Broadcast Upfront to End With a Whimper, Down 22%

NEW YORK Broadcast network television upfront buying for the 2009-10 season is expected to wrap up this week with the five major broadcast networks taking in about $7.2 billion in prime-time ad revenue, down 22 percent from last year’s $9.25 billion.While the troubled economy played a role in the decline of upfront revenue, with some advertiser budgets lower than last year, and negotiated pricing for ad units down -1 to -7 percent compared to last year, the biggest reason for the disparity was that the networks decided to hold back significantly more ad inventory, planning to sell it during the season in hopes that the economy gets healthier.ABC and CBS, which both sold about $2.5 billion in prime-time advertising in last year’s upfront, according to sources familiar with both networks' negotiations, sold about $1.9 billion respectively this year. Fox, which sold $1.95 billion last year, sold about $1.6 billion prime-time revenue this year, while NBC, which recorded $1.9 billion last year, was said by sources to have banked $1.5 billion this year. The CW network, with only five days and 10 hours a week of prime-time programming, sold about $300 million in advertising, compared to $380 million the year before.NBC’s prime-time total does not include two weeks of Winter Olympics coverage in February, but does include National Football League Sunday Night Football telecasts in the fourth quarter. And ABC’s total also includes Saturday night college football telecasts.Upfront negotiations between the network sales executives and the media agencies were the most acrimonious in years, with the agencies demanding secrecy and the networks agreeing to be even more tight-lipped this year. “Because of the marketplace dynamics, there has been a high degree of secrecy,” said one network executive, who did not want to speak for attribution. In fact, none of the networks would comment on the record or on background on the numbers, which were gleaned from conversations with media buying agency executives and other sources familiar with the negotiations.But CBS Corp. president and CEO Les Moonves, speaking on the company’s second-quarter financial call to analysts and the media, gave some insight as to why the networks held back more inventory this year, rather than sell it in the upfront at much lower prices than last year.Moonves said in CBS’ case, the network’s Q3 scatter ad dollars in prime-time so far are up 30 percent, or $30 million dollars, with the retail, telecom, fast-food and pharmaceutical categories all beginning to spend more. Third quarter, said Moonves, will end up better on ad revenue for the network than second quarter when prime-time advertising was down 4 percent. And he believes fourth quarter will be even stronger.According to Moonves, CBS sold only about 65 percent of its prime-time inventory in the upfront this year. He added that in the 2002 upfront -- the last time the network sold as little inventory -- it wound up taking in more ad revenue in scatter than it would have if it had had a bigger position in the upfront.“We anticipate scatter [for the upcoming TV season] will be stronger than upfront prices,” Moonves said.Why then did the media agencies not spend more in the upfront if the networks are expecting the economy to turn around during the upcoming TV season? “Advertisers are not buying that far in advance,” Moonves said, pointing out that some upfront buying can take place 15 months before the advertising is scheduled to air. “They are buying closer to air time.”NBC was the first network to get some upfront deals done in mid-June, followed by Fox. Both ABC and CBS took a harder line with media buyers, choosing to play a waiting game and call the buyers’ bluff. But it seems like early prime-time deals by NBC at -7 CPM rates held up as the low point of the market. Fox began doing deals at low single-digits in the -1 to -3 percent range, and eventually CBS jumped in and was doing deals in that same pricing neighborhood.Sources said ABC continued to take a harder line, and several media buying agencies bypassed ABC and wrote business with The CW at -2 to -3 percent CPM rates. CW is usually the last network the agencies negotiate with. Media buyers said ABC would be the last network to complete upfront selling.“The networks that were more flexible were the networks that were able to do earlier deals,” said one source familiar with the negotiations. “The networks that took a harder line might have gotten stung a bit.”NBC, which has done early deals in the past several upfronts, did so again. Sources familiar with the network's negotiations said overall, combining NBC Universal’s broadcast, cable and digital properties, including all dayparts, the company took in just south of the $4 billion it took in last year. “It seems like NBC Universal overall wound up having a much stronger hand to play than the media agencies thought they did,” said one industry source.Sources said NBC sold the new five night-a-week prim-time Jay Leno Show as part of packages with other shows rather than selling it separately and worked out adjustments on its rates to fit into those packages. The network also did several product integration deals in the show.NBC, sources project, sold about 10 percent less inventory than it did last year, selling about 70 percent of its available units. The CW, per sources, sold about 65 percent of its prime-time ad inventory this year, compared to 77 percent last year. ABC CBS and Fox, which sold about 75-80 percent of their prime time in the upfront last year, were each said to have cut back between 10 to 15 percent this year.Nielsen Business Media

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Broadcast Upfront to End With a Whimper, Down 22%

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