The year has just begun, but already the 2010 upfront selling season is taking shape. NBC announced this month that it would scrap its recent “inFront” approach and return to a traditional presentation in May, and media agencies are expecting their first round of upfront visits from the smaller cable players beginning in mid-February.
As for pricing, a B&C survey finds that buyers and sellers expect a stronger upfront and shorter negotiating period than in last year's depressed and protracted season. But apart from the question of whether pricing will be up or down, agencies appear more focused on how the general remapping of the TV landscape may affect the market.
Mergers, Acquisitions and Retrans
To be sure, Madison Avenue is anxious to see what NBC has planned for its 10 p.m. slots beyond the post-Olympics schedule it announced last week. NBC, of course, announced Jan. 10 that The Jay Leno Show would no longer air at 10 p.m. five nights a week as of Feb. 12. Post-Olympics, the 10 p.m. slot will be filled as follows: Law & Order on Mondays; the new drama Parenthood on Tuesdays; Law & Order: Special Victims Unit on Wednesdays; and The Marriage Ref on Thursdays. Dateline will run 9-11 on Fridays.
(The network resumes its Upfront Week leadoff spot, kicking things off on May 17. Fox follows later that day, with ABC presenting on May 18, CBS on May 19 and The CW on May 20.)
But it's NBC's future parent company that is on many minds. “One of the big things we're looking at is what effect the mergers are going to have,” says one agency activation executive at a major buying group. “Comcast and NBC, but also A&E and Lifetime.”
The executive also suggests that broadcast networks' ability to gain retransmission dollars from distributors may even have a knock-on effect on the cable upfront. If, as feared, cable channels aren't able to raise as much in annual subscription fee increases paid by distributors—a direct result of that broadcast grab for cash—then the question for agencies is to what extent will cable ad sales teams be looking to shore up the difference with advertising dollars.
“We're going to be keeping a close eye on the affiliates' arguments,” says the executive about the station groups that are currently lobbying for cash from multi-service operators.
Last year, the upfront landed down some $1 billion, with networks holding back inventory for scatter and buyers and sellers engaged in a months-long standoff that only broke as the fall season was kicking off. With all broadcast networks and major cable groups discounting CPM prices last year, buyers rushed in at the last minute to get more money down at cheap rates before the scatter market officially got underway in September. Since then, many networks have reported a buoyant scatter market in fourth quarter 2009, with first quarter 2010 shaping up nicely so far.
“Cable is still in a very good position—ratings are up and broadcasters are down,” said Joe Abruzzese, president of ad sales at Discovery Networks. “If the upfront happened right now, Discovery would be in an extremely good place. Money flows to efficiencies and ratings.”
In a Jan. 13 report, Bernstein Research analyst Michael Nathanson noted, “Strong scatter market for both national and local TV inventory does point to a very powerful inflationary trend for coming 2010 upfront.” Fourth-quarter earnings calls, which kick off in mid-February, are likely to bring greater clarity on how upfront bases get established as management begins to shed light on how first-quarter sales are performing.
Upfront pricing, according to Peter Knobloch, CEO of media agency RJ Palmer, is “definitely going to be on the plus side. I don't think we'll get to a double-digit upfront, but we could be in the higher single digits.”
David Lawenda, president of sales at Univision, is expecting a better upfront as marketers begin to target Hispanic consumers as part of their mainstream buys. Even with last year's rollbacks, Univision posted dollar volume growth.
“We are very bullish on the road to the upfront,” Lawenda says, adding that fourth-quarter dollar volume was up 50%, while first-quarter scatter pricing is up double digits. He sees strong activity from consumer packaged goods and in the beverage and restaurant categories.
Still, Lawenda and others warn that it's too early to make a call on the strength of the upfront market, as executives on both sides of the table will want to see how second-quarter sales go so they can gauge the strength of demand. Caution is still very much the watchword.
A More Traditional Upfront
As ever, it's the programming that counts. The sales team for OWN: The Oprah Winfrey Network is already out telling the market to expect premium pricing for top-draw shows. The network, a joint venture between Discovery and Winfrey's Harpo Productions, is set to launch in January 2011; it is pitching itself at a CPM anywhere between what buyers currently pay for Discovery's TLC and Oprah's syndicated talk show—around $17 (a broadcast network's average CPM might be double that figure).
Elsewhere, Travel Channel, now under Scripps Networks ownership, is hoping to take back ad sales from former owner Discovery Communications in advance of upfront presentations. The network is being sold by Greg Regis, former VP of ad sales for Food Network, who was named senior VP of advertising sales in January.
Aside from the likelihood of an upturn, one broadcast network sales executive predicted that 2010's upfront would look much more like a traditional market than in previous years—something bound to please those worried that a lack of general commitments to the upfront might have damaged the annual TV ad ritual. And they are eager to remind clients that there have only been two quarters in the past 10 years when scatter pricing has fallen below upfront levels.
“If you can get in a position to take part in the upfront, it's the best way to go,” says one buyer at a major agency. “It is still a huge gamble to wait, and much more costly than any advantage [in putting all the dollars in scatter] in a down year.”