Fox, ABC Begin Upfront Deals With Media Agencies
Call it the déjà vu upfront.
In what appears to be a simulacrum of last year's orderly upfront bazaar, Fox and ABC have started writing deals with some of the major media agencies. And while both networks are believed to be the furthest along in the process, every broadcast sales chief is currently engaged in discussing budgets and pricing with buyers.
While the numbers remain fuzzy, sources on Wednesday said that Fox is looking for CPM increases that are in line with the eight percent gains it secured during the 2012-13 bazaar.
The Fox deals are falling into place almost a year to the day after the previous upfront market began heating up. Sources said that Fox is once again lining up its core categories, landing commitments with automotive manufacturers and movie studios.
Because it simply has fewer CPMs to sell (the network closed the season down 22 percent in the 18-49 demo), Fox is almost certain to generate lighter dollar volume than a year ago, when it booked an estimated $2.2 billion in advance commitments.
For its part, CBS has the luxury of the most ratings points to sell and a roster of many of the biggest hits on TV. (It also doesn't hurt that CBS sells time in early- and late-Sunday afternoon NFL games. According to the SQAD NetCost estimates, CBS’ 2012 late-game unit cost was $385,000 per 30-second spot, while the early-game rate was $316,000.)
As CBS Corp. evp and chief financial officer Joseph Ianniello told investors last week, the Tiffany Network should once again bring in the largest dollar haul. Last year, the top-rated broadcaster sold off a record-tying $2.65 billion in upfront time.
"We're not really focused on who breaks the market," Ianniello said at a May 22 investors’ conference. "We want what we want and we’re going to get it whether we go first or last. We’re best in class and we expect to be compensated for that."
Earlier this month, Barclays projected an 11 percent increase in CBS sales, for a total upfront booty of some $2.93 billion.
All told, buyers expect broadcast volume will be down by as much as five percent versus last year's $9.55 billion take. (That figure includes the Big Four broadcast nets and the CW’s $400 million in bookings.)
Some of that decline can be chalked up to an overall loss of 10 percent of the available broadcast GRPs. Some ad sales execs have suggested that the tide has turned sufficiently enough that the entire ad-supported cable business could snap up an additional $1 billion in 2013-14 commitments.
Should the pace of the current bazaar mimic that of a year ago, broadcasters should be done writing their deals within the next two weeks.
One key difference between this year and 2012-13 is that no major clients are holding out for price reductions or otherwise disrupting the easy flow of the marketplace. Last year, General Motors was roundly rebuffed after it tried to muscle 20 percent CPM cuts from the networks.
In 2006, Johnson & Johnson and Coca-Cola sat out the upfront melee, opting to shift their respective investments to a late-summer calendar date more in tune with their business-planning cycles. Neither company's overall TV spend was compromised by the delay.
According to the Cabletelevision Advertising Bureau, ad-supported cable networks last summer generated nearly $9.8 billion in upfront sales. Analysts believe that cable has the potential to boost its overall take by as much as 8 percent, which is where that bonus $1 billion comes into play.
Viacom is the furthest along in its upfront deal-making, as the MTV Networks have sacrificed greater pricing increases on the altar of volume gains. Thus far, the strategy appears to be working to Viacom's advantage; sources estimate that MTVN could be up by as much as seven or eight percent by the time the final bell sounds.
The Viacom nets in 2013 are on a pace to bring in a grand total of $4.33 billion in domestic ad sales, per Barclays Capital projections. Among the cable network groups that also have completed some early deals are NBCUniversal, Turner Entertainment and Fox Cable.
While USA Network has been looking for hefty CPM increases for its acquired comedy series Modern Family—buyers say that the initial conversations centered on a rate that is four times what they were used to paying for the channel's movies and off-net dramas like Law & Order: Special Victims Unit—pricing has come down steadily.
It is said that the inflated rates for Modern Family are being offset by discounts in other areas of the NBCU portfoilio. "I think they'll have to give in other areas to get the price on Modern Family," said one TV buyer.