy- and sell-side executives, Viacom's CBS and UPN, which are sold together, are seeking increases of 4% to 5%, Fox is asking for 3% to 5%, Time Warner's WB is at 3% to 4%. General Electric Co.'s NBC had not written any business as of May 27, and buyers are firm in their stance that the best NBC can hope for is a flat CPM or a decrease of 1% or 2%.
The big question was why ABC did not appear to be pushing harder given its major hits, "Desperate Housewives" and "Lost." It asked for a 5% hike last year without the knowledge the shows would break out as blockbusters. "They are obviously going for share," said one buyer who predicted ABC would go all out for a $2 billion upfront. "With [prospective Disney CEO] Bob Iger coming in, it's the Wall Street factor. He has to have a good upfront, he's under scrutiny." An average prime-time CPM cost on ABC was put at $25 by one buyer, vs. around $28 at other major networks. Last year, the networks booked $9.3 billion in upfront commitments.
ABC's ad-friendly posturing may have hurt its rivals. One buyer explained the rush to ABC, "People are saying I can do [ABC] now and hammer the other guys later." This person said negotiations at CBS had begun at CPM increases of 8% and had come down from there.
A CBS spokesman said: "We're well on our way. We're getting healthy CPM increases. We are pleased with the sales effort."
CABLE `MISSED THE BALL'
The network rates and fast budget grabs are likely to have a huge impact on cable. Sellers had hoped the cable market would move ahead of broadcast, but now it appears they were overconfident. With broadcast networks offering good deals at 3% to 6%, buyers say cable executives are unlikely to get their hoped-for 10% CPM hikes.
"The top-tier cable nets had an opportunity to really rake in the dough, and they really missed the ball," said one agency buyer.
A cable executive agreed: "Nobody got any traction with the numbers they went out with and the agencies said no. There was a quick and early conversation and a standoff. It was a nice strategy by the buy side."
The problem for broadcast and cable sales executives is figuring out whether the market is up, down or flat, and how much agencies are holding back for scatter or other opportunities.
Agencies may have been enticed into dealing early with ABC by its willingness to deal on the branded-entertainment front.
One executive said ABC has tied up a concept deal for integration on "Desperate Housewives." Another buyer said the network was also discussing potential product placements for the next season of "Lost."
contributing: abbey klaassen