• by Wayne Friedman , June 12, 2007

Suddenly the broadcast networks are being aggressive when it comes to the upfront market--possibly looking for double-digit program price increases, say media buying and selling executives.

But that's not necessarily good news for the ad community. "It's not a rosy picture for marketers--but it is not that good either for the networks," said one veteran media agency executive.

With broadcast ratings points down anywhere from 9% to 11%, networks are looking to make up the difference--at least by asking for double-digit cost-per-thousand viewer (CPM) increases versus a year ago, say media agency executives.

For the networks to break-even versus a year ago, giving them the same overall money as last year, they would need to raise prices by 11% in an environment where they lost 11% of their viewers.

Networks probably won't get to those lofty levels, say executives. But they look to be higher than a year ago, when broadcast nets could only grab scant 2% to 3% CPM gains. As a result, media agencies are bracing for cost-per-thousand viewer prices up perhaps 7% or more.

For the past few days, the networks have been "counting the house"--industry-speak for figuring out where the market is going to be, now that 90% or more of media agencies, which have upfront clients, have told the networks what their clients will spend on broadcasting next year.

Still, overall TV upfront money may be up only slightly--1% or 2%, according to one media agency executive. Last year, estimates were that advertisers spent $8.7 billion in the upfront for TV's prime-time daypart. Some advertising categories that are expected to show sharp spikes this upfront include pharmaceuticals and movie companies.

The trend is different in other network dayparts--morning, news, late night or daytime--where media executives expect a sizable uptick in volume.

TV media plans are being sent back from the networks to media agencies for analysis. Negotiations will start soon, perhaps a little slower than in years past. Media agencies are scrutinizing the new commercial rating estimates that are attached to plans.

Many agencies are waiting for big agency groups, such as Group M or Starcom to perhaps push the market. Each of those media groups represents around 25% of all TV network revenues.

Is there a network market leader? Some media executives have suggested Fox or ABC. Others say it is too close to call.

Fox has been No. 1 among 18-49 viewers for three years--and could get the ball rolling, usually with movie and/or automobile advertiser deals. Improving ratings at ABC, which is still priced at a discount next to Fox and NBC when it comes to 18-49 CPMs, may step to the plate quickly.

Media executives say negotiations will go slowly; there are many wild cards for next year, like NBC's Summer Olympics in Beijing. Media executives are unsure how commercial ratings will react around such big events. Deals at non-NBC networks might be at a disadvantage. For example, a show with a commercial viewer retention of 94% might drop to 89% during the Olympics.

"We have no projections for 2008," says Jason Kanefsky, senior vice president and group account director at media agency MPG. "It could make an impact. You may switch to NBC. It creates a disadvantage."