How TV Got Sold

The art of selling in the upfront's early years

It’s a warm spring evening sometime in the early 1970s, and the CBS sales guys are holding down the fort at the ‘21’ Club, having commandeered Nixon’s table against the far wall. Frank Hussey, who services the Doyle Dane Bernbach account for the Tiffany Network, is spinning yarns to a group of young salesmen, and while he’s been selling for years and more or less out of circulation, his spiels are usually worth the price of keeping him in Bloody Marys.

Hussey, who jumped into his first upfront in 1957, is renowned for his storytelling prowess. Most tales have to do with putting one over on the buyers or outmuscling his competition at NBC and ABC. When on a run, Hussey will wax lyrical about the upfront itself, arguing, not incorrectly, that it’s less a clubby bazaar than a marriage of zeitgeist and revenue—a single week in May when networks establish the cultural grid, dictating what will appear on the nation’s TV sets, and thereby holding America’s heart and mind for the next 12 months.

Tonight, he’s much more prosaic. His topic: the art of the psyche job.

“So it’s the week after upfronts, and I’m on my way out the door hoping I can make that 11:10 train to Greenwich,” Hussey’s saying, gesturing at the door with a wilted celery stick. “On the way out, I see these two fellas from ABC and NBC, the ones who called on DDB, and they’re sort of commiserating.”

Hussey pauses to take the last pull on his Bloody. One of the young ad men glances at his wrist; he’s heard this one many times before. “I decide to walk over there and give these guys a hard time. I nod my head at the both of ’em, and I say, ‘Hey, fellas, you’d better set your alarm clocks extra early tomorrow. I just came back from Doyle Dane, and I got all my Volkswagen money down for fall. Trouble is, I only left enough money for one of you.’”

As anachronistic as this seems, that sort of brinkmanship hasn’t entirely disappeared. Instead, that smoky swagger in the wee hours has merely morphed, these many decades later, into health-conscious power lunches and no-nonsense meetings. (The one venue that has remained constant is the golf course; at Shinnecock, you can’t swing a 3-wood without hitting agency and network sellers and buyers.)

Despite its myriad changes and the changing world around it, the basic principles of the upfront have stayed pretty much the same: a marketplace so powerful that not even the vast suction of the Internet can throw it off its moneymaking track. Bottom line, its central, age-old premise—price as a function of supply and demand—persists.

What has changed, of course, is the annual bazaar’s dynamics. In a three-network universe, sellers had the latitude to lay out all their goods behind glass and set as high a price as they thought the market would bear. If you were a buyer or client and you didn’t like the cost, you could gather your forms and take your business back to radio. But the proliferation of top-tier cable nets has ensured that there is no such animal as a “must buy”—at least in theory.

The basic molecular structure of the upfront fell into place back in 1948, shortly after CBS and ABC launched, following NBC onto the national stage. At the time, the network schedules were unfixed; rather than running on a September-to-May calendar, programs premiered at various times throughout the year. Upfront negotiations were synched to the studio development cycle; as such, upfronts would begin the week after Washington’s Birthday, wrapping up by month’s end. Then, in 1962, ABC forever altered the advertising landscape: In a bid to create a showcase for American automakers, the network shifted its entire programming lineup, setting its premieres for a single week in the fall. In so doing, ABC not only invented the broadcast TV season as we know it, but also ushered in the era of the modern upfront.

Five years later, ABC triggered another seismic event when it became the first network to offer ratings guarantees. For the first time, a network would place an insurance policy on its deliveries. On the one hand, if a client placed a big bet on a sleeper show and it became a hit, it automatically locked in the original rate even as those who took a pass on the show were obliged to pay a stark premium.

It works in the obverse as well. Say a client gambled on the short-lived, mid-’70s sitcom Dusty’s Trail and went pretty deep into the fall run. After the series’ ignoble flameout, ABC would have offered some spots in much more successful programs (i.e., give “make-goods”). In this way, the threat of a bust is greatly diminished.

But let’s go back to the ‘21’ Club, a few years post-Hussey’s tale, where a nattily dressed producer, Pierre Cossette, has stationed himself at Jackie Gleason’s table. An avuncular former agent and old-school showman—Cossette’s name regularly pops up in Earl Wilson’s “It Happened One Night” column, and he’s not only booked massive engagements for the Rat Pack at the Sands but brought the Grammy Awards to TV—is feeling the signal throb of an incipient stress headache.

