Disney, NBCU, Fox Start to Sell in TV’s Accelerating Upfront Market (EXCLUSIVE)

TV Ad Sales Upfronts
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At least three of the nation’s big media companies are writing deals in an upfront ad-sales market that is moving more rapidly than in years past.

Disney, NBCUniversal and Fox have all begun to sell advance advertising commitments as part of TV’s annual upfront market, according to five people familiar with the pace of negotiations. These people expect the volume of advertising dollars in support of traditional linear TV to rise by 2% to 6%, with other money being committed to new streaming venues.

The upfront, when U.S. TV networks try to sell the bulk of their ad inventory for their next cycle of programming, has in recent years typically required until at least July 4 to get settled. With the coronavirus pandemic squeezing business, the 2020 haggle lasted until the fall. But in 2021, these people said, a significant fall off of linear TV audiences is spurring Madison Avenue to rush to get money down, for fear of not being able to secure a schedule that will generate the viewer impressions necessary to push sales.

They will do so as part of a moment in which the economics of television are changing — and quickly. Advertisers are placing as much emphasis on aligning with the streaming part of the business as they are with its more traditional operations. Indeed, one executive says the TV market has essentially split, with the volume of commitments rising noticeably for streaming and more tepidly for linear TV. Some advertisers have over the past year moved to lock in early deals with WarnerMedia’s HBO Max and NBCU’s Peacock in exchange for more favorable rates.

Several factors are driving the speed of this year’s proceedings. NBCUniversal is under some pressure to sell inventory in both the 2021 Summer Olympics and the 2022 Winter Olympics as well as next year’s Super Bowl — no small feat, particularly given health and safety concerns about this year’s Tokyo showcase. Meanwhile, the networks are seeing strong interest in linear inventory from pharmaceutical companies, who require longer commercials to spell out the side effects of their various medications, as well as web-based retailers and streaming outlets.

It’s not clear whether the networks will make back the linear volume they lost during coronavirus. In 2020, the nation’s five English-language broadcast networks could have seen the volume of ad commitments they secured for their next cycle of primetime programming fall by at least 9.3% to 14.6%, according to Variety estimates.  That marked the first time since 2015 that upfront estimates have sagged. Based on conversations with media buyers and other executives, Variety estimated NBC, ABC, CBS, Fox and the CW secured between $8.2 billion and $9.8 billion for their 2020-2021 primetime schedules, compared with between $9.6 billion and $10.8 billion for primetime in the 2019-2020 season.

With their linear ratings supply crimped, all the media companies are pressing for significant hikes in the cost of reaching 1,000 viewers, a measure known as a CPM that is integral to these annual talks between TV networks and Madison Avenue. Cable networks have sought CPM increases between 9% and 13%, according to media buyers and other people familiar with discussions. Broadcast networks have pressed for CPM hikes between 16% and at least 19%, with some pushing for increases in the low 20% range, according to executives familiar with the process.

Some of those traditional TV ad dollars are moving to a dizzying array of new streaming venues. Advertisers appear to be getting over some of their apprehension over big CPM hikes being sought by nascent streamers. Executives familiar with discussions say advertisers have been impressed by low commercial loads on Peacock and HBO Max, and understand how streaming outlets can be utilized to reach consumer niches that may not interact with linear TV as much as they have in the past.

Some media companies are not moving as quickly. Both ViacomCBS and Discovery are said to be holding firm to demands that some media agencies think are too severe. ViacomCBS is in the midst of conversations with agencies and advertisers, according to a person familiar with the matter.

NBCUniversal, Disney, Fox, Discovery, ViacomCBS and WarnerMedia, six of the largest media sellers, all declined to make executives available for comment.