Television upfronts

TV’s “upfront” marketplace is moving.

NBC Universal, Fox and CBS have all begun securing advance advertising commitments as part of the market for commercial time on TV, according to media-buying executives and other people familiar with the pace of negotiations.

Three buyers suggested Fox has begun to write business by accepting a lower rate of increase in pricing than it did in 2013. Last year, Fox did deals that called for an increase of 5% to 7% in the cost of reaching 1.000 viewers, a measure that is known as a CPM and that is a fundamental element of these annual discussions between TV networks and advertisers over the sale of the bulk of TV’s ad inventory for the coming season.

Whether Fox is trying to maintain its CPM increases at 5% or has accepted CPM hikes in the low-single-digit percentage range could not be immediately determined.

Meanwhile, NBCUniversal has begun moving through a portion of business, according to a person familiar with the situation. The company has been placing an emphasis on package deals that would involve the purchase of inventory across multiple outlets in its portfolio, which includes NBC, Telemundo, USA and others. NBC has been seeking in many cases a CPM increase of 8% or more, this person said. Last year, NBC sought increases of between 7% and 8% – the only network in 2013 that fought successfully in certain cases against lowering its CPM bid despite pressure from advertisers. NBCU said executives were not available for comment.

The CW has also begun to write business, according to a person familiar with the situation, though the terms could not be immediately learned.

Fox’s stance, at least  as described by buyers (who have an interest in keeping the market low), may be emblematic of how the 2014 upfront will proceed. Ad buyers and TV executives both suggest that the volume of money registered this year by advertisers for TV commercials is down from what was allocated last year, which means media outlets may feel the need to make pricing concessions to drive volume.

Fox has long practiced that strategy, typically offering a more attractive rate of increase in price than rivals in order to build early momentum in the marketplace. Fox often does business early with movie studios, who are eager to reserve time on a network with programs that typically skew towards difficult-to-reach young men. Fox’s fall schedule will contain “Gotham,” a hour-long drama that explores the early days of the DC Comics superhero Batman, as well as two live-action comedies, sophomore “Brooklyn Nine-Nine” and the new sitcom “Mulaney,” that will be mixed win with the network’s long-running animated series on Sundays.

Fox has reason to offer an attractive price. For years the dominant network among viewers between 18 and 49, the network has seen its place slip, owing to shortfalls at its flagship program, “American Idol.” The network has already said it would rely less on the maturing competition program next year.

In the discussions between networks and buyers, CPM rates have been one of the initial topics of debate. The buy side wants a significantly lower rate of increase than last year in nearly all cases, while broadcast sellers have been trying to push for the same rate of increase they achieved last year, according to executives on both sides of the discussions.

NBC may be an outlier in this year’s market, according to one buying executive. The network and its parent company, NBCUniversal are said to be seeking better terms than it achieved last year. The NBC broadcast network is not on par with its rivals in terms of pricing, owing to ratings shortfalls during several years of lackluster programming on the network. Now, with  the 2015 Super Bowl and several coming Olympics telecasts to sell, as well as ”The Voice” and “The Blacklist” on its roster, the parent company sees an opportunity to narrow the gap and buyers may have to grapple with its terms.

Cable as of yesterday had not appeared to move in significant fashion, according to people familiar with the situation. One executive with knowledge of talks suggested networks with better ratings may be willing to sell less in the upfront and instead bet that prices will increase for so-called “scatter” advertising that is purchased closer to air date. This executive said many cable networks were pushing for better than the 6% to 8% CPM hikes many secured last year.

(Updated, 11:55 a.m. PT)

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