CBS’ Moonves Champing at the Upfront Bit

The rude health of the scatter market has Leslie Moonves itching for a major upfront windfall.

The CBS Corp. chief executive on Thursday told analysts that the broadcast network is commanding significant pricing premiums in scatter, with ad rates coming in at 30 percent over upfront pricing. With just three months to go before CBS performs its annual springtime spiel, Moonves said he expects the network will be in a position to secure double-digit CPM increases in the 2010-11 upfront.

“We are not just looking at low-single digit increases at the upfront, because our numbers are going to expect more,” Moonves said during the company’s Feb. 18 fourth-quarter earnings call. “We believe in our product, we believe in the strength of our network, in our programming.”

Moonves added that his ad sales team will play hardball with any prospective client looking to low-ball the top-rated network. Investors witnessed the same display of chest-beating a year ago.

“We said last year that we were not going to sell that much [inventory] if we didn’t get the numbers we wanted, and that’s why we held back and only sold 64 percent,” Moonves said. “And now we are benefiting greatly from that. Once again, heading into May and June, if we don’t get the pricing we want, we will very happy to play the same hand we played last year.”

The difference between this year’s bazaar and the prolonged 2009-10 slog is that the general economy has begun showing signs of improvement. The television marketplace has been a beneficiary of the brighter financial outlook, as automotive, retail and financial services dollars are returning to prime time.

The global cash crunch saw broadcasters rollback CPMs by low single digit percentages. Clients who pushed for greater price decreases or who sat out the upfront entirely are now paying that 30 percent premium.

“I don’t think I’ve ever seen scatter this strong and at these numbers,” Moonves said. “Our sales guys are begging us to give back promo time for ad sales.”

Moonves predicted that clients who opted out of last year’s upfront aren’t likely to make the same mistake twice. “Clearly all the advertisers that are paying plus-30 for what we offered to them last June are going to be coming back into the upfront,” he said.

In Q4 ‘09, CBS posted an 8 percent gain in national ad sales, versus the year-ago period. Total revenue at the television unit was up 4 percent, to $1.82 billion.

The company’s cable unit, which includes the premium network Showtime and CBS College Sports, posted revenues of $347.1 million, an improvement of 8 percent from the prior-year period.

Moonves told investors that local media was also on the rise, as the CBS stations and outdoor segments enjoyed their strongest quarter of the 12-month period. “Nowhere is the recovery more apparent that at our TV and radio stations. Fourth-quarter local broadcasting revenues were the highest of the year by a wide margin, and [adjusted] OIBDA of $227 million for the quarter was up 31 percent.”

The local broadcasting business took in $680 million in revenue, down 7 percent from the fourth quarter of 2008.

As the year progresses, CBS’ TV stations anticipate a boost from political spending, given the number of Senate seats in play. The January Supreme Court decision to overturn a 60-year-old law that prevented corporations from buying air time on the behalf of political candidates should also present a windfall to local media. Or as Moonves characterized it, “The barriers recently removed by the Supreme Court will bring added political dollars into the market.”

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