End in sight for slow upfront

Uphill struggle could reach summit by early next week

Seventy-four days after the last of the broadcast networks took the wraps off its fall programming lineup, the Sisyphean 2009-10 upfront finally is creeping to a close, with executives on both sides of the table indicating that business could finish up by the beginning of next week.

After seven weeks of trying to roll the pricing boulder up the steep grade of a stronger-than-anticipated television marketplace, media buyers are nearing the summit. Buyers began making the ascent in late June, but the gravity of clients' demands for double-digit CPM rollbacks met with push-back from network ad sales executives, and time and again talks were sent crashing back down the slope.

As the Greeks would have it, Sisyphus' infernal errand was a condemnation handed down by the gods as punishment for his hubris. According to more than a few ad sales bosses, that sort of pridefulness informed much of this upfront, as clients made incongruous pricing demands and buyers tried to force the issue with the networks.

Despite the mounting pressure to accept the double-digit rollbacks on offer, the nets held their ground. At the same time, the sellers began to give up on the single-digit cost-per-thousand increases they'd asked for at the outset. In the end, both sides had to lessen expectations, but having failed to meet client demand, buyers might have lost more face.

"The agencies should be ashamed," said one ad sales chief, who like nearly all the executives reached for this report, spoke on the condition of anonymity. "They completely backed themselves in the corner when they told their clients they could get them those 10% rollbacks. And while they couldn't get any business written, they did everything they could to turn the upfront into some kind of half-assed silent auction."

While this year's upfront has been conducted with unprecedented secrecy, buyers weren't the only players who tried to stem the flow of information.

"Look, we've kept quiet too," said one network exec. "The agencies may have issued a gag order, but once we were able to get a feel for where the market was and how we'd end up, we started dealing with third-party guys on a need-to-know basis."

The broadcast network market was turning toward the homestretch, with about three-quarters of the business written. Sources on both sides of the negotiations said NBC, Fox and the CW are furthest along, while ABC and CBS are lagging a tad, having come to the table later in the game.

Any estimates of the final tally will be slow in coming, as the Big Four are all expected to hold back more inventory than usual for scatter. Two weeks ago, General Electric CFO Keith Sherin said NBC will retain an unquantified percentage of ad time heading into 2010, a strategy espoused by ABC 13 days later.

Although ABC also declined to say how much inventory it'll hold back, buyers think the nets will keep 10%-15% more than usual, moving around 70%-75% of their total airtime, in part because overall money is down. (Sources estimate that broadcast volume could be down as much as 20%, from $8.7 billion in '08 to about $7 billion.)

"Sure, they would have liked to have written everything in the upfront, but the demand isn't there," said the top buyer at a major agency. "They don't want to take that big a hit on the price."

That said, sales execs seem rather chuffed to take those dollars off the table, as nearly everyone on the network side believes that scatter pricing will be elevated.

"Scatter will be up 10%-15% above upfront pricing," said one seller. "We'll be more than happy to revisit the guys who decided to sit out the upfront."

Buyers are more cautious about making even short-term prognostications.

"We'll see what scatter turns out to be," said one agency higher-up. "We don't see the economy turning around anytime soon, and frankly I don't know really how much money is going to be out there in scatter." At present, scatter pricing is in line with last year's upfront prices, according to buyers.

ABC, CBS and Fox are selling off their primetime inventory at low-single-digit CPM declines, and NBC is believed to be agreeing to rollbacks of 7% for many of its deals. Syndicators, which were about one-fourth done as of Sunday, also are writing business at CPM reductions 1%-2% for top-tier programming, to 7%-9% for the tonnage material.

As broadcast closes out the remainder of its upfront business, cable is all over the map. Top-tier network groups -- NBC Universal, Turner, Discovery, Fox Cable, Comcast, et al. -- are in motion and have completed as much as 50% of their respective dealmaking. All told, cable deals are falling within a range of 5%-8% declines, though those nets that entered the bazaar from a relative position of strength are much closer to zero.

In many cases, midtier and lower-third cable nets still are awaiting budgets and therefore are nowhere near being done.

"We're fighting for crumbs," said one salesman. "There's the haves and the have-nots, and the have-nots aren't doing (much)."

Last year, cable landed $7.65 billion in upfront dollars, according to the Cabletelevision Ad Bureau. This time, analysts expect it to slide as much as 15% to $6.5 billion.

Facing a few more weeks of boulder rolling, sources say they're looking forward to reaching the summit. "Nobody is really happy this upfront," said one buyer.

Steve McClellan and John Consoli of Mediaweek contributed to this report.
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