With economic indicators pointing downward—skyrocketing food and fuel costs, foreclosures and layoffs—syndicators still remain confident that this year's upfront will be good to them.
What are they thinking?
First, the past has set a precedent. Last year's upfront was one of the strongest in years, with syndicators taking in $2 billion, up 3% from 2006. Broadcast networks fared even better, improving their take by 5% to $9 billion. Cable did the best, bumping up 6% to $7 billion. While this year's economy is one of the toughest since 2002, the year after the 9/11 attacks, syndicators don't necessarily expect the predicted downturn to take its toll on their business.
“Saving money on promotion and ad space is such a short-term fix,” says John Nogawski, president of CBS Television Distribution. “It makes more sense to find your efficiencies somewhere else, rather than cutting the one thing out of your budget that you know gets eyeballs.”
Moreover, an unpredictable economy actually encourages advertisers to buy in the upfront, rather than wait for the scatter market, which is usually far more expensive. This year, the scatter market was stronger than ever.
“If you hold money back for scatter, you know you are going to pay a premium,” says Larry Novenstern, head of broadcast and executive VP/joint managing director at Optimedia's integrated buying and planning unit. “Buying in the upfront has always been for two reasons: securing quality inventory at a guaranteed price. As long as those two principles are still there, people will keep buying.”
This year, not only was the scatter market tight, but far fewer advertisers than usual chose to exercise their option to not buy ads they agreed to purchase in last year's upfront. Typically, 15% of options are exercised; this year it was closer to 3%, says Bob Cesa, executive VP of advertising sales for Twentieth Television.
“I think we're going to have a very good year,” Cesa says. “Family Guy and Two and a Half Men performed well, and the staples are holding up. Meanwhile, the networks lost audience so there's definitely a shortfall as far as ratings are concerned. If the money stays flat, there will be the same money chasing fewer ratings points and that portends a decent marketplace.”
Beyond that, syndication has a few things to offer buyers that neither broadcast networks nor cable can. First, syndication has emerged with less ratings loss than either broadcast or cable after a year of Nielsen's new C3 ratings system, which rates the viewership of commercials within programs instead of just the programs themselves. The new C3 metric also measures digital video recorder (DVR) viewership. By that measure, syndicators have learned that 85% of its audience watches its shows live and stays through the commercials.
“We've been fortunate in those C3 ratings,” Nogawski says. “A lot of our shows are not TiVo-driven shows, such as Entertainment Tonight. You always need to watch that show today to see what's going on. That's the place where we've really benefited in those ratings.”
In addition, 71% of syndication's audience keeps watching through the commercials versus 41% of network audiences, according to the Manhattan-based Syndicated Network Television Association (SNTA).
“We offer the same programming for 52 weeks a year,” says Bo Argentino, senior VP of advertising and media sales at NBC Universal Domestic Television Distribution. “For many advertisers, that's a huge benefit and a huge constant in a world where other schedules are constantly changing.”
“People have a lot of loyalty to syndicated programs, and that gives them a higher communications value,” says Mitch Burg, SNTA's president. “When you put everything we have to offer together, I think that's why people turn to syndication.”
Burg also notes that syndicators' national advertising pods are far shorter than either broadcast's or cable's pods, and almost 50% of national ads run in the first position, meaning it's the first spot audiences see when a show goes to commercial.
“Syndication's average pod is two minutes and 21 seconds in length—that's 20%-30% shorter than network primetime and cable. And nearly 50% of our units run in the 'A' position, which means our viewers have much higher recall of what they've seen,” Burg says.
NEW, AND TRIED-AND-TRUE
With such long-running shows as Judge Judy, Entertainment Tonight and The Oprah Winfrey Show, syndication certainly can offer advertisers the tried-and-true. But it also has plenty on the horizon that's new and exciting.
First, several new projects will make their syndication debut this fall, including CBS's The Doctors, NBC Universal's Deal or No Deal, Warner Bros.' Bonnie Hunt and Disney-ABC's Wizard's First Rule. Add into that mix Warner Bros.' multiple digital projects, such as MomLogic.com and Essence.com.
Deal or No Deal takes a proven commodity from primetime and brings it to syndication, a formula that has worked in the past. Disney-ABC's Who Wants to be a Millionaire, launched in 2002, is the most recent example.
Deal or No Deal also offers something different: an established, highly interactive Website. NBCU is developing another site for the show's syndicated version, which the company hopes will attract additional advertising.
NBCU is highly focused on including other platforms, such as broadband and mobile, in its upfront sales. “Syndication is uniquely qualified to offer multi-platform opportunities because we own our own shows,” says Argentino, who besides Deal or No Deal is selling Access Hollywood and its highly trafficked Website, AccessHollywood.com, plus Martha, Jerry Springer and Maury.
Warner Bros., also emphasizing broadband, feels it's entering this upfront with its strongest lineup ever. Two and Half Men, TMZ and George Lopez all have performed better than expected, giving the studio lots of credibility as it pitches Bonnie Hunt to buyers.
“It's nice to have momentum,” says Michael Teicher, executive VP of media sales for the Warner Bros. Television Group. “It all comes back to the bottom line: Consumers will watch quality shows. We have no shows on the air that are marginal or don't belong on the air anymore.”
And Disney-ABC is taking a big bet with Wizard's First Rule, the first weekly first-run hour to come to syndication since Xena and Hercules in the late 1990s. Clearances for the show have topped 90%, with many stations planning to run the hour in weekend primetime.
“Demand for that show has been through the roof,” says Howard Levy, executive VP of advertising sales for Disney-ABC Domestic Television. “The ad market typically follows the stations, so that's a good sign.”