Upfront gains cheer CEOs

So far sales have moved at a good clip

Upfront advertising sales activity is moving at a fast clip this week, and that’s music to the ears of showbiz CEOs.

“The business we’ve written so far has been good and in line with what we expected,” Disney prexy and CEO Robert Iger told Wall Streeters on Wednesday during a Q&A sesh at the Sanford C. Bernstein investor conference.

Iger cautioned that ABC and the Mouse’s cable nets were still in the early stages of dealmaking and that it was “too early” to predict the overall level of gains in this year’s upfront, compared to last year’s depressed conditions. But the overall strength of demand for TV time, which has recovered rapidly since the start of the year after taking a big dive in 2009, set the table nicely for a strong upfront.

CBS Corp. chief Leslie Moonves, speaking in a separate session at the same confab, echoed Iger’s sentiments.”We’re very pleased with where the market is,” Moonves said. “There’s a lot of activity.”

Rupert Murdoch, in an interview Wednesday with Fox Business Network, also joined TV’s optimists club.

“Some local television stations are recovering very well in revenues,” he said, referring generally to the state of the ad market. “It’s not back to the boom times of 2007, but it’s certainly very healthy.”

Industry insiders are projecting that CPM rate gains for the Big Four networks will average out to the 5%-10% range for the Big Four broadcast networks.

Total revenue for ABC, CBS, NBC, Fox and CW could be up as much as 10% from last year, when the nets took a beating and the upfront haul for the five broadcasters dropped about 15% from 2008 to about $8 billion.

The major broadcast and cable nets typically book advance commitments for as much as 70%-80% of their ad inventory for the coming TV season during the upfront sales frenzy, which generally follows close on the heels of the mid-May fall sked presentations.

Last year, as advertisers reacted to the economic meltdown by slashing marketing budgets, the nets and major media buyers were in a standoff over pricing, and the upfront market didn’t get going until mid-July. This year, business has returned the pattern of flush times, when strong demand spurs buyers and sellers to cut deals soon after the Memorial Day weekend break. The bulk of the dealmaking is expected to be done by Friday.

A CW spokesman confirmed Wednesday that the netlet’s blurb sales “are moving rapidly.” CW is seeing growth in key ad categories including automotive, retail, wireless service providers and health and beauty, the rep said.

Fox revved up the market by moving quickly to write business Tuesday (Daily Variety, June 2). With the health of the upfront market assured, the big remaining question is how much volume the major nets will sell in long-term upfront deals and how much will be held back for the short-term scatter market. The strength of the scatter market in the past few months has given advertisers incentives to place their bets early in the upfront. Upfront deals offer pre-determined pricing and ratings guarantees for spots, while prices fluctuate with demand in the scatter market and generally don’t come with ratings guarantees.

Moonves noted that CBS sold only about 65% of its inventory during last year’s upfront because pricing was so depressed. The Eye’s strong performance during the season that just wrapped also strengthened its ability to capitalize on the heat in scatter, where prices were up as much as 30% over upfront levels, Moonves said.

“We’re not afraid to gamble,” Moonves said. He predicted that CBS’ volume this year would be “between 75% and 80% — probably closer to 80.”

Moonves refused to predict that CBS would be the highest-grossing of the Big Four in the upfront. In recent years CBS has topped the $2 billion mark in upfront coin, but this time around, Fox has the 2011 Super Bowl to help fill its coffers.

“All four networks are going to do well,” Moonves said. “The thoughts (about) the death of network TV have been a bit exaggerated.”

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