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Why This Year’s Upfronts Will Be More Complex Than Ever

It used to be simple.

Every May, in the annual ad-sales ritual known as Upfront Week, the major TV networks present their coming programming lineups to advertisers. Since 2007, Tuesday mornings have been reserved for ESPN, which always enlisted various team mascots, cheerleaders and on-air personalities to talk about sports.

No longer. Due to the recent purchase of the bulk of Fox assets by the Walt Disney Co., ESPN will now be part of a multi-network presentation held later in the day. In its place: AT&T, the new owner of the company once known as Time Warner. But the freshly christened WarnerMedia won’t unveil a programming lineup until Wednesday. Before the entertainment, AT&T wants to talk on Tuesday about consumer data and advertising technology.

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Television, one of the easiest media sectors to understand, has suddenly become exceedingly — even maddeningly — complex, and swapping easy-to-grasp chatter about football for the wonky nuances of audience targeting is the least of it. Nearly every media company stalwart holding forth in this year’s upfront looks noticeably different than it did just a year ago, a testament to the tremendous forces of disruption blowing through the industry.

Fox, which sold massive media operations like FX Networks and National Geographic to Disney, has shrunk. Disney has increased exponentially. AT&T has dropped Ted Turner’s name from the TV company he once founded. CBS will hold forth in Carnegie Hall as it has for years, but will do so for the first time in decades without the oversight of CEO Leslie Moonves, ousted after allegations of sexual harassment. Univision has a new CEO. Thanks to Comcast’s recent purchase of European satellite broadcaster Sky, NBCUniversal has a new international unit to tout. Even The CW, the stand-alone network, has something new about its corporate recipe: AT&T is now a joint owner, along with CBS.

“It’s all going to be very different. They all have different stories to tell,” says Shelby Saville, chief investment officer at Spark Foundry, one of the biggest U.S. media-buying agencies, which represents advertisers in the annual upfront haggle. Remaking themselves for audiences eager to use new technology to consume video might be the easy part. Now the media giants have to sell their new models to sponsors. And that may be difficult. “What’s the benefit?” asks Saville. “What is the benefit that’s going to come out to us and our clients, that’s going to make our dollars work even harder?”

Billions of dollars in advertising revenue are at stake — and so too are stock prices, which often hinge on reports of how many advance advertising commitments the networks take in around this time of year (and whether they are up or down from the prior year). The five U.S. English-language broadcast networks secured between $9.1 billion and $10.06 billion in ad commitments in the 2018 market, according to Variety estimates, compared with $8.69 billion and $9.55 billion in 2017. It marked the third consecutive year that the networks have snatched increasing volume for their primetime schedules.

The media companies are betting their new configurations will help them spark similar momentum, even as their linear ratings dwindle and their audiences migrate to new technologies.

The changes may be most noticeable at Disney, which has snared two big ad-supported businesses for its portfolio. Indeed, the acquisition of FX Networks and National Geographic from Fox brings more than $940 million worth of commercial inventory for Disney to sell, according to Kagan, the S&P Global Market Intelligence unit — in addition to the millions more the company must move for ESPN, ABC and Freeform. “We have a ton more leverage when we talk [to advertisers] about opportunities,” says Rita Ferro, president of advertising sales and partnerships at Disney.

At the same time, Disney has embarked on a daring strategy. For years, ESPN’s ad outreach was separate from the rest of Disney television. One skewed more toward men, the others toward women, children and families. This marks the first year that all the Disney TV brands are being folded under a larger corporate umbrella, but Ferro says advertisers will recognize each set of assets is distinct and targets different audiences and subjects. If all goes well, she says, marketers will understand they can commit more dollars to Disney without having to worry about missing out on a particular swath of consumers.

If Disney is talking big, Fox sees more value in being small. “That makes us more nimble and able to do things that some of our competitors can’t, because of their pure size,” says Suzanne Sullivan, executive vice president of entertainment sales at Fox. “They’ve got so much to sell in some cases.”

What it lacks in heft, Fox will have to make up with sports. The company’s broadcast lineup will feature sports for a good chunk of the week: football on Thursday and Sunday in the fall and WWE on Friday nights year-round. Fox will help relaunch spring-football league the XFL in 2020. There will be room for scripted content, says Sullivan, but the company can afford to be choosier about what it puts on the air. And it will continue to test new ideas, she adds, including a commercial break in which advertisers can sponsor displays of social-media chatter about the program the ads accompany. “We are going to keep trying different things,” she says.

WarnerMedia comes to market under a parent company eager to log miles on Madison Avenue. With AT&T behind it, says Donna Speciale, president of WarnerMedia sales and marketing, the company can give advertisers more of what they want: deals based on a sophisticated understanding of audiences and their viewing patterns, as well as ad pacts that hinge more on “business outcomes” — the number of people who visit a car dealership or a movie’s opening weekend, for example — rather than straight mass-audience measures. “We are now stronger with a lot of the data AT&T has put behind us,” Speciale says. And she has more to sell, including Warner Bros. syndicated fare as well as some AT&T media assets.

Thanks to Disney’s purchase of Fox, the company will also be selling FX Networks and National Geographic shows as well as ABC fare. Last year, Jimmy Kimmel helped ABC and Freeform present their lineups.
Jeff Neira/ABC

CBS arrives at the upfront under new top management but with an interest in maintaining its connections to ad revenue. While several top executives at the company have left in the wake of the Moonves ouster, Jo Ann Ross is not one of them. The company’s top advertising-sales executive, Ross says the CBS ad team will stand out during this frenetic sales period because it is largely the same as it has been, even as other companies have reorganized or brought in new leadership. During the CBS corporate chaos, she says, “we have stayed very focused on what our responsibility is to clients and the corporation.”

NBCUniversal will bring the globe into its 2019 upfront mix, thanks to Comcast’s purchase of Sky. The company has recently touted technology that will allow advertisers to place commercials alongside content most relevant to their specific customer base and wants to extend that offering to both NBCU and Sky properties. “Our ambition is to unify impressions” across linear and digital views, says Kavita Vazirani, NBCU’s executive vice president of insights and measurement.

With audiences fleeing traditional TV for the instant-gratification hit of streaming video, there’s risk in shaking things up. But there may not be a better moment for the media companies to put these enormous changes in place.

In a time when reaching consumers has never been more difficult, Madison Avenue continues to put faith in TV. The volume of advance advertising commitments for primetime at the nation’s five English-language broadcast networks has risen, not fallen, for three consecutive upfront sessions. Indeed, overall upfront commitments are predicted to rise 2.4% in 2019, to $21.25 billion, according to media researcher eMarketer.

Part of the reason for the continued uptick is that “old” TV is extending into digital venues, offering content that is more trusted in some cases than what advertisers get from new-tech darlings. Marketers remain concerned about brand safety — or the content and comments that get served up on some video alternatives, including YouTube. What’s more, some digital outlets have retrenched, including Vice and Vox. Both have announced decisions to fold some offerings into other content.

After this week’s presentations, the big media companies will know very quickly whether advertisers are impressed. Madison Avenue has always had to choose among various permutations of media assets. This year’s upfront may be more convoluted, but the advertiser gets to determine where the money should go. When you get down to it, nothing could be simpler than that.

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