Upfront and Center

Discovery ad chief Joe Abruzzese prepares to go to the mat, and takes Adweek along for an insider's view

In the grand scheme of things, Discovery represents roughly one-twentieth of the total upfront market, a vast landscape of broadcast networks and 98 ad-supported cable outlets.

Over the course of last year’s robust market, TV snapped up $18.5 billion in advanced commitments, a sum that was more or less evenly split between the networks and cable. When Spanish-language media and an estimated $2.4 billion in syndication are taken into account, the total take for the 2011-12 season added up to $23.2 billion.

Media buyers say Discovery commanded some of the highest CPM increases in last year’s upfront, though Abruzzese undermines the score-keeping culture. “You’re always going to have those guys who say, ‘I won’t go lower than [a] 10 percent [CPM increase],’ ” he says. “If the market says you can get 8 percent and you push back for 10, you might say that’s a great victory. But over the course of the year, two percentage points on a billion dollars is $20 million. That’s $5 million per quarter.” He shrugs to punctuate the point.

Of course, the chest-beating about who’s going to do what to whom has already begun in earnest. CBS Corp. fired the first shot in the upfront wars back in February, when president and CEO Les Moonves told investors his sales team would secure premiums of 10 percent or more. “The [media buyers] always lowball you,” Moonves said at Deutsche Bank’s annual media conference. “We’re going to get double-digit increases in the upfront. There you have it—let the games begin.”

While cable execs tend to utter their predictions sotto voce, last month Lou LaTorre gave his read through a microphone. Speaking to revelers at FX’s annual upfront party, the Fox Cable ad sales president predicted the high end of the cable market would secure CPM hikes of 11 to 12 percent.

On the other side of the table, buyers are saying last year’s market was demonstrably overpriced. Initiative evp Kris Magel says the TV market hasn’t held up as strongly as buyers had anticipated, as scatter has failed to “back up those higher upfront prices.”

If Q2 scatter rates are trending anywhere between 10 to 15 percent higher than upfront pricing, that goes a long way toward justifying inflated rates in the spring sell-off. But when scatter is up in the 5 to 10 percent range, as it is now, a correction may be in the offing.

“Look, the buyers are saying, ‘Oh, we’re not so sure about the economic outlook—it’s not as healthy a scatter market as it should be, we overpaid last year,’ etcetera,” Abruzzese says. “I almost want to say to them, ‘OK then, we’re going to limit how much money we take upfront and let’s see how high the prices go.’ ”

Flash back to June 25, 2009, one of those rare early-summer days in New York where the temperature and humidity aren’t in league to destroy your will to live. The upfront market has stalled, and while no one can know it at the time, negotiations will drag on through September, with some $2.9 billion in TV dollars left on the table. So, on this Thursday afternoon, in the thick of what should be a heavy trading day, Abruzzese is holed up in the bar at the Four Seasons. “I’ve been staring at the walls all week,” he said at the time. “I’d rather stare at the walls in here.”

Another thing no one could know that day until the news hurtles east is that Michael Jackson is dead. Three thousand miles from this temple of Kobe beef sliders and silvery martinis, Los Angeles is already scrambling for votive candles.

One of the bar’s younger patrons gets the word via her BlackBerry, and a game of 21st century telephone begins. When Abruzzese catches wind of the news, he is the picture of impassivity—only to perk up a beat after noticing former St. John’s standout Chris Mullin on the other side of the room. With the world aswoon over a doomed pop star, Abruzzese reminisces about St. John’s loss to Georgetown in the 1985 Final Four.

Simply put, there are things that do not pass muster in the Abruzzese universe, and his way of dealing with them is to offer a short little moue, shrug, then return to more crucial matters. Take those who visit his office wearing jeans, who become the object of brief but intense scrutiny. The sight of a man pulling a wheelie bag elicits an equally bemused response. All of which is to say that Abruzzese lives by a strict personal code, one he would very much like everyone he does business with to adhere to. You will never see one of his salesmen out of uniform. At times, Zaslav will exercise executive privilege, appearing at Abruzzese’s door in jeans and a polo shirt—a violation Abruzzese acknowledges with that characteristic quicksilver frown and shrug.

It’s not that Abruzzese has a Pavlovian aversion to denim. One senior Discovery staffer even claims to have once spotted the dapper sales chief in a pair of Levi’s. (Pictures, or it never happened.) Rather, Abruzzese’s attention to wardrobe reflects the esteem in which he holds this business.

“We take the stance that every client is so important, and that’s why we wear jackets and ties, to show respect for the client,” he says. “And I want my guys to think that way, to think that this is a professional business, a business where your word is your bond. When you stand there, with respect for the clients, with a jacket and tie, you’re telling them that it’s OK to buy futures from us, because I will take care of you as I take care of myself. It goes a long way.”

As expansive as he is, Abruzzese won’t speculate about when he might shoulder his bag of new TaylorMade RocketBallz golf clubs and walk out the door for the last time. His office is a shrine to the good life, but almost every artifact therein testifies to a balance between work and leisure.

Continue to next page →