×
You will be redirected back to your article in seconds

Buyers See Ad-Commitment Decline for New TV Season

Haggling continues, but buyers project volume decline at ABC, flat totals at NBC

Advertisers’ love affair with broadcast TV appears to be cooling. For the first time since recession-wracked 2009, the nation’s five English-language broadcast networks are likely to secure fewer advance advertising commitments overall for their new schedules, according to estimates from ad buyers and other executives familiar with the TV-advertising market known as the upfront.

In all, according to people familiar with the pace of negotiations, ABC, NBC, CBS, Fox and the CW are likely to secure between $8.5 billion and $9 billion in advance ad commitments for their prime time schedules, compared with 2012’s total of between $8.8 billion and $9.3 billion. Meanwhile, cable is likely to see an increase of just 1% to 2% in volume, according to one executive with knowledge of discussions.

Even though the economy has improved – employment has slowly increased and the Dow Jones Industrial Average has risen – big advertisers have held tight to their cash, ad buyers explained, keeping it close at hand or sinking smaller amounts of it into marketing efforts that reach consumers more precisely. Movie studios spent less in the upfront this year, according to ad buyers, having found digital techniques, such as letting movie trailers stream online. Automakers have focused ad efforts only on newer models, not an entire fleet of vehicles for sale.

The money available for upfront commitments “is actually worse than what some of the Wall Street analysts were projecting back in the springtime,” the executive said. “That’s probably what has taken the market a little bit by surprise.”

To be sure, the upfront – an annual session that starts in May and typically ends by mid-June – continues. ABC and NBC are said to be in the midst of negotiations with a passel of media-buying agencies owned by large ad conglomerate WPP. Both ABC and NBC have been holding out for rates of increase in the cost of reaching 1,000 viewers, a measure known as a CPM used in discussions about ad sales, that are equal to or greater than what they secured last year.

In 2012, NBC secured CPM hikes of 5% to 7%, but in 2013, it has been seeking CPM hikes of 7% to 8%, according to ad buyers and other people familiar with the discussions. In 2012, ABC secured CPM hikes of between 6% and 8%. In 2013, it has been holding out for CPM increases of 7% to 8%.

But those offers move counter to those of rivals. CBS, which secured price hikes of between 8% and 9% last year, settled on an average increase of 7.5% in 2013. The Eye’s move makes ABC’s and NBC’s stances more difficult, because if the network with the best ratings is willing to be flexible, why aren’t lesser performers?

Meantime, Fox in 2013 secured CPM hikes of 5% to 7%, after getting increases of between 7% and 9% in 2012. The CW also offered a haircut, agreeing to price hikes of between 5% and 6% in 2013, after getting CPM increases of between 5.5% and 6.5% a year earlier. Even cable leaders like Time Warner’s Turner proved flexible and willing to accept a smaller rate of increase than it did a year earlier.

With those deals in the background, ad buyers expect volume at ABC to be down by at least 5%, while volume at NBC is seen hovering around flat. One projection at ABC calls for flat primetime volume for 2013, according to a person familiar with the situation. NBC sees an increase in primetime volume, according to a person familiar with the network.

Using the 5% figure as a guidepost, ABC’s volume of ad commitments could total between $2.1 billion and $2.28 billion, compared with between $2.2 billion and $2.3 billion in 2012. If NBC’s volume is flat, it would secure between $1.7 billion and $1.8 billion, on par with 2012.

Volume at the other networks has come in flat or down. CBS expected to secure between $2.5 billion and $2.75 billion, on par with its totals for 2011 and 2012. CW expected to secure between $400 million and $420 million, also equal to the volume of commitments it has secured in the past two upfront sessions. Fox, suffering ratings declines at its flagship “American Idol,” saw volume fall by 10%. The network secured between $1.78 billion and $1.79 billion in 2013, compared with $1.98 billion and $1.99 billion in 2012.

The figures are commitments, not cash. Advertisers can cancel a portion of their ad-time reservations each quarter, and can even pull their money over schedule changes or outside business factors.

Talks with ABC and NBC are likely to last a few more weeks, according to the executive with knowledge of discussions. Only when those negotiations are concluded will advertisers’ true interest in broadcast TV for the year ahead become more evident.

More Biz

  • Jackie Knobbe

    UTA Hires Agent Jackie Knobbe to Comedy Touring Division

    UTA has hired Jackie Knobbe as an agent in its comedy touring division, Variety has learned. Knobbe joins UTA after almost 20 years at APA, where she was a partner and co-head of comedy touring. She will bring a strong roster of touring comedy clients with her to the agency, including Tiffany Haddish, Lewis Black, Jeanne Robertson [...]

  • Arista Records Names Danny Cooper Senior

    Arista Records Names Danny Cooper Senior VP of Promotion

    Danny Cooper has been named senior vice president of promotion at Arista Records, it was announced today by John Boulos, the label’s executive VP of promotion. In this role, Cooper will work closely with Boulos in all areas of promotion across genres, and oversee Arista’s promotion staff throughout the U.S. He is based in Los [...]

  • Harvey Weinstein

    Media Organizations Seek Access to Key Harvey Weinstein Hearing

    A group of media organizations asked a New York judge on Monday to allow public access to a critical hearing in the Harvey Weinstein criminal case. The disgraced producer is scheduled to go on trial on June 3 on five charges of rape and sexual assault involving two alleged victims. Prosecutors have filed a motion [...]

  • Delta Air Lines celebrates Grammy Weekend

    Halsey, Jonas Brothers, Zedd to Headline iHeartMedia Wango Tango Concert

    Jonas Brothers, Halsey, 5 Seconds of Summer, Zedd, Ally Brooke (with special guest Tyga), Ava Max, Fletcher and Tomorrow X Together will perform at iHeartMedia’s annual Wango Tango concert at the Dignity Health Sports Park in Los Angeles (formerly StubHub Center) on June 1. Freeform will broadcast a 90-minute television special on Friday, June 7 [...]

  • Prince Memoir, ‘The Beautiful Ones,’ to

    Prince Memoir, ‘The Beautiful Ones,’ to Be Released in October

    The memoir Prince was working on at the time of his death is coming out Oct. 29, according to the Associated Press. Publisher Random House confirmed Monday that “The Beautiful Ones” will combine Prince’s unfinished manuscript with rare photos, scrapbooks and lyrics. Announced just weeks before his 2016 death, the 288-page book, issued in partnership [...]

  • Abigail Disney on Bob Iger

    Abigail Disney Calls Bob Iger's $65 Million Compensation 'Insane'

    Disney chairman-CEO Bob Iger’s total compensation for Disney’s fiscal 2018 was a whopping $65.6 million. Abigail Disney, the granddaughter of Disney co-founder Roy Disney, calls that sum “insane.”  While speaking at the Fast Company Impact Council, the filmmaker and philanthropist insisted that this level of corporate payout has a “corrosive effect on society.” Disney took [...]

  • Contract Placeholder Business WGA ATA Agent

    Signs of Solidarity and Strain Emerge as Week 2 of WGA-Talent Agency Standoff Begins

    Hundreds of WGA members rallied solidly behind their union last week as the industry grappled with uncertainties spurred by the sudden break between writers and their talent agency representatives. But as the standoff heads into its second week, signs of strain among some WGA members are beginning to emerge. Shalom Auslander, author and creator of [...]

More From Our Brands

Access exclusive content