Upfront spending frenzy

Big Four networks nab $9 billion in sales

The barrels of ad dollars being dumped into the current upfront marketplace are proving that broadcast TV, for the foreseeable future and against all odds, really remains the king of all media.

Despite the writers strike that drove viewers away from their TV sets and a recessionary economy that has consumers spending less, the Big Four broadcast networks are expected to cumulatively take in more upfront dollars -- a total north of $9 billion -- than they did last year.

Even the ratings-challenged CW network matched its average weeknight revenue take from last year, although the network's total haul is down by $190 million after giving up programming Sunday nights.

Some of the market momentum was the result of advertisers shifting dollars into the upfront to avoid another year of hefty scatter price increases. Broadcasters shifted scatter inventory into the upfront to harness the momentum, which helped them reach their lofty totals.

But clearly paying the broadcast networks rate increases of between 5%-10% following a season of double-digit ratings declines is a strong indication that advertisers see the medium as their best bet for reaching consumers and getting that all-important return on investment, which they are under increasingly intense pressure to produce.

Yes, more deals in this TV upfront were tied into digital extensions and other platforms connected to specific shows, but the bulk of the dollars were still placed against traditional 30-second spots.

"When national advertisers looked at their media plans to determine what worked most effectively, the bottom line was that it is television, particularly broadcast television," said one media buyer.

"Despite all the gloom-and-doom predictions by certain Wall Street analysts, the upfront money for broadcast showed up. And there was enough money that each of the networks was able to get significant price increases."

Another reason the broadcast networks could have had an advantage, one network sales executive suggested, is that the size or "clout" of several media agencies actually might have worked against buyers.

"There are now only a handful of super-sized agencies that have to get money placed on each network for hundreds of clients," the network sales exec said. "While the agency can use clout and threaten to walk away rather than paying what it believes to be price increases that are too high, the network can also refuse to do a deal and make the agency's many clients unhappy. Too much clout can actually hamper an agency's ability to dictate terms."

Most media buyers agreed that NBC was able to take in $1.9 billion -- $100 million more than last year -- despite being the fourth-rated network in the 18-49 demo by selling more inventory and being creative with its integrations and digital extensions. Buyers also paid the network 5% rate hikes, well enough below the 8%-10% hikes they gave ABC, Fox and CBS for their primetime avails, but still fair.

"NBC still has a lot of value to many of our clients, even if it is the fourth-place network. It has some shows with buzz, and yes, many of the viewers our clients want to target watch 'Deal or No Deal,' " said one buyer who placed business with NBC.

The CW was actually helped by having five hours less inventory to sell (the network syndicated out its Sunday nights to Media Rights Capital to program) and by doing away with the more male-skewing "WWE Smackdown!" on Friday nights.

While the network took in only about $385 million (compared to $575 million last year), that figure was about equal to its Monday-Friday upfront take last year.

"I don't think there's ever been a year when advertiser demand to be in the CW or its predecessor the WB wasn't up, despite the ratings," said one buyer. "A more narrow demographically targeted broadcast network with quality programming will always be in demand. The CW may have lost a few advertisers from this season, but it probably picked up some to offset that."

The CW again did well in this upfront by taking in ad dollars from its traditional core advertisers in categories like movie companies, wireless, retail and health and beauty products.

While NBC and the CW were pretty much wrapped up by the end of last week, ABC, CBS and Fox still had final deals to complete. Both ABC and Fox were cutting primetime pacts averaging about 9%, while CBS was just a tick under that. Fox also was selling advertising in the upfront on its two new dramas, "Fringe" and "The Dollhouse," at 35%-40% premiums as part of its new test concept, Remote Free TV. Under that plan, the network will run fewer commercials in an effort to foster more viewer engagement.

All three nets were expected to bring in either the same or just north of the volume they drew last year: about $2.4 billion apiece for ABC and CBS and $1.9 billion for Fox.

But not all media buyers were so upbeat about the price increases they had to pay the broadcast networks. Several suggested that, because they have the right before every quarter to exercise cancellation options, they will not hesitate to play that card if the economy continues to go south and ratings shortfalls continue into next season.

And while some buyers touted broadcast as the most effective reach vehicle for their clients, one buyer, who did not want to be identified, said angrily, "Every year we create our own demand by panicking and rushing into deals. This should have been a slower process."

Said another: "Once the first deal was done, it was like fish feeding."