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Buyers Praise UPN, WB Merger

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NEW YORK Media buyers are lauding the merging of financially struggling broadcast networks UPN and the WB into the new CW Network, but also cautioned the new partners to stay grounded as far as what they plan to charge for advertising in the new venture. Cherry-picking the best programming from both networks for one schedule doesn't mean cost-per-thousand rates should skyrocket, they warned.

With the proposed network's pre-upfront development meeting with agencies and the ad community just six weeks away, buyers believe it will be imperative that CW's executives project a clear picture of any new program development. They'll also want a clearer sense of which specific personnel from each of the former networks will be involved with the new net. "The development meetings in March will be more key than usual," said Steve Grubbs, CEO of PHD. "They will need to be ready to show us that we can believe in their new leadership and prove to us that their programming concepts have potential."

The major players in the merged network have already been announced: UPN president Dawn Ostroff will run the programming side; WB COO John Maatta will run the business side; and WB sales president Bill Morningstar will oversee ad sales. CBS' research and program-planning departments will also work with the new network.

But several agency execs said it would be important to see how the two nets' current staffs are blended and who is brought in from the outside to overcome the obstacles that each could not overcome individually. Last year, the WB lost $35 million while UPN lost between $70 million and $80 million. "The long-term viability of this new network will depend mostly on the people chosen to run it, and less on the programming," said Jon Mandel, chairman of MediaCom U.S. "If they bring in the best of the best, the network will become viable."

While buyers, on one hand, praised the merger on its content merits, they said if the new network gets too aggressive with its first-year upfront pricing, it could lose some of the dollars targeting the 18-34 demographic to cable, or even to Big Four network Fox. "It's a brilliant move that Barry Meyer [chairman and CEO, Warner Bros. Entertainment] and Leslie Moonves [president and CEO of CBS Corp.] have done," said Donna Speciale, president of broadcast and programming for MediaVest. "Both networks have been struggling and fighting for the same audience." But she added that several young-skewing cable networks can be used as lower-priced alternatives should CW price itself higher than buyers want to see.

One agency exec pointed out that as a result of the merger, 4,000 gross rating points per quarter will be lost, equal to 7 percent of all broadcast network ad inventory. That constriction may cause ad rates to rise at all the networks, and may spark a battle to capture those potentially freed-up dollars.

Sam Armando, director of TV research at Starcom, analyzed UPN and WB's current ratings and concluded that the adults 18-49 rating of the top five shows on each net averages 1.7. "Optimally, that could go as high as a 2.0" when the networks are merged, he said. "You will have a network schedule with less water and a little more scotch. But advertisers will also have to pay more. They'll hurt themselves by setting their prices too high. If they do that, Fox or cable will become a viable alternative."

Rino Scanzoni, chief investment officer at Mediaedge:cia, said ratings for each of the networks' best shows will go up, but the new combined network will not have as many overall viewers as the two networks currently do. "There will be some viewers who migrate away," said Scanzoni.

Some agencies hope that the migrating viewers are not harder-to-reach African-American viewers who primarily watch UPN (approximately 65 percent of the network's audience is made up of black viewers). One agency executive said he has clients with budgets specifically targeting black audiences, and spends a big chunk of dollars on UPN. But Moonves pledged that CW would maintain its "ongoing commitment to our diverse audience."