Upfront 2015: ABC Pushes for Price Lead in Tough Market

CBS is the most watched TV network in the U.S., while NBC nabs the biggest crowd of viewers favored by advertisers, but in the annual haggle for TV advertising known as the upfront, it’s ABC that is gaining new sway with Madison Avenue.

The Disney-owned network is seeking some of the highest price increases for commercial time, according to media-buying executives and other people familiar with the pace of negotiations. The network, home to “Scandal” and “Modern Family,” has been pressing for increases in the cost of reaching 1,000 viewers — a measure also known as a CPM that is central to these annual talks between advertisers and U.S. TV networks — of between 5% and just under 6%, according to these executives.

In most cases, those rates of change are higher than what is being sought by rivals, these people said.

The pecking order in this year’s negotiations highlights the importance Madison Avenue continues to place on reaching viewers 18-49. CBS and NBC typically draw more of them, but in the 2014-2015 season ABC has increased the number it draws compared with the previous programming cycle, thanks to new series like “How to Get Away With Murder” and “Black-ish.” The network intends to add more series that play to multicultural audiences in the season to come. And it relies less on pricey primetime sports than its competitors.

ABC has not been in this position in some time. In recent upfronts, one of its rivals has tended to set the market. Its new place is testament to the work of Geri Wang, the network’s president of ad sales, who had fought to maintain CPMs in previous upfront talks – even if it meant depending more heavily on so-called scatter, or ad inventory that is not booked in advance.

NBCUniversal has been seeking CPM increases of between 4.5% and 5% for ad time on the NBC broadcast network, these people said. In some cases, NBCU has offered more favorable terms for ads on its cable networks in order to press advertisers for the higher rate for broadcast. NBC’s CPMs are, generally, lower than many of its rivals. The network lowered them in recent years after its primetime ratings tumbled in the latter half of the last decade. Now that NBC’s ratings have improved, the company has pressed for raises in recent upfronts.

CBS has sought CPM increases in some cases of between 3% and 4%, according to ad buyers. In other instances, the network has pressed for deals that call for increases in the mid-single-digit percentage range, according to one person familiar with the situation.

On Friday the CW wrapped its upfront sales, notching CPM gains that were said to be more than 4%. In 2014 the network saw CPM increases of between 3% and 4%, reversing a trend in recent years in which TV networks have agreed to narrower rates of increase to secure volume of ad commitments.

Fox has done some deals that are flat with the CPM hikes it achieved in 2014 or cut them back by as much as 2%. The network has come under pressure by advertisers to lower its pricing, owing to ratings shortfalls it has weathered in recent seasons with the aging of “American Idol.” Because of its ratings success in past years, Fox has some of the highest rates for reaching 1,000 viewers in the business.

All of the networks are operating under some pressure. Advertisers are placing new emphasis on emerging media like streaming video and social media, taking away some of the pricing leverage the networks once possessed.

The rates of increases most have been able to command have narrowed, according to executives. In 2014, for example, Fox secured CPM increases of between 2.5% and 3.5%. CBS secured a CPM hike of 6%. And NBC pushed for CPM increases of between 7.5% and 8%.

Like the CW, ABC appears to be pushing for a CPM increase that is wider than the terms it secured in 2014, when it sought hikes of between 4% and 5%.

The network’s marketplace success is not likely to dispel the heightened choppiness of the talks. Advertisers committed between $8.17 billion and $8.94 billion for the 2014-15 broadcast primetime schedule, according to Variety estimates, compared with between $8.6 billion and $9.2 billion for 2013-14 and $8.8 billion and $9.3 billion for the 2012-13 season.

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