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Fox Wrapping Upfront Sales With Lower Volume As Cable Starts To Move

Time Warner's Turner seen securing price hikes of 7% to 7.5%

News Corp.’s Fox network expects to complete its upfront sales effort with volume about 10% lower  than it was in 2012, according to a person familiar with the situation, the result of ratings declines at the network as its flagship property, “American Idol” starts to show signs of wear.

The network saw healthy demand, this person said, but has fewer ratings points to sell. Fox expects to secure ad commitments totaling between $1.78 billion and $1.79 billion, according to a this person. Fox was able to negotiate deals with an increase in the cost of reaching 1,000 people – a measure used in these talks known as a CPM – between 5% and 7%, according to this person as well as several ad-buying executives. In 2012, Fox secured ad commitments totaling between $1.98 billion and $1.99 billion, with CPMs increasing between 7% and 9%.

Fox’s performance is indicative of advertiser attitudes in this year’s upfront, during which the nation’s big TV networks attempt to sell the bulk of their ad inventory for the coming season. According to buyers and TV executives, the overall pot of dollars available for the upfront appears to be down – the result of reduced spending by automakers and movie studios as well as some ambivalence on the part of advertisers regarding the effectiveness of broadcast TV.  Diminished ratings at the English-language broadcast networks could mean advertisers will move money to cable and digital, these executives said. Some may keep the money in their pockets and opt to buy so-called “scatter” advertising, which is purchased much closer to air date and can, in a healthy market, cost more than upfront purchases.

Advertisers have not been willing to pay a higher rate of increase than they did in 2011. Both CBS and the CW have moved toward completion by settling upon a lesser increase compared to last year. CBS agreed to deals with a CPM increase of around 7.5%, compared with 8% to 9% in 2012. Likewise, the CW did deals this year with CPMs rising between 5% and 6%, compared with 5.5% and 6.5% last year.

ABC and NBC have been seeking CPMs on par with or higher than last year’s terms, and, as a result, have been slower to secure commitments, according to buyers. ABC has been seeking CPM hikes of between 7% and 8%, compared with CPM incrseases of between 6% and 8% in 2012, while NBC has sought CPMs of 8% or more, according to ad buyers and other people familiar with the negotiations. In 2012, NBC secured CPM commitments of between 5% and 7%.

Both ABC and NBC have been writing deals, according to people familiar with the networks’ status. The Peacock’s parent, NBCUniversal has been engaged in an effort to get advertisers to agreed to “portfolio” deals that encompass ad inventory from across the company’s broadcast, cable and digital assets, and has moved broadcast and cable inventory as a result, one of these people said.

As some of the broadcast networks try to wrap their deal making, a number of cable companies have already begun to move, according to several executives familiar with the pace of negotiations.

Time Warner’s Turner unit is more than halfway complete with sales for its entertainment networks, which include TNT and TBS, according to a person familiar with the situation. TBS and TNT have been securing deals with CPMs rising between7% and 7.5%, this person said, approaching the top of the market in response to healthy demand. In last year’s upfront talks, the networks’ CPMs rose in the high-single-digit percentage range. Discovery Communications networks and cable networks operated by News Corp.’s Fox cable were also said to have written some business in recent days.

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