Upfronts: CBS Chief Seeks Steep Price Hikes

Pricing showdown rears head: Buyers believe CPM hikes should be no more than 6%

Les Moonves CBS Upfront
Brian To/FilmMagic

CBS topper Leslie Moonves unofficially opened the annual upfront haggle Wednesday by declaring CBS should be able to secure hikes for ad time prices that could be at least as high as 10%.

For weeks, analysts and ad buyers have projected mild price hikes for this year’s upfront, the annual mid-May session when the nation’s TV networks try to sell the bulk of their ad inventory for the coming TV season. But in a conference call with investors Wednesday, CBS Corp. CEO Leslie Moonves said in no uncertain terms that the price increases ought to be much higher.

“We will be very aggressive going into the upfront,” said Moonves, a touch of bravado in his voice. “I can say with absolute confidence that we will once again lead the marketplace in both pricing and volume. The pricing increases will look a lot like they did last year, form high single-digit to low double-digit.”

Moonves often makes bold predictions regarding CBS’s ability to secure price increases in the upfront, but he typically unveils them earlier in the year. “And there you have it, the numbers you have been waiting for,” he said Wednesday with a humorous lilt in his voice. In recent weeks, the CBS Corp. chief executive had said only that CBS would lead the upfront market.

Moonves’s recent reticence to offer hard numbers has fostered the notion that TV networks would feel pressure this year as advertisers give more serious consideration to a host of competing – and more cheaply priced – media outlets that stream video online or via mobile devices.

Buyers have privately suggested advertisers will pay no more than a mid-single-digit percentage increase in the cost of a CPM, or the cost of reaching 1,000 viewers, a measure used widely in talks for the upfront.

In the 2012 upfront, CBS won CPM hikes of 8% to 9%; Fox won hikes of 7% to 9%; ABC secured 6% to 8%; NBC’s was 5% to 7%; and the CW notched 5.5% to 6.5%, according to ad buyers and other people familiar with the talks at the time.

Moonves said he felt it was time for him to speak. “I’ve done it two years in a row,” he said about offering predictions for double-digit CPM increases. “I’ve read at least three stories [saying] ’Oh, the networks aren’t bullish because Moonves hasn’t said double-digits.’ So I’ve said double-digits the last two years. Two years ago, we were up 12% to 13%. Last year, we were up around 9%.”

While he was slightly off in his projections for 2012, he acknowledged, “If you average the two, I certainly was right. And I’m confident again, as I said. There is a lot of noise this time of year, but we’re pretty confident in the hand we’re playing.”

He cited CBS’s leadership postion among total viewers and viewers between the ages of 18 and 49. But according to research from Barclays analyst Anthony DiClemente, CBS’s 18 to 49 audience is down 5.9 percent season to date as of the week ending April 21. Its losses are less than those of Fox, NBC and ABC, according to Barclays. CBS’s overall ratings were given a recent boost by its broadcast of Super Bowl XLVII.