Nets spar with buyers

Upfront sales pause over TiVo payment

Just when money should start changing hands in the annual ad buying rite known as the upfront, networks and advertisers have hit a snag.

The two sides are bickering over payments for newfangled ways in which viewers are watching shows.

Led by ABC, the webs are insisting that Madison Avenue pay them for viewers who record shows and watch them later on digital video recorders.

Advertisers are balking at the prospect of paying for anything more than what they traditionally do to reach viewers in front of their TV sets.

Nets want ratings projections to be based on Nielsen’s “live-plus-seven” reports, which include live viewing, plus any viewing that takes place within a week of the initial broadcast.

A compromise — such as agreeing to Nielsen’s “live-plus-same-day,” which counts DVR use as long as it’s before the next morning — was a possibility before the weekend. (So too was the possibility that all discussion would end and the deals would start flying.)

“Sooner or later they’re going to have to write some business,” says Carat director of research Shari Anne Brill. “Sooner or later we’re going to have to buy some ad spots.”

By midweek, ABC sales prexy Mike Shaw had drawna line in the sand for the networks. Last year, armed with newly minted hits “Desperate Housewives” and “Lost,” and with market share to take from NBC, Shaw seized the moment and booked $2.7 billion in ads over a 48-hour period.

This year, Shaw has played hardball over DVR viewing. ABC is moving its biggest hit, “Grey’s Anatomy” to Thursday to battle with CBS juggernaut, “CSI,” a move that may trigger unprecedented recording as fans try to keep pace with both shows.

DVR users, whom Nielsen began measuring earlier this year, will form a greater percentage of the viewing audience as the gadget likely reaches 18% of American households by the end of the year.

They’re more affluent and watch more network TV than those without DVRs, but the networks don’t earn a dime for that extra viewing.

Advertisers consider the data too new and inconclusive to affect ad rates; ads viewed after the fact have diminished value, they say, and there’s no way of knowing from Nielsen which ads are watched and which are skipped.

While the networks would love to see Shaw succeed, some execs are quietly starting to wonder if it makes business sense to let the principle stand in the way of selling some ads.

“Part of the problem is we don’t know enough about the Nielsen info yet to lock into something that everyone’s comfortable with,” says one network exec.

And the longer Shaw waits, the more precarious his position becomes.

“Conceivably, you could see someone else take the lead,” says one ad buyer.

With relative ratings parity among the top three networks, either of the other two could break the stalemate.

CBS, with its stable of steady hits and dominant position on Thursday nights, could try to take some share from ABC.

Then there’s Fox, which has never led an upfront. But the net won the 18-49 crown for a second consecutive year, and has enough hits to set the market — including “American Idol,” “House” and “24.”

Meanwhile, webheads warn that the live-plus-seven debate is just one issue holding up sales.

“It’s become an idea-driven marketplace as well,” says an exec. “Marketers want more than just ‘spots and dots.’ And those more complicated deals are going to take weeks to create.

“The 30-second unit is still important for a lot of people, but advertisers are now looking to build around that.”

In years past, the upfront marketplace broke soon after the final presentation clip rolled and the last chilled shrimp was eaten by a partygoing media buyer.

Network sales execs and media buyers alike canceled all Memorial Day plans, as the lion’s share of deals were hammered out within a crazy, sleepless 48-hour period.

But the network gravy train has finally stalled — double-digit CPM (costs per thousand) increases may never happen again — with media buyers willing to play hardball.

Bill Morningstar, exec VP of national sales at the CW, says those days of frenzied, all-night upfront billing sessions are over. With the upfront tally predicted to be flat at best, network execs are looking to shift the focus away from those numbers and toward a year-round tally (including scatter).

“We’re going to do business this week, we’re going to do business next week and be in business 50 weeks after this,” Morningstar says. “The business has evolved, and deals are a lot more complicated now. It takes a little more thought, detail and time to structure the deals.”

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