By Brian Steinberg
News Corp.’s Fox and Walt Disney’s ABC have begun to secure ad commitments as part of this year’s upfront negotiations, doing business with movie studios and auto marketers, according to media buyers familiar with the pace of talks.
These executives caution that the upfront, during which the nation’s biggest TV networks seek to sell the bulk of their ad inventory for the coming fall season, has not truly moved in earnest. Many advertisers have yet to describe how much they’re willing to spend, and some networks’ demands for price increases "are absurdly high, given demand levels," said one media buyer. Another ad buying executive even suggested that no significant business had been done with any network, with price demands remaining too exorbitant for many advertisers’ tastes.
Even so, Fox and ABC have written some business, according to several buyers and other executives. Fox has secured price increases in the high-single-digit CPM (cost to reach a thousand viewers) range, while ABC is securing CPM increases in the mid-to-high-single digit percentage range, according to media buyers.
A Fox spokeswoman said executives were not available to comment. ABC was not able to offer immediate comment.
In last year’s upfront, Fox secured approximately $1.98 billion and $1.99 billion in ad commitments, according to Ad Age estimates, with CPM increases coming in between 9.5% and 12%. ABC last year was able to secure ad commitments between $2.3 billion and $2.4 billion, with CPM increases coming in between 10% and 12%.
CBS, which has given indications it would seek CPM increases in the double-digit percentage range, is in the midst of "very active" talks with several different ad categories, but is not writing business at present, according to a person familiar with the matter. In remarks made to investors earlier this week, CBS Corp. Chief Financial Officer Joe Ianniello said the network would "hold out to lead the market.” CBS in last year’s upfront secured between $2.5 billion and $2.75 billion in ad commitments, with some CPM increases coming in between 13% and 15%.
Ad buyers have maintained that clients will not agree to double-digit price increases in this year’s talks.
The disclosure that Fox has moved earlier than the other broadcast networks follows a well-worn procedure. The network, known for "The Simpsons" and "American Idol," transmits fewer hours of prime-time programming than its rivals, and thus has less ad inventory to sell. It has also led its rivals in viewership among 18-to-49-year-olds — the demographic most coveted by marketers — for the past several years. Therefore, advertisers in competitive categories such as movies and autos who want to get their ads in front of 18-49-year-olds feel more urgency to do business with Fox.
Cable entities are also getting into the mix, with buyers suggesting Time Warner’s Turner is in the market seeking high CPM increases that buyers said represented an opening bid in talks. A Turner spokesman was not immediately available for comment.
Advertisers typically commit around $9 billion to the English-language broadcast networks’ prime-time schedule every year. The commitments, however, are just that — money promised, but not paid. Advertisers may reallocate their funds or even take some back at different points during the TV season. Earlier this year, General Motors trimmed some of the ad monies it had committed to TV, though it remains unclear whether that affected the automaker’s overall TV investment for the season.