Upfront predictions exaggerated?

ABC deals may signal a more upbeat marketplace

NEW YORK -- Predictions of a down upfront marketplace could end up being exaggerated.

If the early pricing ABC reportedly received from two major buying agencies holds, it means the broadcast networks might get the upper hand during this year's upfront negotiations.

Sources said Friday that ABC got average increases of 8%-10% for primetime inventory thanks to early deals with buying agencies Starcom and Zenith Media. Neither ABC, Starcom nor Zenith would confirm the report, though the agencies were likely still locking in deals for their movie company clients (Disney for Starcom, Fox for Zenith).

Word of the pacts rippled across Madison Avenue and the other networks, who on Friday reported discussions but no firm deals. Some buyers were concerned because, if true, the deals would end up raising prices in a marketplace that as late as last week had been considered downbeat because of last season's ratings woes and the poor economy.

But one ad agency executive who asked not to be identified wondered why this was the case when holding out could lead the networks off their pricing demands. After all, it took until the second week of June last year for the deals to come, and it has been a long time since network TV upfronts were concluded in the late-night and quickly.

"I don't know why they would go out and initially cut that number," the exec said. "It sounds to me really high this early in the negotiation process. Let's play out a marketplace here."

ABC and Fox -- with the best adults 18-49 numbers and such hits as "American Idol," "Grey's Anatomy" and "Lost" -- were expected to lead the marketplace. But a concern in the buying community is that if those networks were able to get strong pricing, it would tend to lift prices for CBS, NBC and even the CW.

The demand for network TV seems to continue even with the impact of the WGA strike, which sent ratings down again. The networks, and not the advertisers, already know what the market will be like because advertisers and their agencies must register their budgets before dealing with each network. That means that while the individual buying shops don't know the entire marketplace, the networks do.

A potential recession and turmoil among automakers and other sectors heavily into TV led speculation that this year's $9 billion or so primetime upfront marketplace would be down in volume. The TV networks were assumed to get increases in cost per thousand, or CPMs, but in the mid-single digits and not necessarily the 8%-10% that ABC received.

Volume remains a question mark, though as CBS Corp. CEO Leslie Moonves told investors last week, a decrease in volume isn't necessarily a bad thing provided the network gets the pricing it needs and the scatter market is healthy.

An early read is that advertisers, looking at a still-healthy scatter market, want to make sure they get the airtime they need now instead of paying much more later on. Advertisers in the past few years who have sat out the upfront marketplace have had to pay double-digit increases over upfront pricing and also shortages of key time periods. They won't want to take that chance again.

John Consoli of Mediaweek contributed to this report.
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