Insiders expect $9 bil-plus in advertising commitments

The upfront advertising sales market is on a high simmer. With demand for network TV ad time strong, industry insiders expect dealmaking for an estimated $9 billion-plus in advertising commitments for the 2011-12 season to accelerate this week.

Fox as usual was the first net to sit down in earnest at the negotiations table late last week, ahead of the traditional post-Memorial Day kickoff of the upfront selling season — in another sign of a strong marketplace. Execs aren’t talking publicly but sources say they are anticipating 10% to 11% CPM gains as advertisers pursue the younger audiences drawn to shows like “American Idol,” “Glee” and, Fox hopes, upcoming Simon Cowell series “The X Factor.”

Sources said Fox has done a lot of business with studio advertisers who are particularly time sensitive in their need to book key buys around opening weekends for specific films.

The rest of the Big Four and CW are actively doing the mating dance that precedes the rush of writing business. Most of the major advertisers have registered their upfront budgets with the networks, which is the first step toward formal dealmaking.

“It’s usually a good sign when budgets are registered this year that (buyers and sellers) are not that far apart on what they think the pricing should be,” said Gary Carr, senior veep and exec director of national broadcast for media buying agency TargetCast TCM. “That doesn’t mean deals will be done tomorrow, but the networks get a sense of how much money is out there.”

The major broadcasters set the pace of the market to start, but the strongest basic cablers — USA, TNT, FX, A&E Network et al — won’t be far behind, buyers predict.

“It is still early,” cautioned Tim Spengler, prexy of media buying agency Initiative North America. “Both sides are trying to figure out where the market is.”

But compared to two years ago when upfront negotiations turned in to a long slog deep into the summer, upfront dealmaking is expected to wrap up quickly this year because advertisers fear having to pay higher prices in the scatter market later on. Last year’s market marked a rebound from the spending cuts the networks suffered in 2009, when sales were hit hard by the global economic crisis.

Spengler said there should be “more fluidity” at the networks between linear and digital ad sales as online viewing of TV programs becomes more prevalent. Strong categories include auto, wireless, insurance, retail, pharmaceuticals and Hollywood studios, Spengler said.

Scatter pricing this season has been as much as 25%-40% higher than last year’s upfront levels, and that could make double-digit upfront increases achievable in the next couple of weeks, predicted Barclays Capital analyst Anthony DiClemente.

“Given the uncertainty surrounding the upcoming NFL season,” he added, “demand for upfront inventory could argue for higher pricing and greater volume for broadcast and cable primetime programming, as ad buyers will look to lock in broad audiences with ads on scripted and reality TV shows rather than sports/NFL games.”

DiClemente predicts the Big Four will bring in $9.23 billion this year, up from last year’s $8.58 billion. CW last year took in about $350 million in the upfront.

CBS is going into the selling period well-positioned after its eighth finish in the last nine seasons as the most-watched network. CBS Corp. topper Leslie Moonves has been bullish about the net’s prospects, predicting strong double-digit CPM growth to Wall Street.

But the Eye is facing some questions about how its highly rated Monday night comedy block will fare without Charlie Sheen as the star of “Two and a Half Men,” which means the Eye has to generate heat among media buyers about the ability of new star Ashton Kutcher to breathe new life into “Men” as well as the promise of its new fall laffers, “2 Broke Girls” and “How to Be a Gentleman.”

DiClemente projects CBS — with more top 20 shows among adults 18-49 than any network — could lead the broadcast pack by raising more than $3 billion in commitments during the upfronts, with pricing gains of 12%.

It may be that NBC and ABC hold back a beat on their negotiations to see how CBS and Fox fare. DiClemente predicts that fourth-place NBC will hold back a larger portion of its inventory from the upfront than its rivals in the hopes that “ratings trends will improve.”

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