With the writers' strike settled and spring nearly here, both broadcast and cable networks are forging ahead with their annual upfronts, with some kicking off as early as this week. It's too early to handicap the market, but media buyers are already analyzing the unique uncertainties on their minds.
The issues include the strike's impact on the business, a potential recession and some networks' push to sell time based on the inclusion of seven days of DVR viewing (“live plus seven”). Many said uncertainties surrounding these issues would lead to an upfront market that will be flat, at best.
Last year, despite having to cut deals based on a new currency, which included three days of DVR statistics, as well as live viewing, networks were able to squeeze out increases in upfront sales, closing the market with $9.19 billion committed from advertisers. That was up about 5% from the $8.95 billion they got the year before. A total cable tally for upfront 2007-2008 is harder to come by, but buyers said cable wrapped the season with CPMs up about 8%, even better than broadcast, whose collective CPMs were up 7%.
Probably the biggest upfront issue plaguing ad buyers is just how much the strike will affect negotiations. Some buyers say the strike and its hobbling of some development plans will prompt broadcast networks to approach the bargaining table with humility. They're coming with less product, in some cases, and shaky ratings. Without having been able to air full seasons of shows, they can't yet hold up a full year of ratings based on the DVR-viewing “C3” metric they adopted last year.
Cable networks, many of whom saw a bump in ratings for their reality programming when scripted broadcast shows were in reruns, could have an easier time. They may tout those numbers and make a play for dollars that otherwise could have gone to broadcast or new media.
“There's no definite dynamic as to what degree of post-strike audience shift becomes institutionalized as opposed to temporary and how that may affect advertising investment,” says John Rash, senior VP, director of broadcast negotiations for Campbell Mithun.
While deals are always client-specific, it's unclear if networks will push to do some of them this year on “live plus seven” Nielsen numbers. Last year, a pioneering deal between NBC and Group M set a precedent for upfront deals to be cut based on live viewing plus three days of commercial data, and now buyers say some networks may push for the inclusion of four more days of viewing. Again, that may be difficult given that networks don't yet have a year's worth of C3 numbers for shows interrupted by the strike.
“DVR penetration's up, but with a handful of these shows it's still a guessing game on what the numbers are because they won't be back airing until next year, so I don't know that there's a groundswell of support for even more involved numbers right now,” says Brad Adgate, senior VP, director of research for Horizon Media.
The state of the economy, always a factor influencing the upfront's health, may have more sway this year. With many investors fearing recession, advertisers could hold back money or look for spending options that are more affordable than TV. New-media companies that have continued to prove their relevance and ability to attract viewers over the past few years could benefit from that fallout.
“If the economy lags, advertising could lag, too,” says Marlowe Sidney, VP, associate director at Initiative. “Networks could be more humble or they could be aggressive and strike while the iron's hot before a recession.”
While all of the broadcast networks plan their usual stage shows, save for NBC, which plans a scaled-back “spotlight event” in addition to individual agency drop-ins from entertainment chief Ben Silverman, cable networks differ in their planned presentation styles.
Some networks, including National Geographic, are shunning parties and presentations in favor of smaller meetings with press and advertisers. The network plans meetings with the press this week. Others, like USA Network and The Weather Channel, will take those small meetings in tandem with the traditional, if slightly scaled-back, parties. Still others, like A&E Network and History Channel, are still firming up plans for their upfront presentations.
Kids cable networks traditionally kick off the season and this year's no different—Nickelodeon plans a March 13 breakfast and presentation at Hammerstein Ballroom.
Others that have announced plans include The Weather Channel, which plans an event that night at Espace with musical duo Gnarls Barkley performing; Sci Fi, which has slated a Battlestar Galactica press conference and upfront press party with network stars on March 18 at the Morgan Library and Museum; Hallmark Channel, which plans a private tour, cocktails and dinner at The Museum of Modern Art on March 25; USA, which plans an event at the same venue the next night; and Scripps, which has scheduled an April 8 breakfast for its suite of cable networks at Cipriani.