Commentary

Broadcast Upfront: Boring, Too Easy, Or Just Slightly Under Estimates?

This year’s upfront market has been a real snoozer -- a real bore. In particular, the broadcast part of the marketplace has come in slightly below estimates.

Before negotiations started, the general theory was that broadcasters might gain 2% to 3% in total dollars over the $9.5 billion or so they collected a year ago. It turns out that the broadcast upfront has been virtually flat -- networks general sold slightly less inventory, 75%-77%, down from last year’s big 80% or more levels.

What about General Motors? Who cares, really? GM spent around $288 million in non-sports network TV in 2011, according to Kantar Media. Figure that 75% of the total – or $215 million -- comes via the upfront process. Then reckon about $40-$50 million for each of the big four big English-language networks, with smaller budgets going to CW and the Spanish-language networks.

Based on a broadcast marketplace staying at around $9.5 billion -- CBS, $2.7  billion; ABC, $2.45 billion; Fox, $2.05 billion; NBC, $1.9 billion, and CW, $400 million -- GM would represent about 4% of those dollars. That’s big for an individual marketer, but not enough to shake up the entire marketplace.

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The upfront was boring from the start. That’s because movie and car companies started negotiating with Fox, as they have for more than a decade. Those marketers always want to secure premium positions on young-skewing shows and NFL football.

Also typical in this year’s upfront process were the two big cable players -- NBC Universal's USA Network and other networks, and Turner Broadcasting's TNT and TBS -- vying to keep pace with the broadcasters. NBCU was looking for 9%-9.5% price increases, with Turner sticking firmly to 8%.

Cable networks had gotten big volume gains of 6%-10% in recent years, but not this time. Some say the gains were more in the 3% to 4% range.

One veteran media executive says there were really no surprises: "Fortunately, it was an easy upfront."

Several bigger media agency executives say that gross domestic product is a good predictor of the upfront market. Considering many are working off a near-term 1.5% number, the upfront activity came just about where it should have landed -- perhaps a bit under.

But another executive says if anything was a little askew, it would be that the marketplace might still be too robust pricing-wise. Typically, price hikes have been about double the percentage of the GDP number.

The networks are happy for now. But, as usual, scatter beckons. And so does an iffy economy. That may be a different story -- and not so boring.

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