Thanks largely to the battered economy, the annual spring rite of predicting the total upfront haul is as tough as it's ever been. But as always, that doesn't keep anyone from trying.
Last year, broadcast networks managed to negotiate CPM (cost per thousand) increases anywhere between 5% and 10% for a total of $9.2 billion. But with the stock market struggling, March retail sales falling back after two months of gains and a tepid second-quarter scatter market, this year may be different.
While most predictions put the upfront down this year, the degree to which it is expected to fall is varied. There are the pessimists, such as one sales executive at a relatively large cable network who would only give his dour projections on the condition of anonymity.
"I think anybody is being foolish if they think there's going to be an increase this year; flat is very optimistic," the executive said. "It's all up in the air, but you would expect broadcast will be down 10%-15% and cable to be down on average 6%-8%. If you're a tier-one cable network, you could beat the market, but it will be a negative."
But most predictions seem to be more conservative. David Joyce, a media analyst with Miller Tabak & Co., predicts, "Volume will be down, but in the single-digit percentages...The networks will be withholding a bit to keep pricing up...We're looking for signs of a perk-up of advertising."
Advertising consultant Jack Myers predicted earlier this year that spending for the full year will be down 4%-6% overall.
And obviously, pricing is the battleground, and the posturing is well underway. A number of agencies surveyed by B&C said they are seeking aggressive rollbacks in pricing. One senior agency executive even claimed, "If there aren't negatives attached to upfront deals, then not one penny will get spent."
Gary Carr, senior VP and director of broadcast at TargetCast, agrees: "There is no question every agency is looking for rollbacks, or flat at best. That will be the fight, and it depends where everyone comes out; some networks might come out bullish."
And the networks indeed may dig in. A source at NBC Universal, which is giving its 10 p.m. weeknight hour to Jay Leno, told B&C this week, "No rollbacks."
But one thing many predict is a slow-developing sales season. Some see six weeks of silence after the dog-and-pony shows in mid-May, while the two sides mull over pricing and readjust negotiation strategies until they can regroup after the July 4 weekend.
Meanwhile, the cable road shows remain in full swing-agencies are seeing two networks a day in some cases. "We don't see any lack of quality from cable or broadcast," says Harry Keeshan, executive VP of national broadcast at PHD. "That's somewhat surprising given the economy and the dynamics surrounding us."