Cable Execs Expect Tough Up front Talks

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With the broadcast upfront largely wrapping up last week, industry executives expect negotiations on the cable side to pick up steam.

"Some buyers will try to get done [this] week because they feel it's time," Lifetime Television executive vice president of ad sales Lynn Picard said last Thursday. "Others will wait until the week after," due to the Fourth of July holiday.

But tough bargaining sessions loom on the horizon. That's because the agencies — fresh from securing mostly lower costs per thousands (CPMs) from the broadcast networks — are expected to press for similar concessions from cable.

Some in the sellers' camp predicted that the general-entertainment networks, which have historically claimed cable's highest CPMs, will have the roughest time holding the line on pricing this time around.

A few sellers at the more-targeted networks predicted that the general-entertainment programmers will face the toughest negotiations with buyers.

"Broader-based cable networks have very high costs per thousand," said one such executive.

On the broadcast side, the more-targeted Fox, The WB and UPN benefited from CPM comparisons with ABC, CBS and NBC. And so will the niche cable channels that reside on the lower end of the rate spectrum, the source reasoned.

At press time, many cable networks were engaged in various stages of upfront negotiations with shops like Starcom MediaVest Group, Mediacom Worldwide and Zenith Media.

"Agencies have been negotiating tough," one cable-network sales executive noted. "Everybody's talking, but it's slow."

Discussions aside, there evidently has been a dearth of deals since WPP Group's The Media Edge closed business with Lifetime and USA Networks nearly two weeks ago.

And CBS' decision last week to make good on a threat to withhold inventory for the scatter market if buyers resisted its sought-after CPM hike hasn't yet brought more business to cable, several executives said.

There were varying reads on CBS' position. Some sources indicated that CBS wound up dropping its CPMs by 2 percent to 3 percent, while others said Black Rock had garnered CPM upticks in the 1 percent to 2 percent range.

Either way, CBS was said to have posted the "sold out" sign on its upfront last Friday, with only 65 percent of its primetime inventory accounted for. Those commitments could translate into $1.3 billion to $1.4 billion.

A year ago, CBS sold closer to 85 percent of its inventory during the upfront. Among categories, domestic automakers seemed to have reduced their broadcast-upfront spending, while foreign nameplates have boosted their outlays. Some on the cable side don't expect that same pattern, however.

"Automotive looks to be up across the board for us," as one confident seller put it.

But Lifetime's Picard cautioned: "Automotive hasn't moved yet. We can't tell [what'll happen] till we're in negotiations."

In the past few years, Turner Broadcasting Sales Inc. executives have talked up the idea that more agencies and clients would make their cable and broadcast upfront plays concurrently. That scenario certainly didn't pan out this year.

A Turner spokesman last week said its upfront had not yet broken beyond "budgets being registered, plans being assembled and sent back [to agencies]. But no conclusive business."

Though TBSI has sometimes been among the first to close its upfront, he added, "We don't necessarily always finish first." And none of the other cable programmers is anywhere near completion, he added.

"A few have closed with an agency or two but they're not even close to closing their upfront business overall," the TBS spokesman said.

A Fox Family Channel executive concurred. "Budgets continue to be registered for the adult upfront," with no agency buys wrapped yet, the executive said.

Other cable networks also said they were just getting into the game, with some agencies not yet registered.

Discovery Networks U.S. executive vice president of ad sales Bill McGowan last week said through a spokeswoman that the programmer is looking to finalize some deals. Discovery is "in the midst of active negotiations with [The] Media Edge" and other shops, said the spokeswoman.

It was McGowan who a few months back offered a bullish assessment of the cable upfront and hinted that the overall process could be a protracted one.

McGowan has projected that this year's cable upfront could grow by $500 million, or 11 percent, to $5.2 billion, while the broadcast networks would slip $500 million or 6.4 percent to $7.3 billion.

He had restated last year's totals, as several major advertisers had slashed hundreds of millions of dollars from their budgets due to the sluggish economy.

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