Upfront 2009: Deadlock broken; now everyone's talking

After an eight week impasse, the upfront deadlock has been breached. Real deal talks between buyers and sellers began in earnest Thursday, according to broadcast network and cable executives, who cautioned that such news didn’t necessarily indicate that the market was about to break. Others are preparing to get down to serious business by Monday. (Click here for complete upfront coverage.)

One senior cable industry figure confirmed that things are indeed moving in the cable market. “The pace of registration is picking up and there is a greater sense of agencies’ specific needs. Some deals are beginning to get done.” A broadcast network executive said: “To say deal talks have begun wouldn’t be wrong.”

Several executives said agreements had been wrapped already in cable, though specifics were tough to come by. “There are definitely deals done in cable,” said one executive at a major cable channel. The activity appears to be centered at NBC Universal, Discovery Communications and Turner, according to several sources. None of the officials involved would comment.

One executive said Turner had done some “partial deals,” adding that, “They’ve come to an agreement on the money they’re looking at and then there’s more money that is being proffered if they go fish for it.” Translation: cut the CPM rates and you’ll get more money. None of the sources would discuss the CPM levels of those cable deals and many noted the high level of secrecy surrounding talks this year a strategy aimed at ensuring a better deal than rivals.

Some media agencies have asked TV partners to sign non-disclosure agreements, while others have asked for verbal assurances that their deals will be kept secret. “Everyone likes to think they got the best number and they just don’t want to share,” said one cable executive. Executives interviewed for this article preferred to remain off the record for fear of scuttling deals.

Even while talks are proceeding in a more positive direction, a gap still remains. Some top tier cable outlets remain hopeful they can write business at flat to last year or to negative two at worst; buyers are hoping to write CPMs at negative seven or eight. “Everyone’s looking at who’s going to bite at a negative five or six,” said one cable executive saying agencies’ clients simply want to see blood at all cost. “They all want to see vendor blood and that is not an easy thing for a buyer.”

Now that budgets are being registered more fully, sellers have greater visibility about what the total dollar volume will be. Not surprisingly it is down, according industry executives surveyed by Broadcasting & Cable this week. “The money is down between 10-12% overall,” said the head of a major cable channel. If that figure holds across the board, that is a slightly less the 15% drop some Wall Street analysts had predicted.

One category reportedly spending significantly less is movies studios which are cutting back on theatrical releases and DVD promotions, as consumers switch to DVD rentals and away from purchasing discs. Big entertainment conglomerates including Disney have said they are looking to cut marketing costs across the board. “Movies are spending less and DVDs are terrible,” is how this person characterized the market, adding “some networks are seeing 30-50% cuts, our movies could be down 15-20%.” Movie buyers could simply be holding out more money to use in the scatter market however. The pharmaceutical category was also said to have cut somewhat.

On the broadcast front, all the big networks continue to talk with little to report at this stage. That hasn’t stopped the rumor mongering about how each of the big three are jockeying against each other, given that NBC Universal is in a slightly different category given its position across the network and cable markets.