Broadcast Network Upfront Volume Tracking Flat

TV advertising market appears to have been less robust than expected

By Jon Lafayette -- Broadcasting & Cable, 6/11/2012 11:21:40 AM

With the broadcast networks nearly done with their upfront sales, the TV advertising market appears to have been less robust than expected. Volume for the broadcasters was tracking flat at best, according to media buyers, while cable appeared to be headed for a gain of 5% to 7%.

With the softer demand, the price increases the networks got were smaller than in last year's strong market, but still significant. The volume and pricing might have left the networks with more inventory than planned to sell in the scatter market. "Everybody had to recalibrate a little bit," said one buyer.

A wild card in this year's upfront was General Motors, the third-largest TV advertiser, which, working with new media agency Carat, was seeking doubledigit primetime price rollbacks from the networks.

Fox, the first network do upfront deals, reacted to GM's demands by refusing to sell the automaker commercials during the NFL games it airs, which have been an important part of GM's media strategy in the past. It was unclear at presstime if GM had been able to make a deal with any of the broadcasters.

"Agencies often promise better pricing to new clients, but it's the way they did it that rubbed people the wrong way," said one senior ad sales executive.

The CW was the first network to complete its deals, selling about the same $400 million worth of commercial inventory as it did last year at prices about 7% higher, despite lower ratings. The CW's sales include commercials in its shows watched by its younger-skewing viewers online and on mobile devices.

According to industry sources, CBS was getting price increases on a cost-perthousand viewers (CPM) basis of about 8-9%. Fox was getting increases of about 7-8%, ABC about 6-7% and NBC about 5-7%.

In cable, Viacom, whose as sales growth has been slow, went out early, offering below-market price increase in exchange for higher volume. Rival networks disapproved, but buyers said it bought Viacom goodwill.

And while other major cable groups, including Turner Broadcasting, NBCU and Fox, were making deals with price increases in the same range as the broadcasters, some smaller cable groups were getting good volume increases by foregoing price hikes, buyers said.