ABC quietly negotiated a handful of upfront agency deals last week, only hours after the end of the Big Six broadcast networks' fall 2005 programming presentations to media buyers and planners. The business came as a surprise, since most buyers going into upfront week had preached patience and predicted a potential lull before business took off in earnest.
Evidence of that patience came in the form of media buyer reluctance to cut pre-broadcast upfront business with the major cable networks, which for weeks have been trying to jumpstart the market but have been stymied by their own aggressive cost-per-thousand viewer rate-hike demands. USA Networks is said to have cut a deal with a major agency two weeks ago, but had to accept near-flat pricing.
The eagerness to get their clients' dollars down so quickly in broadcast could mean that there are more dollars in ad budgets than the agencies were letting on, and it may also spell serious trouble for the ad-supported cable networks. While the Big Six broadcast nets could together haul in more than last year's $9.3 billion take, cable could stand to lose dollars overall.
While no one from the agencies or ABC would comment, industry sources said ABC had done an early upfront deal with media agency OMD that included, not only prime time, but also other dayparts, as well as a significant Super Bowl buy. OMD traditionally has multiple clients that advertise on the Super Bowl. Sources said ABC did the deal at 6 percent CPM increases in prime time. There was also talk that MindShare had done an early upfront deal with ABC.
While ABC sales president Mike Shaw did not return calls last Friday, earlier in the week at the ABC upfront reception, he did say he would be amenable to doing early deals this year. ABC was the second last of the Big Six to start and finish all of its deals last year. (As he did last year, Shaw made sure the major media agencies received copies of all of ABC's new shows the weekend before its May 16 presentation.)
"We are relatively attractively priced versus our competitors," Shaw said. (ABC is priced significantly below NBC and CBS.)
ABC is poised to have a solid upfront, standing to take in close to $1.7 billion, as much as $200 million more than last season, and most buyers believe if Shaw prices his prime-time inventory reasonably, he'll be able to take significant ad dollars away from NBC. "The more aggressive Mike Shaw gets in trying to steal dollars from NBC, the more of a hit NBC will take," said one buyer at a major media agency. "ABC has four [highly] rated returning dramas and some good new shows for next season. NBC's best programming, like the Law & Order shows, are starting to grow tired. And once they go, what does NBC have?"
Creating even more problems for NBC was the move by ABC, WB and UPN to place better programming into Thursday nights, where NBC is down a cumulative 29 percent in the adults 18-to-49 demo this season, compared to last. In fact, buyers were raving about UPN's new 8 p.m. Thursday sitcom Everybody Hates Chris, loosely based on the life of Chris Rock, as a show that can outrate NBC's Joey, presuming NBC leaves it in the same time period.
The WB also moved two of its more solid rated shows, Smallville and Everwood, to Thursdays, hoping to capture more movie and retail ad dollars targeting younger viewers. "Moving [those] to Thursday night truly puts us in the ad business for the first time on Thursday," said David Janollari, WB entertainment president.
And ABC moved Alias to Thursdays at 8. Alias averaged better than a 3.0 rating on Wednesdays, even against Fox powerhouse American Idol. The network is betting that loyal audience will follow it to Thursday.
All these Thursday program moves are expected to siphon movie and retail upfront dollars away from NBC, which is in serious ratings decline, rather than from CBS, which has seen a lift. Thursdays account for the most upfront spending of any night of the week.
With buyers already beginning to buy broadcast, the consensus is that the major cable networks misread the market by not closing deals before the broadcast upfront presentations. Several media agencies said they were approached by cable networks seeking to do business at 10 percent CPM increases, with no interest in any negotiations downward. All agencies refused, so no business was done. If the broadcast nets end up cutting reasonably priced deals, buyers believe cable failed in taking away as much as $300 million in upfront money from broadcast.
"The cable networks have postured we think a little bit too aggressively," said Ray Warren, managing director at OMD, who declined to comment on if his agency had cut a deal with ABC.