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Deal-making Wraps in Upfront Markets

Jul 15, 2007  •  Post A Comment

The cable upfront moved quickly last week to wrap up after the advertising market accepted commercial ratings as the currency for negotiating deals.
Several key executives estimated the cable upfront market would come in at $6.9 billion, up at least 6 percent from last year’s $6.5 billion take, Advertising Age reported.
The syndication upfront market also is nearing its end, with executives reporting a 3 percent overall increase to $2.06 billion, according to Advertising Age.
This year’s $9.1 billion broadcast upfront was up about 5 percent from last year’s $8.95 billion. In total, the TV industry booked more than $18 billion in this year’s upfront, Advertising Age said.
Uncertainty over how networks will perform under commercial ratings, after years of doing deals based on program ratings, may mean it will be months before this upfront can really be evaluated, some buyers and sellers said.
In some cases, it’s being left to network programming departments to fulfill sales executives’ promises to ad buyers on commercial ratings. The programmers are making changes in show formats and break structures to maximize viewer retention during commercials. So far, no one knows how successful those efforts will be.
At the beginning of the upfront, where the bulk of prime-time advertising is purchased, some cable networks had questions about the accuracy of commercial ratings. Some networks also were concerned that the substantial difference between program ratings and commercial ratings would make it hard for them to maintain their revenue levels.
But even the strongest holdout, MTV Networks, found a compromise. The parent of VH1, MTV and other channels has been doing business based on program ratings in the fourth quarter, and commercial ratings for the rest of the broadcast year.
David Levy, president of Turner ad sales, said the delay in getting the cable market started helped the networks adjust to commercial ratings.
“It gave us a lot of time to understand our inventory,” Mr. Levy said. “Had we not had the time to really understand it, and re-look at our numbers and re-jigger our packages to make sure that we had the inventory that we needed, it would have been different.”
Mr. Levy said the market was strong because of scatter money moving to the upfront and because the change to commercial ratings has reduced the supply of ratings points available. The presidential campaign and Olympics also are boosting the market, he said.
Budgets are up in key categories, including movies, gaming, and insurance.
Mr. Levy said Turner’s entertainment networks—mdash;TNT, TBS and Court TV, which is being renamed truTV—enjoyed double-digit increases in prices on a cost-per-thousand-viewers basis, and a double-digit increase in revenue.
The increase was more than enough to offset ratings declines caused by the move to commercial ratings.
“It went extremely well for us,” he said. “Demand outweighed supply.”
Mr. Levy said Court TV, whose ratings are up 25 percent, scored 20 percent growth in upfront revenue. Over the past two years, Court TV called attention to itself by offering what it called engagement guarantees.
Mr. Levy said when Turner acquired Court, it honored those guarantees and has made more tailored engagement research part of this year’s deals with some agencies.
Turner also sold twice as much digital media as it did last year.
“It is becoming a significant business in our company,” Mr. Levy said, estimating it accounted for about 10 percent of revenue.
Hallmark Channel, which has increased distribution and ratings, also said it had a strong upfront.
Hallmark Executive VP Bill Abbott said the network secured price increases in the high single-digit to low double-digit range and that revenue was up 15 percent to 20 percent.
With the network near full distribution, it has added new advertisers to the mix, and those buyers are buying a higher CPM than those who signed on when the network was smaller.
“It’s a good market,” said Michael Brochstein, senior VP of ad sales for FX.
The network is being selective about making deals to trying to keep prices high, Mr. Brochstein said.

One Comment

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