TV’s ‘Upfront’ Ad-Sales Talks Start to Heat Up

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Ryan Huddle for Variety

TV’s “upfront” marketplace may be gaining traction, though media-buying executives and other people familiar with the tone of these annual negotiations for billions of dollars of TV-advertising inventory caution that talk of serious activity may be overstated.

While all the TV companies are believed to be in active negotiations with advertisers, NBCUniversal and CBS are said to have begun securing advance advertising commitments, according to people familiar with the situation. CBS’s sales effort is in its early stages, one of these people said, while NBCU has been selling both cable and broadcast. Both networks have pressed for deals that call for increases in the rate of reaching 1,000 viewers, a measure known as a CPM that is integral to these yearly discussions between Madison Avenue and the U.S. TV networks.

Several ad buyers could not corroborate the reports of sales activity, and some indicated that the overall market had yet to move in earnest.

The signals of activity come as TV networks and advertisers grapple with a marketplace that has grown increasingly complex, despite heightened demand for TV advertising in recent months. Media companies are trying to package cable, broadcast and digital inventory at once, as advertisers seek to create broader campaigns that reach consumers through TV advertising, mobile tablets and social media, among other types of outreach. Ad buyers, meanwhile, are trying to tamp down the rate hikes their clients have to pay even as ratings declines and new demands for TV time from  certain advertisers put pressure on the available supply.

Indeed, the networks and ad buyers have been at loggerheads for several weeks over the rate of increase that ought to be paid. Initial bids from the networks called for double-digit CPM increases – some as much as 15% or higher, according to ad buyers. Advertisers, meanwhile, have expressed a desire to pay CPM increases of just 4% to 5%. Many buying executives have made a hard point of not wanting to agree to increases of more than 9%, though one of the people familiar with discussions said that CBS pressed for some agreements that call for hikes in the low double-digit percentage range.

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Expectations have been high for this year’s market, which may be the first in several years to move in the TV networks’ favor. The networks lost leverage over the past few years, and saw their ability to increase the rates of increase for TV time erode as more advertisers experimented with streaming video as well as content and programming from new digital players. The five English-language broadcast networks secured between $8.02 billion and $8.69 billion for their 2015-16 primetime entertainment schedules, according to Variety estimates, compared with between $8.17 billion and $8.94 billion for the 2014-15 season.

In 2016, NBCUniversal has moved aggressively in discussions about rates, according to multiple executives, so much so that some buyers said they were frustrated by the terms the company has tried to set. These people said NBCU is working, as it has for the past several years, to reverse declines in its base rate for reaching 1,000 viewers. Those CPMs are said to be significantly less than those commanded by Fox, CBS and ABC, and are the result of years of ratings shortfalls that took place as NBC failed to find solid replacements for programs like “E.R.,” “Seinfeld, “Frasier” and other must-see TV delights that gave it years of top ratings and a command position that lasted into last decade.

NBC’s luster these days rests on its “Sunday Night Football” franchise as well as “The Voice,” and the addition of a handful of “Thursday Night Football” games in the coming season. The network’s parent company has also placed more emphasis on its portfolio of news, late-night, sports and general-entertainment cable options, and has its coming broadcast of the Rio Olympics, another big-viewing property to dangle in front of sponsors.

Ad buyers have suggested that TV budgets are flat to slightly up for the coming programming season, with movie studios and auto manufacturers among the categories trimming TV-ad money. Consumer packaged goods companies and pharmaceutical manufacturers, meanwhile, are said to be shifting money back to TV after several years of placing new emphasis on digital.

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