Upfront Ad Sales at Standstill

May 23, 2005  •  Post A Comment

Most media buyers were taking their time last week before placing their bets on cable or broadcast for the 2005-06 TV season.

That’s in sharp contrast to last year, when upfront dollars rushed into cable before the broadcasters were finished presenting their schedules.

Speculation flew Friday about several possible deals, including one report involving media buyer OMD and ABC, the network likely to be most in demand because of its buzzworthy hits “Desperate Housewives” and “Lost” and next year’s Super Bowl. But at least one buyer said word about deals being done was being spread just “to stir the pot.” “I wouldn’t believe anyone,” the buyer said.

Insiders attributed the absence of a flight to cable to the broadcasters’ ability to mostly hold onto their audience and the perception that the broadcast networks intend to be moderate in seeking price increases.

“We’re going to be very intelligent about how we approach the market,” said Jo Ann Ross, president of sales at CBS, who walked onto the stage at the network’s Carnegie Hall presentation to the sound of “Money” by Pink Floyd. Last year, CBS Chairman Leslie Moonves was vocal in seeking double-digit increases during the upfront. This year, with CBS making a claim as the No. 1 network in the 18 to 49 demographic, Mr. Moonves was being more diplomatic.

“We think the market is going to be up. We’re going to be up more than the market,” he said.

Most sales executives expected ABC to take the lead in setting broadcast prices. “I had dinner with four clients. They were all talking about ABC. It’s got the buzz,” said a salesman at a rival media company.

Some cable deals may indeed be made early, but by and large, buyers and sellers were looking for a more deliberate market. In fact, many deals are said to be almost done, but as of late Friday those deals remained incomplete as buyers waited to see where prices would settle.

One prime example: Early in the week, the word from media buying and selling executives was that a multi-network cable deal worth $100 million between Viacom’s MTV Networks and media buyer MindShare was about to close. But by the end of the week, after the broadcasters made their presentations, the deal hadn’t closed, sources said.

Deals were also said to be nearly closed but not complete at Turner Broadcasting and NBC Universal’s USA Network.

“Why rush?” said Rino Scanzoni, chief implementation officer for Mediaedge:cia. “Cable is a six-month deal.”

In celebration of ABC’s 17 percent increase in ratings during the 2004-05 season, Mike Shaw, ABC’s president of ad sales, arrived on stage at upfront presentation to the tune “I Got You (I Feel Good)” by James Brown.

But Mr. Shaw, who held a hard line last year when ABC was down, has been telling advertisers the network will be user-friendly during the upfront.

“We’ll be on the high end,” he said in terms of pricing. But unlike last year, the leader won’t get double-digit CPM increases, he said: “It’s not that kind of market. It’s not that kind of year.”

Mr. Shaw added that if the networks are reasonable in their pricing, “Some money may come back to broadcast” from cable.

Donna Speciale, president of national broadcast for MediaVest, said the networks will have to be reasonable because there’s less money in the market than last year. That will allow buyers to “take time to watch pilots and have share meetings” instead of rushing into the market, she said.

“NBC is nervous. ABC needs money,” Ms. Speciale added.

One senior sales representative estimated that broadcast CPM increases would range from 0 to 5 percent, which would leave NBC in a position where it would have to work hard to avoid dropping its prices from last year.

“If they come in higher, it could be good for cable,” said one cable sales executive.

Buyers also said that instead of cable going first last year, or broadcast moving first, as it has traditionally, they’ll move together.

“There’s more urgency for broadcast because there’s a finite number of networks and GRPs available,” said Andy Donchin, director of national broadcast at Carat USA.

He said Friday that he had not yet received signals from the broadcast networks about what level of price increases they would seek. “Everybody’s waiting each other out,” he said.

One broadcast sales executive said some agency budgets began to come in last week. Even if prime doesn’t start, the networks might start to do deals in other dayparts, such as news, daytime and late-night, if there’s a basis for agreement.

Still, many sales executives assumed that some prime-time deals had been done, most likely with the movie studios securing time on ABC, CBS and Fox.

On the cable side, it appeared that despite hot and heavy talks over the past few weeks, most major cable groups, such as NBC Universal Cable, Discovery Networks and Turner Broadcasting, had yet to get started.

“There’s no pre-broadcast upfront cable market this year,” said Bruce Lefkowitz, executive VP of sales for Fox Cable Entertainment, who had one deal under his belt from the previous week. “They are still dancing, but no one has left the gym.”

Last year MindShare and Viacom cable networks started the ball rolling early and many other upfront agreements between media agencies and cable networks were also completed by week’s end in a marketplace that was somewhat stronger.

“It happened last year. Cable networks are trying to make it into a trend this year,” said Doug Seay, senior VP of national broadcast for Publicis/Hal Riney. “But no one knows where the market is yet.”

Each of Viacom’s cable networks is looking for different price points from MindShare, according to executives. MTV Networks wants a 2 percent cost-per-thousand-viewers [CPM] increase, while Comedy Central/VH1 wants a 5 percent to 6 percent improvement, according to industry executives. That averages out to about a 4 percent increase, one executive said.

But that’s still too high for MindShare-especially in a marketplace that is somewhat mild. “They want close to flat,” one executive said of the media agency. MindShare’s clients include young-skewing advertisers that fit well with Viacom’s youth-oriented networks.

Executives at MindShare and MTV Networks declined to comment.

Much of MindShare’s response related to a soft scatter market in the second quarter-generally a harbinger of news for the upfront-which has come to a virtual standstill, said media executives.

“The market has stopped,” said one veteran cable television sales executive. “I’m going home.”

It could be a long summer for some media sellers if that’s the case-especially since the supply of gross ratings points has unexpectedly grown on both the cable side and the broadcast side.

“Nobody is in a rush because it looks like you can get your money down at any time,” one veteran cable advertising sales executive said.

The surprise news is that broadcast ratings points in adults 18 to 49 are slightly up this year. That is against a decade-long trend that has seen anywhere from 3 percent to 6 percent in yearly audience erosion.

Broadcast executives used the trend to make a point that broadcast is still vital and deserves its disproportional share of ad dollars.

“It’s a hit-driven business and business is booming,” Mr. Moonves said during CBS’s presentation, noting the power of shows such as ABC’s “Desperate Housewives” and “Lost,” Fox’s “American Idol” and CBS’s “CSI.”

“Yeah, that’s true. But if you take ABC out of the equation, broadcast networks are down,” said Larry Novenstern, senior VP of national broadcast for Deutsch Inc.