Execs Forecast Upfront

May 16, 2005  •  Post A Comment

Buyers and sellers are predicting a more deliberate pace to the television advertising market as the networks make their upfront presentations this week.

“I would find it absolutely remarkable if anything happened [this week],” said Jon Mandel, chairman and chief global buying officer for MediaCom U.S. “It’s a soft enough market that [any other agency] who would rush to do something, I’m pitching their clients because they obviously don’t know what they’re doing.”

What is happening is that some integrated deals have been negotiated and there is some activity among the cable networks, although most of the big deals will wait until the broadcast networks set the sales pace.

Bruce Lefkowitz, executive VP of entertainment sales for Fox Cable Networks Group, has already sold to an undisclosed client an integrated deal to sponsor next season’s premiere of “Nip/Tuck.” “Everybody’s talking, but are we going to get deals done before the broadcast networks?” Mr. Lefkowitz asked. “I have no idea.”

Most observers expect the broadcast market to be flat, with sellers more bullish than buyers. “I think the upfront will be an OK upfront,” said Randy Falco, president of the NBC Universal Television Networks Group. “In terms of volume, I think it will be very good on the cable side. I think it will be robust on the Hispanic side, and I think network will probably grow 3 [percent] to 5 percent as well.”

Mr. Mandel said he isn’t so sure. “We’re estimating that overall budgets are anywhere from -2 percent to +2 percent. I only have three out of 70-something budgets [approved by clients]. That’s my economic analysis. When I get the actual numbers it may be more or less. And anyone who tells you differently is full of s**t right now.”

With NBC showing a double-digit decline in ratings and dropping from the No. 1 spot among adults 18 to 49 for the first time in years, the consensus is that its upfront sales will drop from $2.9 billion last year to about $2.4 billion this year. The question then becomes “Who will pick up those dollars?” Some will certainly go to resurgent ABC, but a former network sales executive noted that ABC is not always a good fit. Its viewers are older than NBC’s and not as affluent. ABC is weak on Thursday. Still, ABC is expected to show the biggest gain at $2 billion, up from $1.6 billion last year (“Monday Night Football” does not figure into ABC’s upfront totals).

CBS is now the leader on Thursdays, which remains important. Thursday is a key night for big-spending advertisers, including the automakers and movie studios. That should help CBS boost its upfront business to about $2.4 billion to $2.5 billion, up from $2.3 billion last year.

Fox is expected to increase its upfront haul to about $1.6 billion from $1.5 billion last year.

“I don’t necessarily know there’s going to be any kind of hot and heavy pace this year,” said Mel Berning, executive VP of sales and marketing at A&E Television Networks. “I think it will be a deliberate pace. I think that’s consistent with what everyone has been saying on the buy side and the sell side. They want a more controlled market, a more deliberate market where you talk about things other than just [gross ratings points] and [costs per thousand].”

Some agencies, including Initiative Media and Mediaedge:cia were looking to get a jump on the market by getting branded entertainment deals in place that included high-profile shows such as ABC’s “Desperate Housewives.” “We are in pretty good shape,” said Fred Dubin, managing partner and director of entertainment marketing and promotions for Mediaedge:cia. “There are a number of clients who are interested. It certainly makes sense to start early.”

Pricing for these branded entertainment deals are adjusted based on the CPM levels in that client’s overall upfront buy. “We are not holding the media deals hostage to the branded entertainment deals,” one executive said.

“There are some budgets that are being talked about and those are the integrated budgets,” said David Levy, president of Turner Entertainment Sales and Marketing. “You have to get that conversation done early if you’re trying to talk about product integration or VOD or any of those things that are going to take time to develop,” he said, adding that while integrated opportunities are being discussed, “the context of the overall deal is not.”

Fox’s Mr. Lefkowitz is hoping that his early deal for “Nip Tuck” will establish overall pricing for that client and its agency. “It certainly is a good and exciting deal and one that we think gives us some good momentum,” he said. “We were out yesterday and basically had two [other] people say to us, `We’re ready.’ Again, they tend to be accounts that are in our highest-demand categories … but at least there are conversations. We’ll see.”

Meanwhile, Turner executives said the pace of the kids market picked up last week. “I can’t speak for the whole market, it’s still moving, but we’re about 75 percent complete right now and we’re very, very happy with the performance,” Mr. Levy said. “We’re in double-digit increases in revenue, and I’m in double-digit increases for CPMs for my hard 10 [the weeks before Christmas] and pre-Easter, and that’s basically what I was anticipating. It took a little longer maybe than we anticipated ultimately, but we’re here where we want to be.”