No Damper on the Upfront: Nets See Double-Digit Gains
By Mike Reynolds -- Multichannel News, 7/8/2007 8:00:00 PM
Wet weather soaked Fourth of July activities in the New York area — and the holiday's midweek scheduling also put a damper on cable upfront activity on Madison Avenue last week. But it didn't douse ad rates, with most networks achieving gains of 8, 9, 10 and 11%.
With July 4 falling on Wednesday, “it was hard to keep momentum. It was like having two Mondays,” said one ad-sales chief at a top programmer. “You come in on Monday and get the process going. You have meaningful conversations Tuesday. Then everyone goes home Wednesday and has a hot dog. This week, we had to start all over again on Thursday.”
That doesn't mean a fair amount of business wasn't conducted — at or closer to a double-digit increase.
Lifetime Entertainment Services senior vice president of pricing and planning Rick Basso said upfront pacts for its television networks produced ad-rate gains in the high single digits and low double digits, with overall revenue from its upfront deals growing in excess of 10%.
Lifetime is a leader in this year's marketplace, triggered by a multiple-daypart, multiplatform deal, estimated to be worth $70 million that it inked with GroupM on June 26. Friday, the most-watched women's network said that it had completed all of its major upfront deals.
Basso and senior vice president of advertising sales John Matluck said the record-setting performance of new series Army Wives; the potential of its upcoming original slate, including Side Order of Life and State of Mind; the strength of the packaged-goods, retail and pharmaceutical categories; and the network's 96% audience-retention index through commercials; combined to make for a strong Lifetime upfront.
Indeed, the high audience-retention mark played well for Lifetime with GroupM and other agencies using C3 — the metric which adds together average commercial ratings plus three days of digital-video-recorder playback guarantees — as the major currency for this year's upfront negotiations. Historically, program ratings have been the basis for deal negotiations.
On the kids' beat, Cartoon Network wrapped up last Tuesday night, with 85% of its upfront business accounted for.
Turner Entertainment Sales president David Levy said he was “extremely pleased” with the high demand for the “hard 10” weeks leading up to the Christmas holiday and other key kids' selling periods like Easter and back-to-school. Levy said rates for those periods, which constitute about 50% to 60% of Cartoon's kids business, grew in the high single digits, with volume advances in the low double-digit realm. Cartoon's deals were based on both C3 metrics and program ratings.
Levy noted that demand was strong across all key kids' sectors for those spans, with business benefiting by upticks from gaming and films, categories that were soft during last year's upfront.
“There were concerns in terms of [product availability] with PlayStation 3 and Wii and the movies weren't skewing younger. That's a cyclical thing,” Levy said. “Gaming and movies were up strongly this year.”
Nickelodeon, sources said, recorded good growth with endemic categories en route to posting mid single-digit CPM advances overall. Network officials could not be reached for comment on Friday.
Meanwhile, Nick's corporate cousins at MTV Networks seem to be coming off the company's declaration that it was too early to conduct deals on the recently implemented commercial ratings — a metric that did not favor many of its youthful-skewing networks' audiences, who tend to jump around during commercial breaks.
Some observers said MTVN has done a few small deals, while one industry executive noted that MTV is now “moving quickly and is close to being done.” MTVN officials could not be reached for comment.
Elsewhere, Turner Entertainment was said to be about two-thirds of the way there for TNT, TBS and Court TV, with most deals concluded with rate increases in the 10% to 11% arena.
Meanwhile, Adult Swim, Cartoon's late-night spinoff service, was said to be about at the same upfront sell-through level, with rate increases somewhere between 9% and 11%. Continued ratings records among adults 18 to 24 and 18 to 34 were driving demand, while the addition of a seventh programming night increased the amount of inventory the network can place into the market. Adult Swim was said to be tapping budgets formerly earmarked for broadcast's late-night daypart.
Turner officials declined to comment about the general cable upfront.
For its part, AETN was very busy the last week in June, writing about 50% of its upfront business, with rate increases in the 7% to 8% range. While the programmer was active in negotiations again for A&E Network and The History Channel last week, the pace of its deal-making slowed to some extent. A&E officials declined to comment.
C3 aside, the marketplace is being shaped by such factors as the continuing strength of the scatter market; the 2008 Summer Olympics from Bejing; health concerns that are reducing advertising for kids' foods; the upcoming political primary season; and the auto industry's struggles.
The CPM gains achieved by the broadcast and early cable movers in fact could have a rebound effect: “Agencies may sit tight for a while and try to balance things out and bring down the rates with their remaining deals,” said one sales executive.
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