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Upfront Pauses As Media Buyers, Nets Bicker Over Price

NBC pushes for 8% price hikes as buyers hold ground

TV’s upfront market appears to have hit a snag.

The annual ad-sales frenzy during which the nation’s TV outlets attempt to sell the bulk of their ad inventory for the coming year is turning out to be anything but. While it’s true Viacom’s cable nets and the Fox broadcast outlet have begun to write business with advertisers, those players opted to press for price increases that are de minimis, according to ad buyers. But their rivals have not, and that has proved to be a sticking point with advertisers.

Other networks do not appear to be moving forward as quickly –a trend that runs counter to previous session, when Fox might start writing deals and rivals would rush to follow suit. The cable market, according to ad buyers, has not begun moving in earnest. And while NBC and CBS remain deep in conversations with ad buyers and sponsors, there are few if any reports of significant chunks of business being written.

The CW is said to have started writing business as part of its upfront process, but the network’s course at this time each year has never influenced the outcome of the Big Four. ABC has done some early deals, according to people familiar with the situation, but the Disney network was making an initial push for price hikes – also known as CPMs and measured by the cost of reaching 1,000 viewers – in the range of 7% to 8%. Whether those numbers hold as more information becomes available remains to be seen.

“Things are happening very, very slowly right now,” said one media-buying executive familiar with the pace of negotiations. “There’s a pretty big gap between what some sellers are asking for and what the buyers are willing to pay.” Advertisers are not bringing the dollars to broadcast TV they did last year, this buyer said, when the Big Four and CW won commitments totaling between $8.8 billion and $9.3 billion. What is more, auto advertisers and movie studios appear to be carrying less ad money to the table in 2013, buying executives said.

Buyers may be trying to use the CPMs being agreed to in the Fox negotiations as reason to push back on ABC, CBS and NBC. Fox been doing business by offering CPM increases at between 5% and 7%, according to ad buyers and others familiar with the situation. There is some speculation from ad buyers that some of those deals may be clustered toward the lower end of that range. Fox saw a noticeable ratings decline in its most popular property, “American Idol,”this past season.

Those dynamics could make it harder on rivals to justify significantly larger price increases, ad buyers said.

Of course, buyers have an interest in throwing cold water on the upfront process, in order to get better terms for their clients. The current sentiment, for example , has not kept NBC from making what some ad buyers called an aggressive initial bid for CPM increases of 8% or more – more than either Fox or ABC has asked. In 2012, NBC secured CPM increases of between 5% and 7%.

NBC has been making the pitch that it expects new momentum from its schedule, which includes two of the most watched programs in television, “The Voice” and “Sunday Night Football,” while praising two shows that got good response from ad buyers during the network’s May presentation: “The Blacklist,” a crime drama starring James Spader and sitcom “The Michael J. Fox Show.” NBC will also have a Winter Olympics to broadcast in the months to come.

Buyers said The Peacock has over the past several years offered CPM terms that lagged the rest of the market, owing to ratings decreases and a lack of hits, and has been telling agenices it can no longer do so. Its ratings performance compared with other networks has not been as severe, NBCU executives have suggested, and it has new life on its schedule. Buyers have still taken notice of turnover in NBC’s primetime.

To be sure, a pause in the upfront market could end at a moment’s notice. All it takes is buyer and seller agreeing on terms, and rival TV networks feeling pressure to do business before ad money can follow. “Only time will tell how much money ends up materializing and what the right price point is to get these deals done,” said one ad buyer.

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