The broadcast-network upfront marketplace turned fast and furious late last week.
By last Friday, the buyers and sellers were “swapping spit,” one buyer said. “Some people are in the corner jumping each other’s bones, others are on third base.”
In fact, serious business has been written at all the broadcast networks, with volume and pricing that has “surprised both sides,” another senior ad-sales executive said, predicting that by early this week as much 35 percent of all broadcast upfront deals will have been done, with autos and film studios leading the way, and with package goods, particularly health and beauty products, generally up significantly as well.
NBC, Fox and The WB all are “hot and heavy,” and have done significant deals in those categories, according to another senior buyer. “CBS is going to be last” again this year, the buyer predicted.
“It will all be over by [this coming] Friday,” this senior buyer predicted. “I’ve heard the same numbers you’re hearing … but I don’t hear them attached to anybody [in particular].” A senior seller was even more optimistic, saying the broadcast networks would be done by the beginning of the week.
Somewhat surprisingly, three of the Big Four-NBC, CBS and Fox-are asking for similar cost-per-thousand CPM increases, ranging from eight percent to 12 percent across various categories and for various time periods. Only ABC, which this past season hemorrhaged desirable demographics, is calling for a modest four percent to six percent CPM increase, according to sources. The WB is asking for mid-double-digit increases; UPN, which like The WB focuses on must-buy young demos but has less inventory to sell, is expected to be up as well.
Spokespersons at all Big Four broadcast networks and UPN declined comment. At The WB, “we think we’re going to blow through projections,” a network spokesman said. “New advertisers, new categories. … movie money, health and beauty, automobiles. … A lot of young female money also.”
By general agreement NBC and CBS, the Big Four’s big men on campus this past TV season, have the heat this upfront too. A snapshot of their dance floor follows:
In last year’s soft marketplace, NBC moved quickly, trading CPMs for share, while CBS held back, betting on scatter (a bet that paid off).
This year, NBC, which scored Nielsen touchdowns with desirable demos, is going to try the CBS beat, playing hard to get and looking for a big CPM bump, said to be in the low double digits. CBS, sources saidy, is again betting on what many observers predict will be its strongest fall schedule in years, and is calling for 12 percent CPM rises in the upfront, with Mel Karmazin once again adamant about holding the CPM line and prepared to take another flyer on scatter if advertisers won’t pay his price. Fox, too, is looking for CPM rises of up 10 percent over the last upfront.
The networks’ stances may strike some observers as odd, given that once again they lost viewers to cable this past year. But putting that over-arching trend aside, there’s an almost a buoyant mood at the networks, even at embattled ABC, which believe that after last year’s advertising debacle there is nowhere to go this year but up.
In addition, the networks in general generally actually believe (as opposed to simply tout) that their new schedules are stronger than ever and argue that the coming Era of the Niche makes their broad reach that much more valuable.
Add to that the coming political season and the expected spending increases in several important advertising categories, among them pharmaceuticals (where new drugs in the pipeline, including new erectile- dysfunction medications, will require expensive new direct-to-consumer advertising), automobiles (particularly foreign manufacturers, who upped ad spending last year while domestic manufacturers cut back, and thereby reaped an increase in market share) and Hollywood film studios (that are heading for their best year at the box office ever).
Movie studios, with expensive Friday opening nights in mind, are looking for the most-desirable Thursday time periods, and that means the highest CPMs of all, and strong movie demand tends to drive up the entire marketplace up.
Another marketplace driver: many of the early deals being done are for the “out quarters, the second and third quarters,” according to a senior buyer.
“The question is, are people just doing this because they’re figuring, `What the hell. It’s got to turn around by then and it’s on option anyway’? So is it real money or not?”
Buyers, who had expected to be in the driver’s seat, for at least one more upfront, now find themselves being reminded of what happened in the recent scatter market, when higher prices and diminished availabilities prevailed. That, too, is a factor, not only in the deals being done but in the size of the budgets being submitted.
What all this means for cable, which again follows after broadcast in the upfront, is still debatable. One senior buyer expressed the opinion that cable money would be down this year; another took exactly the opposite view.
”We’re getting the calls to get geared up,” said Roger Domal, VP, national sales, Fox News Channel, who formerly was a broadcast network sales executive, and is one of the few executives at this delicate stage in the upfront dance who is willing to talk on the record. Contrary to expectations, this upfront is shaping up to be “almost old-fashioned” in its speed, he said.
The best news for cable as its own upfront looms is that “there is more money in play than any of us were anticipating,” Mr. Domal said.
For weeks, the Madison Avenue and Broadcast Row consensus has been that this upfront would be long and drawn out, just like last year’s epic trench war. That consensus is now history.