Upfront Wheeling And Dealing -- But Not Always By The Numbers

• by Wayne Friedman , Staff Writer, June 8, 2010

What's the real upfront deal? Is one network getting a 7.5% price increase over a year ago -- or is it 7%? Does it really matter?

One thing for sure. Each TV marketer has a different base and therefore a different annual increase. Upfront pricing that are reported in the press are just rough averages -- in theory -- across a particular network's full range of clients, anywhere from 200 to 400 depending on the network.

Reporting on the upfront has been an arduous task, and is only getting tougher. No network publishes numbers. Few if any network executives will ever wink, nod, or smile, when talking upfront numbers. And yet, many executives -- both TV buying and selling -- aim to get a specific message across.

Perhaps the most interesting point revealed in this marketplace is the range of reported price increases. For all networks, it seems to be in a substantially narrower range. Want to believe that Fox is getting a 8.5% to 9% gain, and that ABC and Fox are right behind at 8.5%? OK. Does this leave NBC at 7.0%? Does this leave CW at 7.5%?

No one wants to be caught paying more than the next guy -- not a half a percent more, not even a quarter of a percent more. Clients will scream to their media agencies, who in turn will scream at their network sales reps. If the press writes that the number is 7.5%, and there is calm upon the land, you can be assured everyone is getting deals at 7%. Everyone then looks good.

The range among most of the big networks and the top five or so cable networks is perhaps just two percentage points. That ain't much. In previous upfronts, the range could be four points to eight points or more. In previous upfronts, network executive negotiating a late-night deal might just cave on a half a percentage point and catch an 11 p.m. train.

Publicly, we have a different outlook. Certain network executives tout double-digit price increases -- every year. Is this just a public ploy -- or a fair estimation, given past upfronts under similar conditions?

Increasingly, marketers are resistant to return to the high TV prices of yesterday -- especially any price increase that has two digits attached to it. To their credit, network sales executives feel marketers' pain. Thus you have modest price hikes, and a narrower range of price increases.

It's worth repeating: The upfront deals are just a bunch of commitments -- which can be changed right before the start of the season (adjusting a "hold," or, more rarely, dropping it) or reducing the upfront deal during the season (quarterly option or buying more in scatter).

Couple this with the always-fun practice of guessing price increases, and you are looking at the mystery of TV advertising -- and occasionally, some answers.