“I’ve been out to Cincinnati I can’t tell you how many times, and I still can’t get the concept through to P&G,” Cossette says, fiddling with a cocktail napkin. “They think Sha Na Na are bikers, criminals. They don’t see that they’re a cartoon.”

It’s the mid-1970s, and having balked at the network’s inflated advertising rates, Procter is betting big on prime access, the 7 p.m. on-ramp to prime that has recently become a speculator’s paradise. Trouble is, the straitlaced company isn’t sold on Sha Na Na’s retro-hoodlum act, a mashup of louche ’50s greaser stereotypes and doo-wop standards.

“I thought if they heard the music they would get it,” Cossette says to his dinner companions. “I met with 22 P&G people and brought 22 Sha Na Na record albums. ‘Just listen to this record,’ I say. ‘It’s good clean fun!’ I say. What I didn’t know was that on the gatefold sleeve, there was a picture of the band dressed up in their leather and chains with all that greasy kids’ stuff in their hair. And they’re holding up this giant sign that reads, ‘We’re Gonna Bust Some Ass.’”

Cossette would eventually win over P&G, and the Sha Na Na show would become enormously popular, running for four seasons and kick starting the prime-access syndication boom. And if the novelty act is something of a TV footnote, the series marked a turning point for the upfront inasmuch as it was the first successful challenge to a system that had been in place for the better part of 25 years. In lining up a client to produce a syndicated show at 7 p.m., Cossette essentially provided a bypass to the network’s ever-increasing ad premiums.

These single-sponsor programs marked a middle path between acquiescence to the networks’ increasingly steep pricing and the abject failure of another signal moment in the history of the upfronts: J. Walter Thompson’s boycott. When CPM premiums swelled to an unprecedented 25 percent during the 1975-76 upfront, the largest TV agency in the business decided to sit it out and wait for more reasonable rates. After all, at the risk of losing out on JWT’s $95 million purse, it seemed a safe bet that the networks would temper their rates.

Bad bet. Ultimately, JWT got burned and wound up paying even higher rates in scatter (where time not sold in the upfront is sold on the open market) for what amounted to a bunch of leftovers.

“At the time, there were no alternatives to broadcast,” says Marc Goldstein, former president and CEO of GroupM North America, parent company to WPP’s media agencies, and a keen observer of the upfronts. “The market went crazy, and the networks started demanding 23, 24, 25 percent increases—and more often than not, that’s what they got. That’s when the shift came. The pressure to find alternatives to network television is what got the clients into the production of series for prime-time access.”

For those who didn’t want to roll the dice on financing a 7 p.m. show, the JWT debacle was a stark reminder of certain rather elementary supply-and-demand principles.

“After that, nobody really thought about skipping the upfront again for a long while,” Goldstein says. “And as much as taking over prime access worked in the short run, there’s a lot to be said for the insurance policy afforded by a negotiated CPM. It’s a very nice safety net. With the early syndicated shows, Procter bore 100 percent of the risk of failure.”

Because supply was so limited, the networks almost always had the upper hand over their agency partners. If you were a Larry Hoffner, former NBC sales group chairman, or a Marvin Goldsmith, former ABC sales and marketing president, or any of the handful of powerful men who dominated network sales from the ’60s through the ’80s (a broadcaster didn’t promote a woman to the top of the pyramid until as late as 2002, when Jo Ann Ross was named president of CBS network sales), you could see the entire marketplace spread out before you from your table at ‘21’ or from a handful of other clubby Midtown restaurants. With client budgets falling to just three national TV outlets, the sellers had what amounts to X-ray vision.

But you wouldn’t have known there was an imbalance in the power dynamic between sellers and buyers from observing the back-and-forth between the two poles. “There was a lot more community with the sales chiefs back then,” says Arnie Semsky, former worldwide media director at BBDO. A thoughtful “big idea” guy, Semsky left the agency grind at the tender age of 52, having grown weary of the sort of bureaucracy birthed by rampant consolidation.

