Updated: Cable Upfront to Stretch to September?


As much as all parties involved can’t wait to watch the 2009-10 upfront recede in the rearview mirror, the cable marketplace still has quite a stretch of road ahead of it before buyers and sellers reach the finish line.

While some of the major network conglomerates (Turner, NBC Universal, Viacom) have finalized their upfront negotiations, a significant chunk of business remains to be written at Discovery Communications and Scripps Networks. Fox Cable Networks is believed to be all but wrapped up, while A&E Networks has completed around 80 percent of its deals.

Mid- and third-tier cable nets have done very little deal making, and at this juncture, many executives don’t anticipate crossing the line before Labor Day. As it stands, this year’s bazaar will go in the books as the most drawn-out upfront in TV history, and while compromise was a two-way street, few will look back on the last three months with a sense of satisfaction.

“Nobody is exactly thrilled with how things played out,” said one media buyer, who like nearly everyone else who chimed in this summer, spoke on condition of anonymity. “On the one hand, guys on our side came to the realization that there was a limit to what kind of rollbacks the sellers were willing to accept. And the networks saw that we weren’t going to go along with the CPM increases they were looking for early on, or even flat pricing.”
Irresistible force, meet immovable object.
When the dust settles, cable will see CPMs retreat between 5 percent and 8 percent from last year’s upfront levels, although if you plot the results on a number line, the variation between the haves and have-nots looks like a column of marching ants. Closest to the zero are NBC Universal’s USA Network, which secured superficial (2 percent) CPM rollbacks, thanks to its status as cable’s ratings king and an historically low price point. Turner’s TNT and TBS also absorbed relatively minor pricing decreases, finishing up with reductions of 4 percent.
While Discovery has yet to finish its deals with agency heavies OMD and GroupM, thus far the network group has written better-than-average decreases (negative-3 to negative-4 percent).

During the company’s August 4 Q2 earnings call, Discovery president and CEO David Zaslav said the ad sales team “plans on selling less [upfront] inventory than in years past,” largely because of tightened marketing budgets and a scatter market that is pricing at a premium to last year’s upfront levels.
“We’re still in middle of our sales process, but we anticipate lower absolute levels of commitment,” Zaslav said. “We think holding back additional inventory is prudent.” Last year, Discovery sold a little more than 50 percent of its avails in the upfront.
With less than 50 percent of its upfront squared away, Scripps Networks is also outperforming the mean, with pricing down in the Discovery range. Viacom hovered slightly above that span, with rollbacks of –4 percent to –5 percent, although the MTV Networks are thought to have taken more of a hit on volume. Sources said MTVN closed its upfront down as much as 15 percent in total dollars.
“There was certainly some pressure on volume, as advertisers looked to maintain flexibility in how they plan their advertising budgets,” said Viacom president and CEO Philippe Dauman during the tail end of the media conglomerate’s July 28 earnings call. Dauman did not quantify the volume decrease, saying only that the company was “pleased” with the results.
Buyers suggest that cable volume will fall between 10 percent and 15 percent, adding up to $6.5 billion to $6.88 billion, down from $7.65 billion a year ago.

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