Turner Broadcasting System has wrapped the bulk of its entertainment network upfront sales, finalizing the last of its deals with the major media agencies just hours ago.
According to multiple sources, Turner’s TNT, TBS, truTV and Adult Swim secured CPM increases between 7 percent and 8 percent, putting the portfolio at the high end of the market.
Because some smaller business remains outstanding, it’s not possible to get a definitive read on overall dollar volume. That said, given the price hikes and a sell-out rate that is said to be on par with last year’s figure (approximately 65 percent), it’s safe to assume that Turner’s upfront haul will be greater than its 2012-13 take.
Since upfront transactions aren’t subject to intense third-party scrutiny and the numbers themselves are notoriously squishy (more on that in a moment), the details that arise out of any given spring bazaar are directional at best. That said, Turner is verifiably at the top of the cable food chain, with TNT and TBS alone accounting for some $1.95 billion in 2012 ad sales revenue—or about half of the entire portfolio’s $4 billion haul. (That figure includes sales for the company’s news and kids brands, i.e., CNN and Cartoon Network.)
Telecom and quick-serve restaurants were particularly robust categories for Turner. As has been the case at every networks group, automotive was softer than expected.
A week ago, Turner was at the halfway mark. It closed its last significant bit of business Tuesday night, coming to terms with the agency that controls 20 percent of the TV waterfront (GroupM).
Also done with its business is Viacom. Discovery Communications is well on the way to folding its tent, with 80 percent of its deals on the books, while Fox Cable has just one bit of business remaining on its plate.
Thanks to a must-see roster of demo-friendly original series and theatricals on FX and the flood of available GRPs for sale at the start-up net FXX, Fox Cable is expected to land the biggest year-over-year volume increases.
A+E Networks is also turning into the home stretch, writing CPM increases in the 5-7 percent range for its something-for-everyone portfolio. (History draws a sturdy complement of men and is now ranked in the top five among adults 18-49, A&E provides a near 50-50 gender split and is also a leader in the dollar demo, and Lifetime is one of the biggest draws among the three major female demos.)
In the aggregate, more than half of the cable business has been finalized.
On the broadcast front, ABC continues to quietly set its house in order, sticking to its guns on a 7 percent CPM premium. “I have a lot of respect for [ABC ad sales president] Geri Wang,” said one national TV buyer. “She’s not budging. ‘If you can’t get me my number, then I’ll see ya in scatter. Take it or leave it.’”
Should scatter continue to prove as robust as it has been in the second quarter, ABC can clean up with late commitments. Not only is the scatter market almost always stronger than the upfront, but it’s also a lot easier to write double-digit premiums when the scrutiny’s not nearly as intense.
The conflicting reports surrounding NBCUniversal’s upfront progress continue to muddy the waters, but the consensus is that the company still has a lot of business to close across its broadcast and cable networks. Talk that NBC’s prime-time sales will be up from a year ago is hard to credit, given that it has yet to come to terms with GroupM.
“They are simply not far enough along to gauge volume,” said one buyer. “We saw reports last week about how their volume will be up even if you factor out Sunday Night Football, and frankly, that’s a lot of bullshit. There’s no way to make that call with so much business left to get done.”
Speaking of the NFL, buyers and ad sales executives said the pro football marketplace is not in motion, adding that reports about brisk sales are inaccurate. What inventory has been moved is largely tied to long-term automotive, beer and QSR contracts. Auto alone accounts for as much as 40 percent of NFL sales; existing contracts with automakers expire at the end of the 2013-14 NFL season.
While negotiating in the press is nothing new—sellers inflate their numbers while buyers low-ball, and the truth, presumably, lies somewhere in between—this year’s bazaar has been particularly knotty.
“I have never seen the trade press be used as a negotiating platform the way it has this year,” said one buying veteran. “CBS created artificial urgency by saying that they were done when they were actually nowhere near being done, and NBC seems to have tried a similar stunt, only this time not as many [reporters] took the bait.”
For what it's worth, ABC has been blameless throughout. The network’s policy of keeping mum during its negotiations effectively absolves it from the charges of market manipulation that buyers have been lobbing at the other broadcast networks. Fox also has kept a low profile.
When the smoke clears, broadcast volume may be down as much as 7 percent, which would effectively remove around $650 million from the Big Four’s coffers. Much of that money is expected to land in cable, although as one sales exec said, “a lot of money is just sitting on the sidelines.”
However the market shakes out, it has become increasingly evident that the obsession over making revenue projections based on the notoriously squishy figures that circulate each June is a fool’s errand. For one thing, analysts estimate that there is only a 35 percent correlation between upfront spending and growth in the U.S. ad market. For another, the unverifiable numbers are placeholders. Until holds are converted to orders, they’re about as meaningless as the millions splashed across the tote board of a telethon. Furthermore, given that clients have the option to change and/or cancel these buys in three of the four fiscal quarters, the dollar figures don’t become “real” until the checks clear.
“In one instance, in 2005, ABC released…an SEC document,” said Nomura Equity Research analyst Michael Nathanson, adding that this may have been the only time that investors “had a real number to work with.”
While the practice of closely monitoring what Nathanson characterizes as “a reservation system” remains a weirdly popular spectator sport, the hard dollar figures generally can be cobbled together from quarterly earnings reports and the annual tally released by the Cabletelevision Advertising Bureau. In the meantime, buyers said the initial optimism of upfront week has given way to a far more downbeat outlook.
“I used to watch every single pilot. I can’t do it any more,” said one TV buyer. “Some of the cutdowns looked promising back in May, and then I start screening the actual shows and the first five I watched were fucking garbage. … I’m only a quarter of the way through and I just don’t think I can get through them all.”
Others are a bit more sanguine. “From a fan’s perspective, I really want to see Marvel’s Agents of S.H.I.E.L.D., but ABC isn’t letting anyone see it until Comic-Con,” said one media buyer.
While consensus is hard to come by, most buyers who were asked about the fall lineup said they thought that The Michael J. Fox Show (NBC) was the most promising comedy, although Brooklyn Nine-Nine (Fox) also earned a few positive notices. The new dramas have generally received poor reviews from buyers, although many of the pilots are likely to be tweaked between now and September.