Broadcasters see upfront surge

Demand for deals was very strong

The broadcast nets got their wish. The upfront ad sales derby that came to a close for the Big Four and CW last week was markedly different from last year’s battle.

As many in the biz predicted, demand for upfront deals was very strong, with spending up across all major categories, especially those that were in the tank last year like automotive, financial services and retail.

The overall tally for the five nets is projected by industry insiders at around $8.5 billion-$8.7 billion — a healthy hike from last year’s haul estimated at $7.5 billion-$8 billion.

But some aspects of this year’s wrangling veered from predictions. The sales moved quickly, but not at warp speed as in the go-go days of yore when business was done in a round-the-clock frenzy.

Fox led the pack by cutting deals as soon as buyers settled back into their offices after the Memorial Day weekend, while NBC was the last of the English-lingo broadcasters to finish its dealmaking last Thursday.

Net execs’ dreams of double-digit CPM increases making up for last year’s 5%-10% declines were tempered by reality. Ad buyers were resigned to paying more this year, but not mega-increases. Biz insiders said Fox took the market’s temperature and opted to get out early with increases that averaged 8%-9%. CW took a similar tack and realized increases that averaged out to about 7.5%.

For select programs, Fox, CBS and ABC cracked the 10% CPM mark, but those were exceptions to the general trend of 8%-9%.

NBC finished out with an estimated $1.6 billion for its primetime sked, with CPM hikes of about 7%. The Peacock booked another $800 million-$900 million for its news (including the “Today” cash machine), daytime and latenight programming.

NBC’s ratings woes and turmoil in its primetime sked continues to take a toll on the Peacock’s bottom line. The net’s slate of new series for the coming season was generally well-received by buyers, particularly the spy-fy romancer “Undercovers” and laffer “Outsourced,” but there’s concern that NBC will be hamstrung by having to launch 12 frosh scripted series in 2010-11.

NBC Universal pushed hard during the past two weeks for buyers to cut deals for its cable properties at the same time as NBC — as opposed to the industry tradition of cable waiting until the broadcasters are done to begin their talks. That approach prolonged NBC U’s negotiations but allowed the company to call it a wrap Thursday for virtually all of its upfront dealmaking.

USA, not surprisingly, has commanded big CPM increases for its original hits such as “Burn Notice,” “In Plain Sight” and “Royal Pains.” NBC U’s overall upfront haul was pegged at about $4 billion, with the cable side posting a 20% increase in revenue over last year.

“This was a great upfront for the industry and our results reflect that,” said Mike Pilot, NBC U’s prexy of sales and marketing. For NBC specifically, he noted that “the market responded to our investment in new programming.”

Like NBC, the other broadcasters were quick to report big revenue gains, but year-over-year comparisons are complicated by the fact that each of the five nets sold significantly more inventory than last year.

CBS booked an estimated $2.5 billion, with ABC right behind at $2.3 billion-$2.4 billion. Fox nabbed about $1.8 billion-$1.9 billion, a tally that reflects its lower inventory base than the Big Three (Fox programs 15 hours of primetime a week compared to 22 for ABC, CBS and NBC, and Fox doesn’t have much non-primetime programming beyond sports.) The CW brought in an estimated $360 million-$375 million.

The major nets typically book advance commitments for 70%-80% of their available ad time for the upcoming season during the upfront sales process, when rates are predetermined and buyers receive rating delivery guarantees.

Last year, because upfront pricing was so depressed, the nets only sold about 65%-70% of their time in the upfront. They gambled, successfully, that a recovering economy would boost demand in the first half of this year for TV blurbs sold in the short-term scatter market. The scatter market in recent months has been on fire, with prices up as much as 30% over last year’s upfront. The strength of the scatter market virtually ensured that more dollars would flow to the upfront this year as marketers sought the most advantageous deals.

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