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Viacom Expects to Gain Ad Volume as TV’s ‘Upfront’ Bubbles (EXCLUSIVE)

Viacom, in the midst of a bruising legal fracas involving its top management and controlling shareholders, expects to nab a greater volume of advance ad commitments as part of its annual “upfront” talks for commercial time, a sign of a market that is shaping up to be healthier than TV has seen in years.

The owner of Nickelodeon, Comedy Central and MTV expects to secure a 10% increase in volume from advertisers, according to a person familiar with the situation, and pressed for deals that called for an increase of 7% to 8% in the rate of reaching 1,000 viewers, also known as a CPM. The measure is an integral one in these annual talks between TV networks and Madison Avenue. Last year, Viacom secured a volume increase of just 3% to 4% and did deals calling for CPMs between 3% and 4%.

The results suggest that TV networks are navigating through a stronger upfront session than they have seen since the end of the last major U.S. recession. Buying executives suggest that consumer packaged goods companies and pharmaceutical manufacturers are moving more dollars into TV from digital than previously anticipated, and also moving quickly to secure time in upfront talks than they have in the recent past, when they would hold ad dollars back to spend in the so-called “scatter” market. With demand increasing, and with many TV networks suffering ratings erosion, the supply is under pressure – and pricing is going up.

Viacom has been under scrutiny in recent months due to ratings shortfalls, particularly at MTV and Comedy Central. Indeed, advertisers showed more interest in VH1, which has seen ratings increase, as well as in TV Land and its comic drama “Younger” (pictured, above) according to the person familiar with the situation. The company also saw healthier interest in its suite of Nickelodeon kids’ networks, this person said – thanks in part to ratings declines at its main rival, Time Warner’s Cartoon Network. In the so-called “kids’ upfront,” Viacom saw its volume of advance ad commitments increase about 5% and pressed for deals that called for CPM increases of between 9% and 12%, this person said.

To lure advertisers, Viacom made use of a  new pact with the instant-messaging service Snapchat, and sweetened some deals by offering its “Vantage” data services. The technology helps marketers use a range of different streams of information about consumers to place commercials more precisely on specific networks, at certain times of day or in individual programs. Viacom did deals with 42 different advertisers seeking to use its data offering, this person said.

Some of the company’s volume had been secured through the use of multi-year deals that give advertisers a price benefit in exchange for committing to a greater amount of volume in subsequent years of the deal. Viacom’s ability to close the upfront “makes sense,” said one media buying executive familiar with the pace of this year’s negotiations. “But there’s a story behind the story.”

The company tried to drive volume by offering a lower CPM hike than many of its competitor. Most of the broadcast networks are pressing for CPM increases of 10% or more in many cases. By opting for deals that use a lower rate hike, this person said, Viacom was able to speed up its “upfront” sales process while other networks were locked in tough haggles.

Completion of the sales process offering a glimmer of good news at a time when the company seems to be engulfed in chaos. Viacom and National Amusements Inc., the movie-exhibition company through which Sumner Redstone holds a controlling stake in the entertainment conglomerate, are in the midst of a scorched-earth legal battle over who should control the company. Redstone has moved to oust several members of Viacom’s board of directors, including Philippe Dauman, Viacom’s executive chairman and chief executive. The company has filed in Delaware to block the maneuver.

Whether or not the upfront effort will help Viacom’s overall advertising revenue remains to be seen. It’s hard to find a direct correlation between the vague numbers hinted at during upfront time and the actual money that flows in during a fiscal year. Viacom said Friday that it expected its ad sales to fall by 4% in its current fiscal quarter that ends June 30. In its fiscal 2015, Viacom said revenues at its TV networks rose 3% to $10.49 billion, which included a 1% gain in worldwide ad revenue.

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