Upfronts 2014: All Eyes On NBC To Set Market Prices

Television upfronts

Everyone wants to know how the Peacock will strut.

In the still-embryonic “upfront” market of 2014, most buyers and sellers have yet to move off of the sidelines. Part of the reason for that is that many advertisers have not registered ad budgets, according to ad-buying executives. But many media companies are also shying away from the negotiating table due to a desire to find out how NBC intends to act.

Under General Electric, NBC for years had to contend with ratings shortfalls, and was unable to replace hits like “E.R,” ‘Seinfeld” and “Frasier.” These days, there’s new life at the outlet, thanks to “Sunday Night Football,” “The Voice” and “The Blacklist.” NBC is claiming the lead this season in the 18-to-49 viewership advertisers say they want. And it will broadcast the Super Bowl in 2015.

Yet because of the long stint at fourth place, NBC has ground to make up to get its ad prices on par with Fox, CBS and ABC, according to buyers. And it is likely to use its new momentum to make a play for a significant price hike in this year’s “upfront” market, when U.S. TV networks try to sell the bulk of their inventory for the coming season.

“I think they have to be the price warrior here and get a pretty hefty pricing tag to make everyone happy in their house,” said one media executive. “There’s an advantage to waiting and seeing how that shakes out.”

One company known for making an early bid has this year held back. Viacom, the owner of MTV and Comedy Central, has in recent upfront sessions offered lower-than-expected CPMs – a measure used in these discussions that looks at the rate of reaching 1,000 viewers – to drive greater volume. Indeed, in 2013, Viacom had started writing business before ABC even put on its presentation. But ad buyers say Viacom has joined its rivals in their stance, at least so far.

Rivals are likely to analyze not only how much of a hike NBC can secure, but also whether its prices come about as the result of “packaging.” or combining  inventory from different timeslots or outlets.  Linda Yaccarino, president of ad sales for NBCUniversal, has been vocal in recent years about getting advertisers to buy broader amounts of ad inventory across the company’s many properties, whether they be a broadcast outlet like NBC, a Spanish-language broadcaster like Telemundo, or cable holdings like E! or Syfy.

Last week’s programming presentations put a spotlight on several intriguing new programs, including Fox’s Batman drama “Gotham,” CBS’ Sunday-night political series “Madam Secretary” and new Thursday-night football telecasts and NBC’s new Katherine Heigl vehicle “State of Affairs.” Ad buyers suggested, however, that marketers see no obvious hit they must buy up immediately for fear of not getting an ad presence during the season.

“I think until everyone gets a better handle on where the market its and where the spending is going to be, it’s going to be hard to know what the right price is going to be,” said one ad-buying executive.

NBC may be the one to make those terms more plain. “CBS, ABC and Fox have made $500 million to $1 billion more than NBC (in past years) because we were in fourth place,” NBCUniversal CEO Steve Burke recently told Variety.

Clearly, the company needs to use its current ratings momentum to help narrow the gap. But ad buyers suggest they are looking for low pricing and expect to reward networks willing to accept a lesser rate of CPM increase than negotiated in 2013.

The job of persuading advertisers to accept any kind of hike will fall to Yaccarino, who has never been afraid to aim high. Her negotiations could set the tone for the rest of the market.

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