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TV Upfronts Come Back Strong - Broadcasting & Cable

TV Upfronts Come Back Strong

As broadcasters recoup 2009 declines, with volume and price increases, cable networks prepare to feast
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Upfront Central: Complete Coverage from B&C

Television's upfront advertising market is coming in strong,
with broadcasters recouping much of last year's declines and cable networks
licking their chops.

Quickly after returning from the Memorial Day holiday, Fox
and The CW wrapped their sales during a short week, with each racking up
double-digit increases in sales volume and high-single-digit increases in
prices.

CBS and ABC, after wrestling with media buyers over whether
their price increases would be bigger or smaller than Fox's, ended the week
with most of their deals done after an especially long night Thursday,
according to sources.

NBC, meanwhile, was having discussions, but with buyers
looking to pay significantly smaller increases, no compete deals were being
reported.

The CW's sales were up 20% to about $370 million. Prices
were up about 7.5% on a cost-per-thousand-viewers basis. The network, owned by
CBS Corp. and Time Warner, also sold substantially more of its inventory than
last year, when just 65% of its spots were reserved in the upfront.

With its young-skewing programming, The CW is expanding the
number of commercials that appear online. A key part of its upfront strategy
was getting sponsors to buy advertising in its shows both on broadcast and via
the Internet. The CW says its strategy worked.

"We're wrapping this year's CW upfront, and thrilled that
our convergence initiative has been a resounding success with the advertising
community as the vast majority of our clients have bought both on-air and full
episode streaming online," said Rob Tuck, executive VP, national sales, in a
statement June 4.

Fox confirmed June 4 that it had completed its upfront
sales. The network said that its "volume and pricing levels [were] consistent
with our position at the number one network." Sources indicated that Fox sold
about 80% of its advertising inventory for next season, up from last year,
generating $1.8 and 1.9 billion worth of revenues. Prices were up by 8.5% to
9%.

Cable Plays "Supply
and Demand" Card

Cable networks were anxious to get going, and with buyers
paying more than they expected for broadcast, demand appeared to be strong and
some talks were proceeding rapidly.

Turner Broadcasting already had deals with some agencies
done, according to sources. Like the top broadcasters, Turner had been seeking
low-double-digit price increases but found the market to be in the high-single-digit
range. Some of Turner's deals included sponsors for Conan O'Brien's new
late-night show.

A sales executive at another cable network said that buyers
had already made counteroffers on price late in the week and that the
difference was "closeable."

With the market appearing as strong as expected, cable
networks were trying to play a new card: supply and demand.

In recent years, ratings for cable overall and for most of
the largest networks have been up. That increasing supply has made it difficult
for most cable networks to get the kinds of price increases the broadcasters
tend to get. It also means that while the ratings gap between broadcast and the
bigger cable channels was shrinking, the pricing gap was little changed.

With Turner's TNT and TBS, NBC Universal's USA and AETN's
Lifetime all recording lower ratings, executives there could argue, as broadcast
sales execs do, that lower supply should translate into higher prices.

One buyer scoffed at the idea because in the world of cable
there are always numerous alternatives for reaching whatever demographic group
is being targeted. That means that higher prices at the major cable networks
could create a trickle down effect, with buyers moving some money to lower-rated
cable network. In tighter markets, advertisers tend to concentrate their buying
on a smaller number of outlets.

"If Lifetime charges too much, you buy more Hallmark," said
one buyer.

During last year's down market, buyers were able to get the
networks to agree to let them cancel upfront buys as little as 30 days before
the end of a quarter instead of 60 to 90 days. 
Buyers said that they were able to retain those terms in this year's
negotiations.

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