Television upfronts

Now that broadcast networks have begun to write business in TV’s annual “upfront” market, cable players are preparing to join the fray.

Executives at Time Warner’s Turner suite of cable networks believe there’s an opportunity for volume gains in the 2014 upfront market, when U.S. TV networks try to sell the bulk of their ad inventory for the coming season.

The company, which operates TNT, TBS, CNN, Cartoon Network and other outlets, senses advertisers holding back dollars in negotiations with broadcast networks, according to a person familiar with the situation, and feels only a portion of those dollars can go to digital outlets. Turner’s operating premise in the marketplace, this person suggested, is that marketers still want video advertising and won’t be able to tuck dollars away in their corporate pockets.

As such, the company is likely to seek price increases in line with the top of the broadcast market, this person said. NBC, which has seen a recent surge in the audiences between 18 and 49 that advertisers seek,  has been pressing for increases of around 8% in the cost of reaching 1,000 viewers, according to media buyers and other people familiar with negotiations. The metric is also known as a CPM and is a central part of these annual discussions.

Turner is believed to be in discussions with agencies and advertisers, but it was not clear if the company had begun writing business as of yet. Other cable players, including Viacom and Discovery, have not moved significantly as of yet, according to people familiar with the negotiations. Meanwhile, NBCUniversal has been selling cable as part of a broader corporate effort to sell broader packages of inventory from broadcast, cable and digital. Turner is also taking a “cross-selling” approach in this year’s market, having consolidated ad sales at all TV networks and digital properties under a single executive< Donna Speciale.

One executive familiar with upfront talks this year suggested leading cable networks would likely seek CPM increases of between 6% and 8%. Turner sought CPM increases of between 7% and 8% in last year’s upfront haggle for its entertainment networks, and was able to secure volume increases.

Turner’s TBS secured approximately $917.7 million in ad revenue for all of 2013, according to data from SNL Kagan, while CNN took in about $293.2 million. Last year, Kagan forecast TNT would take in over $1 billion in advertising revenue. Not all of this money is committed during upfront talks; sometimes, advertisers hold back money to spend on “scatter,” or advertising purchased much closer to the date it actually airs.

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