On the eve of the broadcast network upfront, the upfront ad sales process has begun-for cable.
A handful of top cable networks have started to ink pre-upfront deals, totaling about $100 million, according to media buying and selling executives. While one media agency executive said the amount of early cable ad dollars is "insignificant" considering that cable networks took in $5.2 billion overall during last year's upfront, the timing of the deals is noteworthy. Traditionally, nearly all cable upfront ad deals occur after the broadcast networks ink their deals and after broadcast networks present prime-time programming schedules to advertisers. Network presentations start May 17.
Auto and fast food
The early cable deals are with automotive and fast-food restaurant advertisers-including one General Motors Corp. and CNN deal, according to executives.
"We don't comment on negotiations while they are going on," said a General Motors spokeswoman. Calls to Time Warner's CNN were not returned by press time.
The deals are known as "conceptual" deals. In committing to these buys, advertisers are guaranteed a discounted cost-per-thousand viewer price. In return, cable networks are promised more advertising dollars overall than they got in previous deals with these advertisers. Despite the discount, the deals were struck at a 5% to 6% cost-per-thousand increase over last year, said one cable ad sales executive, who anticipates the cable CPMs this year to see a 6% to 9% increase over last year.
The move follows a threat advertisers have made for months to broadcast networks that this year they would shift $400 million to $600 million of broadcast upfront dollars to cable networks and syndicated programming.
Despite these prime-time upfront revenue predictions, broadcast networks will still gain appreciable hikes in CPMs-7% to 10%-for this upfront sales period, media agency executives said. Last year advertisers paid skyrocketing 15% to 18% pricing gains en route to a $9.3 billion take for the six broadcast networks.
"The market will start to move at the end of [this] week and the beginning of the next week after-but not at a fast and furious pace," said Joe Uva, president-CEO, OMD Worldwide.
According to industry estimates, the overall broadcast network upfront prime-time market will rise weakly-2% to 3%-in revenue.
"It'll be up a little," said Andy Donchin, senior VP-director of national broadcast, Carat USA. "The big question is not how much money is going to be in the market, but how it is all going to lay out."
Cable networks will improve over their $5.2 billion upfront take of a year ago, but not nearly as much as cable network ad sales executives hoped. Cable may gain 8%, or $400 million, to $5.6 billion. Syndication will make similar gains as well over its $2.5 billion 2003 upfront take.
Mr. Friedman is a contributor to Television Week, a Crain publication.