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Prices Off For Syndie In Upfront

Jun 27, 2005  •  Post A Comment

First it was NBC that had to take less than anticipated for its advertising in the upfront market. Now syndicators are being forced to lower prices for commercials on some of their shows.

Meanwhile, Discovery Networks, while resisting lowering its cost-per-thousand rates, is nevertheless expecting to book about 15 percent less ad revenue than it got in last year’s upfront.

Ad sales people said they hope to wrap up the upfront by the Independence Day weekend, but buyers said it might drag on much later than that.

NBC, which saw its upfront revenue drop to $1.9 billion to $2 billion from $2.8 billion last year, is not going to cut back spending as a result or making any sudden personnel changes, said Jeffrey Zucker, president of NBC Universal Television Group.

“There is no panic or any sense of the bottom falling out,” Mr. Zucker told TelevisionWeek shortly before addressing the Promax&BDA conference last week in New York. “We expected to be down,” he said, although the market pushed NBC down more than the network anticipated. Now NBC Entertainment is beginning “a rebuilding process,” he said: “Everyone is aware of that.”

Sources said NBC expected CBS to lead the market and seek CPM increases of more than 6 percent. Instead ABC, accurately sensing that there would be less money in this year’s upfront than last year’s, took the lead offering to take increases of less than 6 percent. NBC then had to change its strategy. ABC’s move put a ceiling on the market, not only for broadcasts but cable and syndication as well.

Mr. Zucker said NBC will be able to continue to invest in the programming it needs to make a turnaround and that parent General Electric is being “unbelievably supportive.”

Later, during a Promax session in which he was interviewed by NBC Agency Senior VP Frank Radice, Mr. Zucker said it had been a tough year for NBC.

“We expected to suffer as a result of that and knew we were in for quite a setback,” he said. “Obviously it was a little more than we expected, and that’s OK because that’s something we as a whole company, NBC Universal, can deal with.”

He said the ability to ride out a tough year at NBC was “the whole point” of the NBCUniversal Entertainment merger. “The fact is the other assets of the company are in fantastic shape,” he said. “Those things do buoy you in a tough time, and we can withstand the current problems at NBC Primetime. It doesn’t make them any easier, it doesn’t make us any less competitive and want to fix it any faster. But the idea behind the merger and this newly combined company makes that more palatable.”

Syndication executives said that they were doing deals last week, and that prices were ranging from 3 percent increases to 3 percent decreases. “Better shows are getting increases. Other shows are not,” said Bob Cesa, executive VP ad sales, Twentieth Television and DirecTV, looking at syndication overall. “There are some shows that are doing negatives.”

Sources said that Warner Bros. Domestic Television Distribution had made a major integrated marketing deal linking Campbell’s Soup with “The Ellen DeGeneres Show.” Executives from WBDTD and Campbell’s ad agency declined to comment.

Mr. Cesa said he’s seeing more demand for shows in daytime: “There’s no reason to drop your price there.”

While there is less money in the market, Mr. Cesa sees a strong economy and thinks money is being held back for scatter.

The shows taking the biggest decreases are older sitcoms that run in late-night time slots, sales executives said. Late night dating shows also are having difficulties attracting ad dollars.

Another syndication sales exec said that with lower prices in the market, advertisers can afford to buy more inventory in the top shows, which means trouble for “someone who’s got some overpriced sitcom in the middle of the night.”

Jon Mandel, chairman of MediaCom U.S., said that media of all kinds are looking at price rollbacks and that television is no exception. Mr. Mandel blamed the fact that there is less money in the market on an inability of companies to make long-term spending decisions, and expected the upfront to go on all summer.

“I’m still standing,” Mr. Mandel said, noting that it’s a buyer’s market and he’s doing better than many television sales executives.

“Sometimes you’re the windshield, sometimes you’re the bug,” he said, quoting Joe Abruzzese, president for ad sales, Discovery Networks U.S.

Mr. Abruzzese said Discovery was about 70 percent done with its upfront deals. Despite a sharp ratings drop at TLC and a traditionally high CPM rate, he said, the network was getting prices that ranged from flat to low-single-digit increases.

But with TLC’s problems, he’s got fewer ratings points to sell and buyers are spending about 15 percent less in this year’s upfront with Discovery than they spent last year.

Mr. Abruzzese remained upbeat that the scatter market would be stronger and that TLC’s ratings would improve to take advantage of it.

For other cable networks, the deal-making ground on. “So far, people are coming slowly, but they’re coming around,” said Bruce Lefkowitz, senior VP of ad sales for Fox Cable Networks Group.

One big buyer, OMD, had finished deals with only MTV, Lifetime, Turner and USA, market sources said. Another, Magna Global, still might not have finished any cable deals. And General Motors was also moving slowly with the cable networks.

With so many deals undone, sellers were wary about dropping prices to get an early deal done because other buyers would insist on pricing at the same level.