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Upfronts: Viacom Moves Fast to Set Ad Sales Deals (EXCLUSIVE)

Sources say cable group is flexible on price to grab volume

As the broadcast networks make their glitzy upfront presentations to advertisers this week, another media entity has already started writing some upfront business.

Viacom, the owner of cablers including MTV, Comedy Central, Nickelodeon and Spike, has notched some upfront deals, according to people familar with the pace of negotations, by offering terms it believes will be more favorable than those of its competitors in order to drive additional business into its coffers. Negotiations are in the early stage. There is no question Viacom comes to the market this year in a weaker position ratings-wise than most of its larger cable competitors.

A spokesman for MTV Networks, Viacom’s cable unit, declined to comment on the status of the company’s upfront discussions.

The strategy would appear to emulate a stance Viacom took in last year’s upfront haggling, when the nation’s TV nets attempt to sell the bulk of their ad inventory for the coming programmming season. In 2012, Viacom remained flexible on pricing, willing to sacrifice a few points of increase to generate more business from longtime sponsors. The strategy helped Viacom lock up deals with both Unilever and General Motors – no small feat when the latter was pressing for price rollbacks from any TV outlet that wanted its advertising.

It was unclear what kind of increase Viacom was seeking in the cost of reaching 1,000 viewers  – a measure known as a CPM that is common in upfront discussions. A person familiar with the company said Viacom was “happy” with the tone of the market in terms of both volume and pricing. One ad-buying executive suggested Viacom’s CPM demands were lower than what other cable-network groups, including Time Warner’s Turner or NBCUniversal’s cable outlets – might demand.

Viacom may be striking at a good moment. Until the most recently completed fiscal quarter, Viacom had experienced five consecutive quarters of advertising declines, according to research from Nomura Securities analyst Michael Nathanson. The company’s nets have periodically come under scrutiny from ad buyers for running too many ads – a strategy that would help the company meet its ratings guarantees even as it found some viewership in decline. In the first quarter, however,  Viacom showed worldwide ad gains of 2%, driven by ratings gains at Nickelodeon and Nick at Nite.

The development illustrates the pressures on media companies in the 2013 haggling session. Buyers have cautioned that TV networks with ratings issues will find it more challenging to generate additional ad money this year.  With ratings collectively down among audiences between the ages of 18 and 49 at the Big Four, for example, ad buyers suggest they are thinking more strongly about top-tier cable and streaming video.

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