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ABC Sees Modest Price Hikes

May 30, 2005  •  Post A Comment

Media buyers said last week their deals with this year’s hot network, ABC, have set a ceiling on price increases at about 5 percent, significantly lower than the double-digit increases CBS was able to wring out of advertisers during last year’s upfront.

“Zero to 5 percent is the range for everything,” one senior media buyer said. “I don’t think anyone’s going to get above that. They’re all going to have to fall in line.”

CBS began making sales after many buyers said they were finished with ABC late last week. While CBS went into the upfront looking to be the leader in terms of total dollars and price increases, sources indicated that the network appeared satisfied with price increases in the same range as ABC’s.

A CBS spokesman would not discuss specifics, but said the network has completed a “significant” amount of business and is “pleased” with the rates it was getting.

Fox, which has written a few deals, is expected to come in on the high end of the zero-to-5-percent range.

NBC, meanwhile, is trying to avoid deals at lower prices than it got last year, and it hasn’t yet registered any sales.

After years of being No. 1, NBC has the highest-priced ads of any network, and buyers have said that its prices may be in for an adjustment this year. The network announced relatively few changes to its schedule despite a double-digit decline in its once-dominant ratings and a fall to fourth place among viewers 18 to 49.

UPN and The WB also made deals with cost-per-thousand increases of about 3 percent.

Late last week ABC wrapped up deals with most of the major media-buying agencies, selling not only prime time but most of its other dayparts too, including news, daytime and late-night.

To monetize the 17 percent ratings increase it had last season in prime time-fueled by new hits “Desperate Housewives” and “Lost”-ABC needed to move fast in what is generally seen as a weak market rather than hold out for big increases in CPMs, buyers said.

“The early run of business was on ABC because they had an attractive base CPM. They had a strong schedule and good development,” the buyer said. “They got volume, and we got a good price.”

Last year “I bought NBC at $28 on adults 18 to 49, CBS at $27, ABC at $25,” another buyer said. “My [ABC] deal for next year is $26.75. It’s still lower than the other guys. So why not?”

ABC executives declined to comment last week. It’s expected that Mike Shaw, president of ad sales, will discuss the results of the upfront this week, after all the orders are added up.

“I think Gerry Wang [ABC senior VP of prime-time sales] did a fabulous job for them,” said Jon Mandel, global buying officer and co-CEO of MediaCom. Now, he said, “there’s less of a rush” to do business with the other networks. “If you take enough money out of the marketplace, and it’s a marketplace that’s soft to begin with, it makes it even less necessary to do anything else.”

That’s particularly true of cable, where few if any major deals have been struck.

Mr. Mandel confirmed that MTV Networks and Turner asked for aggressive price increases, but were rejected by the agencies early last week. “They’re raising their rates when demand isn’t there,” he said. Since then, cable ad sales executives may as well have been on the golf course, he said.

“The market outsmarted the MTV Networks,” one rival cable ad sales executive said. “They showed their hand, and the marketplace said, ‘Nah, I don’t think so.’ They’re making them sweat. So MTV f**ked it up for themselves and for the whole cable market.”

Nevertheless, by Friday, one market sources said MTV brought media buyer OMD on board in a multinetwork deal that had been stalled for nearly two weeks.

Buyers said they were aware of few deals being made in the syndication market.

Most buyers saw the market as relatively soft, but they still weren’t sure whether overall upfront spending would be even with or down from last year’s $9.1 billion.

“We’re taking it rather slowly because we’re not yet certain of where the market is going to be,” said Peggy Green, president of broadcast for Zenith Media Services.

One significant change making it harder to project the size of the market is the tendency of media agencies to wait until the last moment to register budgets-or in some cases to not register them at all. “Why give someone your budget so that they can use it against you?” one veteran media executive said. “There is less visibility of budgets this year.”

The media executive predicts overall revenue could drop for some networks, with some major advertisers leaving money on the sidelines during the upfront. “Scatter has been soft two years in a row,” the executive said. “Drug companies who bought upfront last year might say, ‘Let’s just buy scatter.'”