• by Wayne Friedman , June 3, 2010

Are ABC, CBS and NBC angry at Fox for its upfront negotiations?

Media executives say Fox could have set pricing for its upfront inventory higher than the average 8% or 9% price hikes it has received. In the weeks before the upfront market started, most senior network executives had been talking about hefty double-digit price increases over a year ago for the CPMs.

"Fox moved quickly, but it could have set pricing higher," says one veteran media agency executive. "If you are ABC or CBS, you'd be angry," and other networks as well. Says another executive: "Everyone is pissed at Fox."

As the market leader, Fox has the ability to set the price bar. Now, many other networks, in theory, need to be priced under where Fox has settled. Media sources say ABC and CBS are now hoping to get at least the 8.0% to 8.5% price hike, just under Fox. Struggling NBC hopes to land a half a point to a point just under ABC and CBS.

But Fox may have the last laugh -- especially if the TV ad market continues to be strong.

"The real question in my mind is: How much of the inventory did they really sell?" asks Larry Novenstern, media consultant for The Leverage Agency and former TV buying executive for media agency Optimedia International U.S.

If Fox sold on the low-end -- say around 70% of its inventory -- it could make even more money later in the year. Fox could say: "Now, let's just kill it in scatter," adds Novenstern.

A Fox spokeswoman said the network would not comment about the upfront until its negotiations have been fully completed.

Other reports suggest that Fox may have gone in a more predictable direction. In virtually completing its upfront negotiations, it might have grabbed some 15% to 20% more in overall advertising dollars to just under $2 billion. Other big broadcast networks -- ABC, CBS and NBC, all of whom have done some business -- might be looking at similar volume increases. The broadcast prime-time marketplace has been pegged to get to $8 billion, some 20% higher than a year ago.

Bob Iger, president/CEO of Walt Disney Co., in speaking at the Sanford C. Bernstein Strategic Decisions Conference in New York on Thursday, said: "It's early, but the [advertising] business we've written so far has met our expectations."

At the same conference, Les Moonves, president/CEO of CBS Corp., said the network expects to sell around 80% of its network inventory -- up significantly from its high 60% levels of a year ago. Concerning the upfront, Moonves says: "There's been a great adjustment in the marketplace."

While the market moved quickly in the early part of the week with Fox completing virtually all of its upfront deals, the remainder of the advertising market will go a bit more slowly.

Broadcast prime time won't be finished by the end of the week, as previously expected. It will drag on into next week with NBC -- the last-place network -- finishing up the broadcast part of the market.

Cable networks are next. Agency executives say Turner's TNT and TBS, for one, are now actively looking to close deals.