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Upfront 2016: Kids’ TV-Ad Market Is Heating Up

There’s serious stuff ahead for advertisers next week – a series of glitzy presentations from TV companies seeking up to $9 billion in advance commitments for primetime commercials. Before any of those events start, however, Madison Avenue has turned to childish things.

Talks for the $800 million kids-TV “upfront” market have begun to percolate, according to executives on both sides of the negotiations.  Whether they have progressed meaningfully is a matter for debate.

Ad buyers and other executives familiar with the pace of discussions suggest both sides are moving closer to making actual deals, and say the kids’ market could move in earnest over the next two weeks. There is speculation in the market, however, suggesting that locked up ad time, possibly at Time Warner’s Turner, which owns Cartoon Network. And there is some indication that Viacom may have secured some early deals, though executives cautioned these could merely be the result of the owner of Nickelodeon renewing a handful of multi-year agreements, not due to new money coming in over the transom.

One executive with knowledge of the negotiations said current activity suggested a “very, very strong” market. for kids. “People seem to be bringing their total year budgets to the table,” this executive said.

Viacom and Turner declined to make ad-sales executives available for comment. The two companies dominate the kids’ market, but also vie with smaller players like Walt Disney (which limits ads on some of its networks); NBCUniversal’s Sprout; and Discovery Communications’ Discovery Family Channel. Netflix and Amazon are also strong distributors of kids’ material, but at present do not accept commercials.

Viacom has reason to work for deals. The company has come under Wall Street’s scrutiny in recent years due to ratings declines at MTV and Comedy Central, but its giant Nickelodeon unit has been a bright spot in recent months. “Nick Jr. and Nickelodeon continue to gain share at the expense of other networks,” said Bernstein analyst Todd Juenger in a May 9 research note. “All other major kids’ cable networks are down significantly,” he added, particularly Cartoon Network, which has seen viewers decline since late last year.

TV-industry executives will attempt to read into the kids’ market to see if activity there will translate into other parts of the upfront, during which U.S. TV networks try to sell the bulk of their commercial inventory for the coming program cycle.

Based on recent “scatter” activity, or ad purchases made closer to air time, many TV executives believe they will see a greater volume of ad dollars committed “upfront” than in several years. The theory is that advertisers will want to get money down early during a strong cycle, and secure  prices that are likely to increase. ,Since 2011, TV networks have seen upfront ad volume decline as Madison Avenue earmarks dollars for new venues like streaming video and mobile devices.

The kids’ networks have gained new appeal in recent years. As viewership migrates from general-entertainment TV networks due to the advent of new viewing behaviors, advertisers have recognized tykes and toddlers aren’t the only people watching “Paw Patrol” or “Doc McStuffins.” Adults are present, as well. So TV networks are presenting their kids’ outlets as places to reach moms and “co-viewing” parents who might prove appealing to travel marketers, retailers, toy-makers and movie studios.

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