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ABC Joins Cautious TV Upfront Market

Analysis: Buyers say talks grow deliberate as TV outlets weigh price versus volume

Television upfronts

Add ABC to the list of TV networks getting started in this year’s upfront market.

The Walt Disney outlet has begun conversations with advertisers and may even be doing a little business, according to an ad buyer and another person with knowledge of the pace of negotiations.

Cable and broadcast outlets are currently working to sell the bulk of their advertising inventory for the coming season, in a market that last year saw the nation’s five English-language broadcast networks secure between $8.6 billion and $9.2 billion in advance advertising commitments for primetime, according to Variety estimates. In 2012, the five networks secured between $8.8 billion and $9.3 billion.

ABC joins what media-buying executives — who have an interest in tamping down the market — characterize as an upfront moving at a “snail’s pace.” Advertisers are registering less money for TV advertising than they did in 2013, and their representatives are pressing for price increases that, if agreed to, would be some of the smallest in recent memory.

“Advertiser money is down,” said one media-buying executive. “I don’t know why you would pay a number that was higher than anything we paid last year.”

The increases currently under discussion are for the cost of reaching 1,000 viewers, a measure known as a CPM that is an integral element in these annual talks over commercial time. Ad buyers say they are pressing for CPM increases that are under 5%, while TV networks are pushing for CPM increases that are on par with what they secured in 2013.

If the networks are to consider the small increases,  buyers said, they want to be assured they will be rewarded with a more robust volume of dollars than they might normally otherwise get. That counteroffer would slow things down, as giving more money to one outlet would likely require clipping the amount earmarked for another.

Already, there is some ballast to the buyers’ suggestion. Fox has begun selling, with some deals coming in with CPM increases of 3% to 4%, according to a person familiar with the matter. The network typically tries to drive volume with favorable price increases. The tactic has succeeded in the past because Fox fills fewer primetime hours than its largest competitors and because movie studios and other marketers are eager to reach the younger men attracted to the network’s programs. In 2013, Fox did deals with CPM increases between 5% and 7%.

Deals with CPMs in the low-single-digit percentage range would mark continued erosion in TV networks’ leverage in the annual haggle. In 2013, CBS secured deals with an average CPM increase of 7.5%. The CW secured between CPMs of between 5% and 6%. ABC pressed for CPM hikes of between 7% and 8%, though it’s not clear what success the network had in doing so. NBC, meanwhile, sought CPM hikes of between 7% and 8% last year.

As it did last year, NBCUniversal is seeking to expand its rate of CPM increase for NBC, rather than see it narrow. The company has been seeking CPM hikes of 8% or more in the current upfront market, according to a person familiar with the situation. NBC is touting the fact that the price increases it seeks come off a lower base than those of rivals, owing to the fact that the Peacock suffered from lackluster ratings  and programming for several years.

Buyers suggest NBC is moving at a similar pace as other networks, owing in part to the complexity inherent in doing broad “package” deals that encompass inventory spread across many of its properties, which include USA, Telemundo and MSNBC, among others. Some buyers suggest the network may use the broader deals to attempt to lessen the potential sting of its CPM ask.

“They deserve to be at the top of the market,” said the ad-buying executive, who noted that in the current climate, asking for an 8% CPM increase raises eyebrows, no matter the argument behind it.