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Let the Upfront Buying Begin

Broadcast, cable, syndication markets all break this week 5/18/2003 08:00:00 PM Eastern

By the time you read this, the network, cable and syndication upfront ad sales marketplaces will have begun. Simultaneously. That's a departure from most years, when buyers usually started with the networks and then dealt with cable and then syndication.

It ought to move quickly, insiders say. The broadcast network market will likely be wrapped up by week's end, with record spending commitments plunked down at what has become the typical sizzling upfront pace.

The top-tier cable networks and syndicators are also expected to write substantial business this week, although it was unclear whether they will finish up by Friday.

"We're battening down the hatches," said David Levy, president of ad sales for the Turner entertainment and sports networks. "I think … we're going to see it break" this week, he said.

One major syndicator was expecting to start cutting deals last Friday.

Levy said he expects Turner and other top-tier cable networks to start moving their inventory simultaneously with the broadcast networks. Whether he'll finish or not this week will depend on how negotiations play out and how quickly buyers and sellers can agree on price.

Not surprisingly, the two sides differed on just how much more money will be in the marketplace this year. Agency executives estimate that the total will come in slightly higher—2% or 3%—than last year's record $8.1 billion broadcast-network upfront.

Bob Riordan, senior vice president, national broadcast, MPG, estimates that upfront dollars this year may total $8.4 billion, or about $300 million more than last year.

Riordan and others don't believe that any of the additional money in this year's market is "new." Rather, it is money that advertisers will spend upfront instead of holding for scatter to take advantage of better pricing.

Network executives were guessing that this year's upfront pool of dollars will be greater than the total suggested by buyers—perhaps in the high single digits, on a percentage basis, above last year. In fact, CBS Chairman and CEO Les Moonves said the market might reach $9 billion, or about 11% higher than last year's take.

But buyers say they won't pay it, Moonves was told. He responded: "It's the normal dance. Every year, it's 'Woe is me, we can't afford to pay it, we're not going to pay it,' and then they pay it."

But that attitude might cost CBS market share, says MPG's Riordan. "If CBS tries to price itself two or three points higher than NBC, they will not garner the dollars" to achieve parity with NBC in share of upfront ad dollars. On the other hand, if CBS "wants to go for share" and price its ad packages accordingly, it could reach market-share parity with NBC. "It's going to be close," he said.

Last year, NBC had the single biggest piece of the upfront pie with roughly $2.7 billion. CBS was second with a little more than $1.9 billion. ABC raked in about $1.5 billion, and Fox collected $1.3 billion. The WB garnered $580 million, UPN about $250 million.

Buyers say the biggest battle—both this week for share of the upfront money and next season for share of target audience—will between CBS and NBC.

Last week, Moonves predicted that CBS will "close the gap" next season with NBC among adults 18-49, a gap that now stands at just six-tenths of a rating point.

"He said that last year, too," said Roy Rothstein, senior vice president, Zenith Media. He believes that CBS may continue to narrow the gap, as it did this year. Whether it can close it and whether it really wants to remains to be seen: With an audience median age of 51, "CBS still has the highest median age of any network," Rothstein said.

And there's possibly a limit to how young CBS really wants to get. The reason? Drug money. CBS gets the dominant share of prescription-drug advertising, including more $200 million in such ads last year, according to CMR, the New York-based ad tracker. "That's a 35-plus demo," said Rothstein.

As for ABC, the consensus seems to be that network is taking small steps in the right direction but still is not a serious contender for first or second place next year. "ABC is in significantly better shape going into the fall than it was going into this season, but that's not really saying much," said Steve Sternberg, senior vice president, director of audience analysis, Magna Global USA. He and others question the renewals of Life With Bonnie
and Less Than Perfect,
"modest performers at best."

The network also failed to exploit its Bachelor
lead-in "because it didn't have any appropriate 10 p.m. dramas." Thursday still needs a complete overhaul, and, "possibly most important of all, ABC needs something on Monday," after football.

Agency executives said The WB, with a flashy production of Tarzan and Jane (he has moved to New York, and, like most WB stars, actor Travis Fimmel is a hunk) seemed to enhance their programming lineup.

"They should do at least as well as they did this season," said Rothstein. "I think they helped themselves on Thursday and a little bit on Friday and Wednesday as well."

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