Wrap-Up of 2010 Broadcast Networks’ Upfront: Market Eked Out a Small Gain

Jun 11, 2010  •  Post A Comment

Brian Steinberg
Advertising Age

Advertisers have committed between $8.1 billion and $8.7 billion to the five broadcast networks’ coming program schedules, according to estimates from Advertising Age, eking out a small gain over last year’s estimated $7.8 billion to $8.1 billion.

In a continued sign of the robust activity surrounding this year’s marketplace, NBC Universal has completed negotiations for both its NBC broadcast network and its passel of cable properties. "It was a great upfront for the industry, and our results reflect that," Mike Pilot, president-sales and marketing, NBC Universal, said in a statement.

NBC Universal’s total take for the upfront — across cable and broadcast — was approximately $4 billion, according to a person familiar with the situation, representing a slight increase from its total last year, when it was slightly less than $4 billion. In 2008, the overall take was said to be slightly above that figure. For prime time, the NBC broadcast network was able to secure commitments somewhere around $1.6 billion. NBC secured about $1.5 billion in last year’s marketplace, according to Ad Age estimates.

In all, the five broadcast networks were able to charge more for their ad time — and sell more of it, to boot, a signal that marketers felt more free to spend than they did last year. It’s true, the fact that the networks sold more inventory this year than last makes apples-to-apples comparisons difficult. Even so, ad buyers and TV executives have all suggested that three types of advertisers hit hard by last’s year’s economic turmoil — automotive, retail and financial services — returned in force to the upfront market in 2010. Buyers said they also saw strong activity from movie studios as well as marketers of wireless and other telecommunications products.

At a time when consumers have an increasingly dizzying array of media choices, initial predictions on this upfront were moderate. Buyers early on said they were pushing NBC to take just a 5% increase on ad prices, yet the network was able to secure at least 7%, they acknowledged. Meanwhile, CBS was able to in some cases notch price increases at around 10% — a figure to which many ad buyers swore early on they’d never agree.

"There is fragmentation and there is a shift to cable, but I do think [broadcast] TV is still very powerful and, obviously, it is showing in the amount of money that is being spent there right now," said one media-buying executive.

With automotive marketers moving more strongly into the marketplace, other advertisers felt the need to get money down quickly, or be shut out of decent positioning across the broadcast prime time grid. That dynamic accounted in part for the quick timing of this year’s market. Last year, with the economy stalled, advertisers waited until late August to transact business — and insisted on price rollbacks before they’d even come to the table.

Underscoring the trend, money is also flowing strongly to cable. NBC Universal’s cable outlets have completed negotiations, while Time Warner’s Turner Entertainment channels are writing lots of business. Both networks have been able to secure strong prices increases in the low double-digit percentage range, according to people familiar with the negotiations. At Turner, advertisers seem to be capitulating in part to the company’s demand that ad time on the new Conan O’Brien show be priced at or near parity with late-night fare such as NBC’s "Tonight Show" with Jay Leno or CBS’s "Late Show" with David Letterman, according to a person familiar with negotiations.

ABC was able to secure somewhere around $2.2 billion in ad commitments for its prime-time schedule, according to Ad Age estimates, and $2.4 billion in commitments for all its inventory across all day parts, according to a person familiar with the situation. In a sign that NBC may be breaking out of its long tenure at the bottom of the broadcast-network rankings, the broadcast network was able to secure commitments totaling around $2.5 billion for all of its programming.

CBS secured between $2.4 billion and $2.6 billion for prime time, Fox secured between $1.8 billion and $1.9 billion for prime time and the CW secured between $370 million and $404 million for its prime-time schedule, according to people familiar with the networks’ negotiations.

While both sides of the table nod to this year’s robust activity, there wasn’t enough money in the market to return broadcast TV to levels seen in prior years. In 2008, for example, the five networks were able to secure about $9.2 billion in upfront commitments, and in 2007 captured commitments totaling $9.1 billion. Clearly, the networks continue to wrangle with eroding ratings and the realization that a screen on a computer or an iPod is just as handy as one built into a TV set.


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