Television
NBC kick-starts upfront with a big deal
By Toni Fitzgerald
Jun 14, 2007 - 8:54:19 AM

The broadcast upfront market has finally broken, led by the least likely of networks, fourth-place NBC.

In what was a coup for both, NBC and Group M, the WWP buying arm, reached an $800 million-plus ad deal for the upcoming season that includes media buys on NBC but also spans NBC Universal cable properties Sci Fi and Bravo and Spanish-language broadcast network Telemundo, as well as digital components.

As the weakest of the Big Four, NBC was not expected to lead the upfront, as it had in years past when it was the top broadcast network. That honor was expected to go to either Fox, which won the season in 18-49 viewers, or ABC, which came in third.

Terms of the deal are not being disclosed, but presumably NBC settled for less than the 10 to 12 percent CPM price increases it had been asking for, as the network with the least negotiating leverage of the Big Four in this year's upfront. It's also not known how much broadcast inventory was included in the deal.

Last year, NBC actually cut its pricing, by a reported 6 percent, and it ended up making deals valued at some $1.9 billion, down more than $1 billion from the years when it was the top-rated network and fetching the most desirable deals.

The question is whether, following yet another abysmal season, NBC was forced to slash pricing yet again. That would seem more likely than not, with few hit shows, a recent management shakeup, and a new fall slate that received a lukewarm reaction from media people.

In any case, the effect of the deal is to get the upfront rolling, a full month after the networks previewed their fall shows to buyers.

Going into this upfront, the sense has long been that it will come in modestly above last year's $9 billion, up several percentage points at best, but with buyers facing substantial pricing increases, in the 10 percent-plus range, as the networks attempt to offset declines in available rating points resulting from falling ratings.

In an encouraging development, buyers and network sellers have agreed on a new currency based on commercial ratings and some DVR viewing, termed commercial plus three day. The NBC-Group M deal was struck using the new currency.

Last year the networks, led by ABC, attempted to force buyers to include some delayed viewing in their negotiations, but media people refused, and ultimately the networks backed down.

That's giving the broadcast networks an important advantage over the cable networks, which are resisting the new currency, and the likely effect is that buyers will focus on broadcast network deals in the expectation that the cable networks will back down.

Cable networks retain less of their audience during commercial breaks and cable programs aren’t recorded as much on DVRs, making the new currency less attractive.

Buyers are also expected to pursue more multi-media deals reaching across television and the web this year. NBC has been particularly aggressive in that area, with loads of new media initiatives for its first-year and returning shows on tap.