“We had a staff that basically stayed intact for 15 years,” Semsky says, “so things were a lot more collegial. And we used that relationship to get better deals for our clients.”

Being a far more insular business, the upfronts of the Kennedy-through-Reagan eras were marked by a boozy sort of ballbusting that has all but vanished in the age when a salesperson who spends four hours putting away Manhattans at today’s ‘21’ is a salesperson who’s going to be out on his ass faster than you can say “intervention.” Return from a lunch date listing to port, and before you know it, you’ll be packing for a nice stay at Trembling Hills.

The revels following the upfronts have largely been diminished as well. The annual William Morris upfront party was the stuff of legend; so densely were stars and moguls packed into the dimly lit warren of ‘21’ that one could, in a single clumsy motion, spill a Tom Collins on Warren Littlefield while treading on the foot of Mary Tyler Moore.

After bouncing to the similarly congested Four Seasons for a number of years, you could meet everyone you needed to meet in one turn around the reflecting pool in the Philip Johnson-designed Pool Room. The agency had its last hurrah in 2008 at the Museum of Modern Art, killing the tradition in a nod to the cratering economy (and to its own takeover that year by Endeavor).
 

When compared to the spectacle of the old William Morris bash, today’s upfront soirees put one in mind of wartime austerity. Lobster tail has given way to the ubiquitous (and stomach-churning) frivolity that is chicken satay, and on the rare occasion that vendors trot out some desirable swag, a third-tier oddity like Andy Dick will ruin the fun for everyone else. (In 2005, Dick rolled up to the Lucky/Cargo hospitality suite at the Ritz-Carlton where he essentially made off with every high-end premium he could carry.)

Given that each upfront is essentially a narrative—market forces determine the teller of the tale—a little conflict between the protagonists is often unavoidable. The players air their grievances in the trades; in recent years, we’ve seen buyers carp about currency and sellers boast about the fat price hikes they were going to land.

“The sort of public engagement, where you see someone like [CBS Corp. CEO] Les [Moonves] telling people what kind of pricing he’s going to get in the upfront, that wasn’t really done years ago,” Semsky says. “Les is one of the great showmen. And I get the feeling he’s not talking to the clients so much as he’s talking to Wall Street. And Sumner [Redstone].”

Of course, back in the era when you could write a huge chunk of business on a cocktail napkin, there was no need to go out and bang your drum in the streets.

“One year at CBS, we had a goal of $1.6 billion at, say, 8 percent CPM increases and Magna had the most money out there,” recalls Joe Abruzzese, president, advertising sales, Discovery Communications. Abruzzese sold time for CBS for 22 years before making the unprecedented leap to Discovery in late 2002. At the time, some rivals questioned the notion of leaving the major leagues of broadcast for the bush league; then, as now, Discovery’s Dapper Don was right on the money. (Perhaps the most respected sales chief in the game, Abruzzese is also justly renowned for his exquisite taste in custom, hand-tailored suits. Put it this way: Abruzzese pulled in $1.25 billion in sales revenue last year, or roughly half of what he must pay for his dry cleaning.)

“So [former Magna Global chairman and CEO] Billy Cella called me up,” continues Abruzzese, “and I said, ‘Billy, you’re on my schedule. We’re going to a black-tie event.’ So, he had his forms, I had mine, and he said, ‘Suppose we did x amount with Johnson & Johnson and x amount with Microsoft,’ and we laid out $500 million in media at a cigar bar. Closed the deal that night.”

If buyers and sellers were once thick as thieves, the constant pressure to up the ante during the three-network era began to have a wearying effect on the clients. “You’d have years where the network guys were asking for mid-teen pricing increases and yet the mortality rate of the shows they were selling kept going up,” says Goldstein. “It’s the reality of the business—there are always more failures than hits. [In the early ’80s] there was an opportunity to spread the money around a little on CNN and TBS.”

Cable wouldn’t start wetting its beak in the broadcast feeder in any significant way until the turn of the century when a rush to invest in original programming transformed the space from a sleepy backwater haunted by reruns of Too Close for Comfort and bad movies to a platform for some seriously good content. In developing franchises such as Mad Men (AMC) and The Shield (FX), ad-supported cable networks demonstrated they could produce HBO-quality series, and in doing so, took a chomp out of the Big Four. As the shows got smarter and more engaging, some of the money started falling cable’s way.

