Fox Gets Healthy Increases In First Upfront Deals

Buyers maintain sales might not be up as much as forecast

By Jon Lafayette -- Broadcasting & Cable, 5/30/2011 12:01:00 AM

The upfront advertising market got rolling late last week as Fox cut deals with many of the major agencies, according to multiple sources in the market.

The sources said Fox got price increases on the low end of double digits, around 11%. That increase suggested a healthy market, although buyers said that the budgets they have been getting from their clients indicated total upfront sales will fall short of the $9.2 billion some analysts have projected.

Fox moved first in last year’s upfront as well. Fox tends to go early due to factors including the network’s younger skew, the fact that it programs fewer hours than its broadcast competitors and its place as the highest-rated network among adults 18-49 last season. All of that puts more pressure on movie studios and automakers looking to reach those targets.

Buyers said that during negotiations, Fox was primarily interested in getting advertisers into its new show The X Factor, which will debut in the fall. With high expectations for X Factor, Fox priced the Simon Cowell competition show separately from its returning shows, creating a more favorable year-over-year comparison for advertisers suffering from sticker shock.

Fox also wanted to be able to use digital inventory when programs are viewed on Fox.com and Hulu.com as make-goods in cases where broadcast ratings fall short of guaranteed levels. Fox did some of this last season and during its upfront presentation pitched the idea of selling broadcast and online spots together.

Fox officials declined to comment.

Also getting a lot of early interest is ESPN, one buyer said. Because of the NFL labor situation, which could delay or cancel the upcoming pro football season, clients are looking to lock themselves into college football, baseball and other sports that attract large numbers of male viewers. Despite the lockout, nets that carry the NFL have sold the bulk of their NFL inventory already, as few expect the league to actually cancel any games.

Market sources said that media agencies had registered budgets with many broadcast and cable networks, but it was unlikely that deals were done with other broadcasters. Cable was likely to continue to register this week, but by and large would have to wait until broadcast gets done.

Final figures on TV viewership last season showing a decline in viewers 18-49 might have persuaded buyers to move quickly to avoid being shut out of a dwindling supply of inventory. The ratings shortfall is more acute if gains in sports are factored out.

Last week, with budgets from advertisers making their way from media buyers to the networks, some sources were saying the upfront market might not be as big as some analysts have expected, but will still be very healthy. Of course at this time of year, pretty much everyone has an agenda.

“We know it’s an aggressive marketplace, but the total money in primetime is nowhere near the $9 billion that people are talking about,” said one buyer who is still waiting for spending plans from some of the agency’s clients. “Budgets are up, but the question is, to what degree.”

It is not very unusual for buyers to lowball how much money their clients have to spend as the upfront begins as part of the market posturing that inevitably goes on. “It’s part of the gamesmanship,” said one cable network sales executive. “They send in an initial registration and then it grows. We’ve been conditioned by the agencies to think that their opening number may not be the full registration.”

Deal-making didn’t start until late last Thursday. “A lot of networks aren’t pushing the market,” one buyer said. “It’s good that this week didn’t turn into quite the frenzy that some people were expecting,” according to another buyer.

Nevertheless, once the first deals get made, buyers tend to fall in line. “It becomes less about supply and demand and more about what did the other guy pay,” conceded one buyer. “TV is still important to advertisers. They’re going to have to pay what the market bears.”

E-mail comments to jlafayette@nbmedia.com and follow him on Twitter: @jlafayette