Powerhouse Network Strikes Upfront Advertising Deals

Jun 6, 2006  •  Post A Comment

CBS has completed a number of upfront advertising deals, taking a lead over ABC, which some people expected to set the pace as it did last year.

“We are selling and we’re pleased,” said a spokesman for CBS, the top-rated network among U.S. households.

NBC, the fourth-ranked network, has completed some deals, a person familiar with the transactions said. Some buyers said they expect NBC to be forced to lower its prices for a second consecutive year after a ratings slump has made it difficult for the network to justify its high prices.

CBS has sold almost half its upfront ad inventory and has secured price increases ranging from 2 percent to 4 percent on a cost-per-thousand viewers basis, a source familiar with the negotiations said.

Some buyers thought those prices were surprisingly high. The said they had expected the prices to remain flat, given the tepid state of the economy and the defection of advertising money from the television market.

Some ad buyers said some of the higher-priced deals struck so far might have built-in price insurance for agencies that buy early. With that price protection, agencies that buy early get small price increases and a promise that if prices in the upfront market come in considerably lower, prices will be reduced.

Broadcasters are slower this year than last to strike deals after the May upfront advertising market, where networks show ad agencies their slate for the upcoming television season. Talks over how to count viewers who user digital video recorders and negotiations on ad deals for TV shows on the Web and cell phones have contributed to the delay.

Last year, ABC took the lead and set market prices early after the upfront to secure business. But while the network was trying to get buyers to accept ratings that counted DVR viewers, CBS and other networks were registering budgets from advertisers and generating commercial schedules in anticipation of doing business based on only live viewers.

On Monday, ABC President of Advertising Sales and Marketing Mike Shaw reversed the network’s stance and agreed to strike deals based only on live viewers, clearing the way for buying and selling to commence in earnest.

Buyers said ABC appears to be seeking price increases of 4-6 percent, similar to last year, and may not have completed any deals as of midday Tuesday. ABC declined to comment.

Fox declined to comment on reports it has done some deals.