By 2005, cable executives began portraying the broadcast networks as a place for derivative, soulless content. Broadcast was for your sainted mother out in Staten Island; cable was for the urban sophisticate. By the middle of the second Dubya administration, cable had become so disruptive to the old way of doing business that ESPN and Turner Broadcasting decided to jump the line, bum rushing their way into the week traditionally reserved for the network upfront shows.

The extent of the upheaval can be seen on the balance sheet. As late as the 1999-2000 bazaar, cable was still only taking in half the dollars booked by the Big Four. The new millennium saw the cable bucks trending up along a hockey stick graph, and while broadcast keeps adding to its pile, this year will mark the first in which the upstarts reach parity with the establishment guys.

Still, on the eve of the 2010-11 upfront, the broadcast network sellers are anticipating a real lollapalooza. Barclays Capital analyst Anthony DiClemente anticipates that the Big Four are likely to increase their upfront commitments by 7.5 percent year over year to $9.23 billion, beating the previous high-water mark of $8.8 billion in the 2008-09 bazaar. With the cable networks expected to book an equal amount of early commitments, the overall take for this year’s spring fling could add up to some $18.5 billion.
 

The upfront persists because it’s simply the most efficient way for buyers and sellers to agree on long-term deals. The CPM guarantee model that was first negotiated in the late ’60s still protects the interests of buyers and sellers, and despite the rhetoric that sometimes spills over into the business pages, the relationship between all parties is more friendly than fractious.

And yet there is always that drum beat, that persistent thump in the background that spells doom for the entire enterprise. Questions about the validity of the upfront are nearly as old as the practice itself. The blowback from the JWT pullout put aside any talk of closing down the bazaar for some 15 years, but then, in 1992, media agencies once again began agitating for a radical change in the model. When the economy roared to life that spring, the idea of adopting a continuous TV market was once again sidelined.

“I think context matters more than ever, and the upfront today is all about context,” says Ed Erhardt, president of customer marketing and sales, ESPN. A seemingly unlikely theater buff—he has the brawny bearing of an old linebacker—Erhardt, like fellow sales captain Abruzzese, is a backer of the Broadway hit Lombardi. “If I’m a client or a buyer or a planner or an executive in the business of advertising, and I can get all my context in one place and it’s an efficient use of my time, I think that’s really valuable.”

As recently as 2007, some buyers were ruminating on a new upfront model. In the interest of time management, Andy Donchin, evp, director of media investments at indie agency Carat, suggested the networks might agree on throwing a one-day, a la carte affair. Other agency heads endorsed the notion, but ultimately nothing came of it. It was just another skimmed chapter in the history of the upfront.

“I don’t think you can dismiss those folks who say the upfront has run its course,” Goldstein says. “But when you look year in and year out at how consistently advertisers have been spending on prime-time TV, you can’t say to me that there’s not a universal demand. I mean, they can’t all be lemmings. There are a lot of smart people who recognize the advantages to doing business this way.”

Given his theatrical bent, Erhardt understands the value of the showstopper. The same year Donchin was calling for a streamlined upfront calendar, ESPN turned its pitch into a Broadway extravaganza. “We did a play at the Nokia Theater [now the Best Buy Theater] in Times Square. That was near career suicide for me,” Erhardt says with a laugh. “Not because it didn’t go over with the clients, but because I had all my bosses literally memorizing lines. As a seller, it’s really about what can you do to make those days more valuable to your customers. We want to entertain, but there’s always a larger point.”

However the upfront shakes out, it’s not going retrograde. The days of writing deals on a cocktail napkin are long gone. Haunted by ghosts in gray flannels, ‘21’ is both a remnant of a vanishing New York and a reminder of how the city and its markets forever reinvent themselves.

“Back when I was living in Connecticut, I would go home on the train at 1 or 2 in the morning and get a few hours of sleep,” Abruzzese says. “Then I’d turn right around and get back on the train to the city. And there were moments where I would have to touch my face to figure out which way I was heading. I’d say, ‘Well, I’m clean-shaven, so I guess I must be on my way to work.’”