The long-stalled television upfront market has gotten itself un-stalled at last, with buyers and sellers now in a flurry of deal-making, and by tomorrow evening the broadcast networks will be all but done, opening the way for cable, syndication and kids TV.
Negotiations have gone in fits and starts for weeks now, buyers pushing for dramatic price breaks because of the weak economy and the broadcast networks resisting and threatening to hold back inventory.
Which side had the upper hand seemed to change by the day, depending on the latest economic news.
But in the end buyers and sellers met in the middle, with pricing running about flat to down slightly from last year.
“Fox, ABC and CBS are close to flat, on average,” says David Joyce, an analyst at Miller Tabak. “NBC is taking less.”
That's on average, of course.
Costs per thousands--what it costs to reach a thousand viewers--are slightly up for some buys but down for others, perhaps 2 percent to 3 percent from last year--and even steeper in the case of NBC. Its CPMs are down by mid-single-digit percentages, coming on the heels of another season of dismal ratings, coupled with a weak fall lineup.
Buyers and media analysts say about 70 percent of the coming year’s inventory will be sold in the upfront, down from roughly 80 percent to 85 percent in recent years.
Dollar volume as a result will be down about 10 percent, to around $8.3 billion.
In any case, this will go down as the oddest of upfront markets in years, if not in memory, for the time it took to finally get rolling--nearly a couple of months--and the endless jockeying back and forth as buyers then sellers struggled to gain the upper hand in the deal-making.
At the heart of the struggle was the puzzle over just how strong, or weak, the U.S. economy is.
Early in the spring, before the broadcast networks made their fall presentations to media buyers, it was assumed by many that the networks would be forced to take big CPM cuts because of the weak economy.
But as the upfront was about to get underway, there was a sense that the power had shifted to the networks, based on the belief that the economy was improving and would be well on the mend by fall, at the start of the new season.
That would mean the networks could hold back ad inventory from the upfront for sale later in the year in the scatter market, where inventory not sold in the upfront is auctioned off through the year, and likely see hefty price gains. In good times, scatter prices can be as high as 40 percent or more above upfront prices.
Then yet more reports came out suggesting the economic recovery would be longer in coming. That shifted the power back to the buyers. A slower recovery would mean weaker scatter prices, giving the networks less reason for holding back inventory.
And so it went, week in and week out, with neither side budging much. For a long time it looked as though the networks would eventually accept CPM cuts of 2 percent and 3 percent when it was all over, with NBC taking much deeper cuts.
What finally loosened things this week was a growing sense on both sides that the economy was indeed improving and that it was time to move ahead.
“The [Federal Reserve] just came out indicating the recession is easing, which is why buyers are pulling the trigger now,” says Joyce.
In the end, the networks prevailed, fending off deep cuts and holding back some inventory.
But buyers didn’t really lose either. They didn’t get huge price breaks, as clients were demanding, but they can now make the argument that they were able to resist the higher prices the networks were demanding while locking in flat prices before they begin trending up.