Fox network is allowing marketers to push back the deadline on second quarter cancellation options to February 1, according to Tony Vinciquerra, News Corp., chairman and CEO of Fox Networks Group. Vinciquerra, delivering a general business outlook at the Citi media investor conference today, said some marketers had also requested a February 15 deadline.
"We've not had requests yet," he said referring to cancellations. "A number of [advertisers]have asked to back up to Feb 15, they want to see what's happening in the marketplace," he said.
The extent of the cancellations are watched closely because they indicate the strength of the ad marketplace which in turn plays into pricing talks in the ongoing year round scatter market. So far pricing has held steady despite efforts by ad agencies to go back to sales executives and ask them to renegotiate their upfront deals in the light of the tough environment.
Marketers make promises to buy advertising time as part of their upfront commitments, made annually in May. The networks allow companies to take as much as 50% of that commitment off the table, every quarter. The deadline for making such decisions is typically 60-90 days before the quarter begins.
The first quarter cancellations – made in November – were minimal for Fox network which reboots American Idol every January and is this year also airing 24. Cancellations were in the range of 2.5% for the first quarter, said Vinciquerra adding that the real start to this season begins in new year, since so little was introduced in the fourth quarter of 2008.
Even so, Vinciquerra expected Fox to be affected given the overall poor sales climate. “We are in a recession. There is no surprise here. In 2007 consumers spent $800 billion more than they earned, in 2008 has to be $400 to $500 million.”
“We are going to have a tough 2009 and advertising will erode to some degree because consumers are not spending. The question is what categories or genres will be affected by that.”
Separately, Vinciquerra alluded to a slew of corporate strategies aimed at slowing the growth of DVRs. “DVRs are a threat and we’re working on ways to mitigate that, we’ve some pretty specific strategies to limit the growth," though he declined to expand further on what those initiatives involved.