Surprising most observers, the broadcast advertising upfront marketplace broke wide open last week, and broke some records in the process.
The six broadcast networks — led by NBC, which booked some $2.7 billion of ad time — pocketed an estimated $8.3 billion, an amount that surpassed 2000's record of roughly $8 billion. Perhaps more important, broadcast managed to extract gains in CPMs (costs per thousand viewers), an indication that the ad market is truly starting to recover.
Many market observers had predicted slight increases from the $7 billion the broadcasters claimed during last year's upfront.
Now it's cable's turn at the annual Madison Avenue bazaar. As of late last week, large programmers like Turner, ESPN/ABC Sports and MTV Networks had closed some deals, while USA Networks wrote negative CPM business.
Elsewhere, advertisers had registered budgets with a number of other networks.
During the upfront, advertisers secure commercial time for the upcoming TV season, rather than waiting to buy avails closer to air dates in the so-called scatter market.
BUSY WEEK AHEAD
Many observers expect this week will feature a flurry of deal-making in the cable ranks. Some optimistically said activity would wrap up by late June.
Whether that timeframe plays out depends on the advertisers and their agencies, and if they've kept enough money in reserve for cable, following the unexpected size of the outlays for the tighter broadcast market.
In April, Discovery Networks U.S. executive vice president Bill McGowan predicted that cable would jump $500 million, or 12.5 percent, to $4.5 billion. Last Thursday, he declared "a rising tide lifts all boats" and predicted "the final number is going to be, in all probability, north of that."
Added Fox Cable Networks Group executive vice president of ad sales and entertainment Bruce Lefkowitz, "We're very encouraged by the broadcast upfront, and there's still money out there for cable." He had predicted that cable's upfront volume would improve by margins between 5 percent and 7 percent, while CPMs would gain 2 percent to 4 percent.
He now estimates that cable's upfront take will grow 10 percent to 12 percent.
Although budgets have been registered with FX, Lefkowitz said no deals had been finalized as of press time. He remained confident that FX — boosted by auto racing, The Shield, an expanded movie package and a larger distribution base — would surpass industry averages.
"The economy is rebounding. Manufacturing is up and inventories are down. There is an advertising recovery," added Hallmark Channel executive vice president of ad sales Bill Abbott. "We're seeing more budgets registered at this point than last year. Our increases are pacing in the double-digits in terms of volume."
USA'S CPM CUTS
Some cable executives were worried about one development: the negative CPM deals that USA Networks had cut, presumably as a means to secure a larger share of advertisers' budgets.
Those cuts — reportedly down 10 percent to 12 percent from the heavily discounted year-ago CPMs — were deep. Others put them in the high single digits.
"That's a benchmark we all have to work against now," said a veteran network salesman. "I guess they need to build their volume."
A USA Networks spokesman declined to comment on the company's sales strategy.
ESPN/ABC Sports president of customer marketing and sales Ed Erhardt said last Friday that cable's upfront was already starting to move. "We're starting to do a lot of Monday Night Football/ESPN deals," he said.
"Not all the advertisers got their money down in broadcast," Erhardt noted, and that bodes well for the cable upfront. He forecast cable CPM increases of "plus 5 or 6 percent," at least for programmers like ESPN, MTV Networks and Comedy Central.
Things were moving at Turner Broadcasting Sales Inc. last Thursday.
"There are a couple of deals done already, with several more in progress," said a spokesman, noting activity within the movie category.
Turner expected to see CPM increases "in the middle single digits," the spokesman said. Market sources pegged the programmer's deals at 4 percent to 6 percent; another executive placed the CPM increases at around 2 percent.
Several industry sources also noted that MTVN had finished some deals. A spokeswoman declined to comment on the upfront.
"It's too early for us," she said.