Commentary

Money Still Left On Table? Fox's Upfront Selling Strategy

This year's TV upfront has its usual theme. The first network to do deals -- once again, Fox, as has been the case for many years -- has set the bar price-wise. But perhaps a few more competitors than in the past are complaining that Fox could have commanded higher prices.

Fox was first due to hungry movie companies looking for key young-targeted programming slots (at high prices) and the fact that Fox has less inventory to sell than the older three networks --15 hours versus 22. But some competing executives are moaning over Fox's low-ish price increases -- averaging around 11%.

Going into the upfront, these executives wondered whether new Fox senior advertising executive Toby Byrne would continue the process set by long-time Fox advertising chief Jon Nesvig. Seems like he did. In years gone by, executives also had wondered whether Fox's efforts in going early gave marketers cheaper deals and "left money on the table."

advertisement

advertisement

That wasn't the case this time. Fox did well because there were gains to be made during the scatter markets -- which over the last two decades have virtually always given networks price hikes over upfront pricing.

Critics might say Fox could have grabbed higher gains this year -- more than the 10% or 11% that have been reported. This is because some wild-eye prognosticators had been mulling 15% to 16% gains, due to soaring scatter market price increases of 30% to 40%.

But here's the thing: The current scatter market has come down from those crazy rocketing gains (though it's still good, in the 10% to 20% range). Not only that, but having a strong scatter market is only beneficial to those who have inventory to sell -- something which CBS had for almost the entirety of last season.

Fox is betting that shows like "The X-Factor" will add more ratings points to its supply, especially in the fourth quarter, which is seemingly always difficult for Fox. But perhaps more importantly, Fox has been dealing with marketers for whom some piece of expected make-goods will be given from digital video areas like Hulu. All this will free up Fox to sell more traditional TV commercials in the scatter market.

If other networks are complaining that Fox could have gotten better results, they only have themselves to blame. Programming is an issue, of course. But so too are ever-increasing TV/video alternatives.

Steep broadcast ratings erosion of, say, 7% or 8% means a network needs at least 7% to 8% gains in the price per thousand viewers just to give them the same overall dollar volume of a year ago (if sellout levels are the same). Looking at Fox, it lost only 5% in 18-49 rating points this past season versus a year ago. If it is getting 11% gains in CPMs, I'm guessing Fox is doing pretty well.

Feels like desperation for some networks. If history has told us anything, viewership for future years of broadcast television won't get any better.

All to say: expect much more moaning during this and future upfronts.

Next story loading loading..