Cable's Upfront Demands Prompt Some Buyers to Resist -- Turner, NBCU Have Written Business, But Some Balk at Their Initial Terms
By Brian Steinberg and Jeanine Poggi
As the broadcast networks get closer to the conclusion of their upfront negotiations, cable is trying to get things started -- not always with success.
Both NBCUniversal's cable properties and Time Warner's Turner have begun making deals for commercial time in the coming TV season, according to people familiar with the pace of talks, but their terms so far may be hard for some ad buyers to swallow.
Turner has been seeking increases in CPMs, or the cost of reaching 1,000 viewers, somewhere between 7% and 9%, ad buyers and other executives suggested. NBC Universal's effort to secure the highest increases possible, meanwhile, has led the company in some cases to ask for CPM hikes in the range of high-single-digit to low-double-digit percentages.
Turner and NBCUniversal are two of the earlier movers in the cable upfront and two of the largest entities in the sector. NBC Universal has been pitching the value of purchasing ads across the broad range of its portfolio, which includes USA, SyFy, E! and Bravo. Turner, which owns TNT, TBS and Tru, has come out with various interesting digital add-ons, including bundling Facebook ads with its own TV and digital inventory to sell as a single package.
Yet it is Viacom that is near completion after agreeing to take lower CPM increases than expected. The owner of Spike, MTV, Comedy Central and VH1, was looking to drive deal volume, according to a person close to the company, after sensing that some advertisers were concerned about the economy. Ad buyers suggest Viacom, which has also struggled with ratings at some of its holdings, has been doing deals that call for CPM increases between 4% and 7%, depending upon the size of the deals at hand.
Viacom's relatively modest price hikes have undercut the cable market somewhat, two ad-buying executive said, while broadcast activity that has proved slightly more robust than expected has left buyers a little less flush with money to place. Cable sales executives are noting that "this market is not as strong as we originally thought," one buyer said. "There are a lot of folks starting to put a halt to the buying on cable. The high-single-digits? That's not going to happen."
In that vein, seeking double-digit-percentage increases would be "goofy," this ad buyer said.
Some smaller cable networks may be watching this skirmish with a bit of anxiety. Advertisers will likely want to do business with NBCUniversal and Turner before turning to less-sizable outlets, and if the bigger cable entities hold out for higher pricing, it could delay other companies' negotiations, said a cable-network executive at a rival concern.