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Broadcast Shows Strength in $9.1B Upfront Market - Broadcasting & Cable

Broadcast Shows Strength in $9.1B Upfront Market

Turner takes lead among cable groups
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The upfront ad
market again proved that broadcast is far from dead.

The Big Four
broadcasters rang up about $8.7 billion worth of commitments to primetime
advertising during the 2011-12 season, up 9%. Add in the CW, and the total
rises to $9.1 billion.

Advertisers
paid between 9% and 15% more for commercials on a cost-per-thousand viewers
(CPM)  basis than they did the year before, helping to make up for the
lower ratings the broadcasters delivered.

"There was a
recommitment to broadcast, a recommitment to television," said one network
sales executive.

"TV is a
vibrant medium," agreed one buyer. "It's a pretty rough economy out there for
everybody but the media owners."

The strength
of the broadcast market pumped up cable. Turner Broadcasting, which usually
enters the market with aggressive price goals, was the first cable group to
complete deals with the majority of agencies. The prices buyers agreed to pay
were on the high end of what the broadcaster accepted.

Even at the
prices Turner was seeking, "cable remains at a competitive price point versus
broadcast and in an inflationary environment you're naturally going to try to
shift dollars toward the lower price points," one buyer said.

Most sales
executive said the market came in about as they had expected-two months ago.
But there was a period of irrational exuberance just before the broadcasters
made their presentation in May when is seemed like a robust market was turning
into one of nearly unprecedented strength. But when buyers got their actual
budgets, and they were up but not way up, it took a market to adjust to the new
normal.

"There was
money shifted from scatter, and some categories we thought we strong were
strong. Overall we're pleased," said one sales executive.

CBS registered
price increases on a cost-per-thousand viewers (CPM) basis in the 13% to 15%
range, according to a source familiar with negotiations. The volume of advertising commitments sold was about $2.65 billion, up from $2.5 billion a
year ago.

CBS had come out aggressively, asking buyers to fork over increases of 18%. CBS
CEO Les Moonves publicly said that the network would get prices in the
mid-teens, or sell its commercials in the scatter market.  With Fox
opening the market and agreeing to increases in the 10% to 11% range, it took
time for CBS to get its price. But at the end of the upfront, CBS emerged with
the biggest price increases and the most sales of any broadcaster.

 ABC's
price increases average close to 11% and primetime sales were about $2.4
billion, according to market sources.

The network
said in a statement it was able to achieve "significant increases in
pricing." It added that "this positive response helped drive great
volume across the board, and across all dayparts, and reinforced the confidence
that national advertisers have in the power of ABC."

Fox was the first to announce that it was done with its upfront sales last
week, drawing $1.9 billion in volume at price increases that averaged about
11%. . And the CW wrapped up its upfront earlier this week, garnering about
$410 million.

Among the
cable networks, agency executives said Turner had done the most business,
getting increases in the 12% to 13% range.

Turner was
getting especially strong pricing for its original programming and for recently
acquired off-network hits The
Big Bang Theory
 and The Mentalist. TruTV, which
raised its profile during Turner's coverage NCAA Men's Basketball Tournament
was getting pricing similar to TNT and TBS, sources indicated.

NBC Cable also
came out aggressive, asking for increases of 17% to 20% for its biggest
networks, including USA Network, which has been considered underpriced
considering it ranks as the top rated cable network. Sources said NBC Cable
began doing deals that called for price increases in the low to mid-teens for
its big networks. It was also getting double digit price increases for its
smaller networks.

Also said to
be doing business were Fox's cable networks at 10% to 11% and MTV Networks,
which was getting about 8% for struggling channels like VH1 and Spike and 11%
for Comedy Central.

Cable network
sales executive said they thought the upfront would be up about 12% in volume,
with price increase ranging from 8% to 12%.

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