Cable networks whose ratings lagged this past year may opt to lock up less business in this year’s upfront sales market, according to ad sales sources at the companies. Such a strategy may seem counterintuitive. But these networks hope to exploit what they expect to be a stronger “scatter” market--when time is sold during the season itself rather than in huge chunks in advance as is done in the upfront. "I'll probably write a little less business," says one seller. "I'll hold out more for scatter. At these CPMs [cost per thousand homes], I'd rather wait for [my] ratings to come back and for scatter to come back. Chasing a lot of money at these ratings isn't smart.”
Executives also hope that the 2006 Winter Olympics will help firm up scatter pricing by creating more demand in what is now a buyer’s market.
Few buyers are overly excited about broadcasters’ new fall shows. "They don't know where all the new shows will kick out," explains one executive. "They can wait [to buy until they see which shows] are going to be successful and not successful.”
During the past two years, cable networks had moved their upfronts—during which networks introduce the next season’s programming and sell ad slots in advance--in advance of the broadcasters’. The broadcast networks, in turn, had held back during negotiations with media buyers because falling ratings had weakened their positioning. But this year the cable upfronts returned to their normal spot after the broadcast networks’ as ratings stabilized among the key adults ages 18-49 demographic.
"It's hard to tell where cable is right now," says one ad sales executive. "I think clients are holding their money for scatter."
Executives at both the broadcast and the cable networks hope that a rebound in the economy will help boost the scatter market and in turn give next year's upfront a lift. In a statement, Mike Shaw, president of sales and marketing for the ABC Television Network, predicted just that development for his network, noting that scatter pricing has outdistanced the upfront in 12 out of the last 13 years. But while industry executives are for the most part dubbing this a weak upfront, ABC is enjoying strong response. Network sources estimate that ABC sold about 80% of its inventory in its upfront season. "That's pretty good. I'd take 80% right now," says an executive at one of the top 10 cable networks, who would have to reduce rates to reach that level in the upfront. With its solid showing this past season, ABC says it earned advertising pledges of about $2.7 billion – up an estimated 30% from 2004 -- with rate increases in the 4%-6% range.
There were conflicting reports about how CBS would fare this year, with “Mediaweek” reporting the network would collect about $2.3 billion. But CBS insists it was closer to $2.5 billion-$2.6 billion, with price increases in the 4%-6% range.
As of last week NBC had yet to close much of its upfront sales deals. In fact, reports this week say that the network has cut its rates and is closing deals with advertisers at rates below those it charged last year.
