Fox Is First to Close Upfront Deals, With 9% CPM Hikes

Rendered in bold strokes by Fox, the contours of the 2010-11 broadcast upfront have begun to take shape. Having wrapped its final piece of business on June 3, Fox’s quick and lucrative deal making set the upper limit on pricing.

At week’s end, The CW had also completed most of its business, while ABC, CBS and NBC were cutting deals at a less frenetic pace as national TV buyers caught their breath.
Various industry sources estimated that Fox commanded CPM hikes between 8.5 percent and 9 percent over ’09 pricing, an improvement that contributed to an overall volume increase of about 20 percent.

All told, Fox is believed to have brought in between $1.8 billion–$1.9 billion in prime-time commitments, the second most lucrative upfront in its 24-year history. Fox moved roughly 80 percent of its inventory, in line with historical sell-through numbers. (Hampered by the recession, last year’s bazaar was an anomaly; per analyst estimates, Fox sold some 70 percent of its airtime then.)

While Fox did not confirm any vital statistics, the network on Friday issued a statement noting that it had completed its upfront business “at volume and pricing levels consistent with our position as the number one network” among adults 18-49.

Fox entered the upfront with nothing but upside, having won the key TV demo for the sixth straight season on the broad back of its National Football League schedule, as well as the top-rated (but faltering) American Idol and hit scripted series like Glee. Demand for NFL airtime by automakers was so pronounced that Jon Nesvig, president of sales for Fox Broadcasting, began selling spots on Super Bowl XLV in May.

By week’s end, he had sold off a whopping 80 percent of its Super Bowl avails, all but assuring a frenzied autumn rush for the remaining avails. “If you’re a client and you were hoping for an A position in the Super Bowl, you’re out of luck,” said one ad sales chief. “Nesvig has the goods people need to have, and this gives him extraordinary leverage.”

Media agencies late last week began deploying the four-corners stall, less in a bid to quash ABC, CBS and NBC’s separate demands for higher CPMs than to take a step back and reassess the overall marketplace. The speed with which Fox sold off its upfront inventory seemed to put some buyers on their heels a bit; by slowing the tempo, agencies carved out some time to revise planning.

“Each client budget is informed by different complexities, certain proportions of prime time to daytime, broadcast to cable,” said one national TV buyer, who like nearly every executive in the thick of negotiations, spoke on condition of anonymity. “We’re going to do a lot of rejiggering and replanning [over the weekend] in order to try to shift some things around.”

Which isn’t to say that pricing isn’t an issue. CBS is pushing for CPM hikes on a par with those secured by Fox—buyers suggested the net can punch its own ticket so long as it doesn’t push hard on double-digit increases. Like Fox, CBS can afford to throw its weight around a bit. During the just-ended broadcast season, CBS won yet another ratings crown, averaging 11.8 million viewers per night, while tying Fox for first place among adults 25-54.

“CBS is moving, if a little methodically,” said one ad sales boss. “They’re not stalled or mired or are in any way stunted. They’re just getting things done…just not at those 10s that Les was promising.”

Earlier this spring, CBS Corp. president and CEO Leslie Moonves said the network would make the most of what promised to be a robust ad market, although once the deals started getting done, he refrained from issuing any further estimates.

“We’re really in the midst of it right now,” Moonves said on June 2. “We’ve done a lot of deals this week…and we’re very pleased with that. The numbers are where we would like them to be.” Moonves added that should CBS get the pricing it desires, the network will move up to 80 percent of its inventory.

ABC and NBC at the end of last week were a bit less further down the road than CBS, although both nets have done some deals. ABC is expected to write business at premiums of as much as 8.5 percent over last year’s pricing, while buyers suggest NBC would be happy writing 7s. Should ABC move at least 75 percent of its avails at an 8.5 percent premium, it would stand to take in an estimated $2.3 billion, lifting dollar volume by some 21 percent. NBC is much harder to suss out, as its negotiations are complicated by the value of cable sibling USA Network and its lineup of top-rated original drama series. At least one agency has indicated that it wants to tie up its USA deals before working through NBC, a sound strategy that would have a concomitant decelerating effect.

Along with Fox, The CW has closed out its upfront business, notching “tremendous year-to-year growth in all key categories, including health and beauty, retail, wireless, and autos,” per evp, national sales Rob Tuck. The CW is estimated to have boosted volume by around 20 percent versus last year’s take, bringing in some $350 million. The vast majority of its sales were linear/digital-media hybrids.