Television upfronts

Advertisers are willing to give the big broadcast networks a price increase for ad time this year – but not as much as they did in 2013 or 2012.

Three of the Big Four nets have opted to seek price increases in this year’s upfront market that are narrower than they were in the 2013 haggle, according to media-buying executives and other people familiar with the situation. The agreements by Fox, ABC and CBS constitute a signal that this year’s market – when the big U.S. TV outlets try to sell the bulk of their ad inventory for the coming season – is less robust than in recent years. Buyers suggest smaller ad budgets have been registered for TV by Madison Avenue amid heady competition from new digital players also looking to get ad support for video content.

The narrower increases are for the cost of reaching 1,000 viewers, a measure known as a CPM that is a central part of these annual discussions between TV networks and advertisers for the cost of advertising time. Network sellers may be agreeing to the narrowing increases in the hopes of driving greater volume of ad commitments overall.

ABC has begun seeking CPM hikes of between 6% and 7%, according to media buyers and a person familiar with the situation. In 2013, ABC pressed for CPM increases of 7% or more. CBS likewise has begun to seek CPM increase of between 6% and 7%, according to media buyers. In last year’s upfront market, CBS sought CPM hikes of around 7.5%. CBS declined to comment. ABC said executives were not available to comment.

Fox, which often opts for CPM hikes lower than its rivals as a means of driving volume, has in some cases accepted CPM increases of between 3% and 4%, according to a person familiar with the situation. In 2013, the network sought CPM increases between 5% and 7% in 2013. CPM rates being sought by CW could not be immediately determined.

This upfront marks the third consecutive session in which CPM increases have come under pressure. The pushback by advertisers is a byproduct of the continued splintering of TV viewership sparked by the availability of new video-streaming devices that allow TV fans to watch their favorite programs in new and different ways, often not in front of a traditional TV set.

At the same time, given dire predictions by ad buyers and analysts before the market started, CPM hikes in the mid-single-digit percentage range may be better than many people had expected.

In this sort of environment, advertisers are seeking outlets where audiences are stable or growing – and are willing to put more dollars into places that can demonstrate such a dynamic. The five English-language broadcasters have scored a big win: deals with large ad-buying entity GroupM that gives them credit for people who watch commercials for primetime shows as much as a week after they air. The deal should add viewers back into the TV networks’ schedules and could serve as a spark to get other advertisers to do similar deals in the moths ahead.

NBC has been the outlier in the market. The Peacock, buoyed by a resurgence in its adults 18-49 audience – the demographic most coveted by advertisers – has been seeking CPM increases of 8%, according to buyers and other people familiar with the situation. In the previous upfront, NBC sought CPM hikes of between 7% and 8%.

NBC’s ability to score a bigger increase than its rivals does not necessarily mean it’s getting the highest prices in the market. The network saw its pricing power shrink in the recent past as it suffered from a lackluster pipeline of programs. Under NBCUniversal CEO Steve Burke, the parent company has made narrowing the pricing gap between the NBC broadcast net and its rivals a top priority.

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