Ticking clock spurs deals

The Big Four nets and CW are finally seeing some movement in upfront ad sales for the upcoming season — after weeks at a standstill.

Early anecdotal reports indicate that the nets have been successful in holding the line against the steep price cuts of 10%-15% that had been sought by many advertisers. Industry insiders said the standoff between the nets and media buyers eased up this week as both sides grew more antsy with the fall season launch barely eight weeks away.

Knowledgeable sources said that ABC, CBS and Fox are slowly but surely writing business at discounts of 1%-3% compared with last year, or at flat rates for the most sought-after shows (think Fox’s “American Idol,” ABC’s “Grey’s Anatomy,” CBS’ “The Mentalist”).

NBC is in a tighter spot given the net’s performance of late and dearth of bankable ratings franchises. The Peacock is said to be facing 5%-7% declines on average from last year’s CPM (cost per thousand viewer) rates. CW is believed to be down in the 3% range but still finding demand for its sked heavily targeted to the young femme “Gossip Girl” crowd.

Last year, the Big Four and CW booked about $9.2 billion in advance commitments during the upfront. This year, with many marketers pulling back on spending, the upfront tally has been forecast to drop as much as $1 billion-$1.5 billion.

There was a palpable sense of relief among buyers and sellers on Thursday that dealmaking is finally picking up steam, even though it’s going at a much slower pace than in years past.

Typically, the nets have booked advance commitments for as much as 80%-85% of their ad inventory for the upcoming season within a few weeks of the mid-May sked presentations. But this year, the gyrations of the economy forced blue-chip advertisers to heavily scrutinize their TV ad spending, which had a ripple effect, delaying the process of advertisers finalizing their spending budgets and media buyers presenting those budgets to the networks.

“It’s been a very puzzling time,” said Gary Carr, senior veep and exec director of national broadcast for media buyer Targetcast tcm .

“Initially, there was a big gap between what both sides wanted. So the one-to-two-week mating dance that usually happens has gone on for a month. And now everybody’s realizing, ‘Hey, it’s almost the fourth quarter. We’ve got to get these deals done,’ ” Carr said.

Net insiders say there’s no doubt that the dealmaking process will extend into next week and possibly beyond. There’s no 72-hour frenzy to write business as there usually is in flush years, when net sales reps and media buyers often spend the night in their offices.

“We’re not seeing the pizza deliveries and the Chinese food deliveries,” said one net exec. “People have been going home at night.”

Other net sources also emphasized that elaborate product integration and multiplatform deals involving online and other media are an increasingly important part of upfront sales, and those kinds of deals take longer to hammer out than a traditional upfront buy based strictly on CPMs.

“This year, because the money is down so much, there’s less pressure, and people are doing deals in a civilized manner,” Targetcast’s Carr said.

The big remaining question is how much inventory the nets will hold back for sale in the scatter market during the course of the 2009-10 season. There’s much speculation that the nets will hold back a much greater share of ad time this year on the hopes that the economy will improve by next year, which would presumably goose demand and allow the nets to sell blurbs at a higher price in scatter.

NBC Entertainment co-chairman Ben Silverman said as much on Wednesday at a media confab, noting that distressed brands like General Motors are going to have to make a big marketing push at some point.

“We’re all collectively as a broadcasting business playing for that return” of demand among top marketers, Silverman said at Fortune mag’s Brainstorm Tech confab in Pasadena, Calif.

NBC has also faced some slow-going in selling its Monday-Friday 10 p.m. entrant “The Jay Leno Show.” Media buyers are said to be balking at paying full-freight primetime rates for the variety show. NBC pointed to a wide-ranging deal that the network cut with McDonald’s for sponsorship and a sweepstakes promotion in “Leno” and other Peacock shows as signs that the network’s 10 p.m. experiment has been embraced by advertisers.

Once the broadcast nets have established the upfront ceiling on prices, media buyers will turn their attention to the major cablers. Cable, which has made inroads in taking ad market share away from broadcasters during the past few years, is expected to be well positioned for the upfront as buyers look to economize with lower-priced cable spots.

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