• by Wayne Friedman , June 13, 2014

Broadcast networks, on the road to completing much of their upfront deal-making, are operating in a marketplace that is still concerned about weak pricing and volume gains.

"Broadcast is pretty much done; cable is moving slowly,"  says one veteran media-buying executive. One network, CBS, offered a statement: “As we near the finish line, we are very confident that CBS has once again achieved the highest pricing and most total dollars in the upfront marketplace.”

CBS did not go into further detail. But one estimate from Topeka Capital Markets predicted that CBS would take in $2.6 billion in upfront revenue this year.

In what seems like a sellers market, media-buying executives have pushed for smaller rate hikes -- the cost per thousand viewers (CPMs) -- versus a year ago, at around 3% to 7%. This would be smaller than the 5% to 8% hikes that broadcast networks had a year ago.

NBC may be the lone exception, showing some strong viewership improvements this year and winning the season overall among 18-49 viewers. But while NBC looks to write the highest gains on CPMs this year, it still has much ground to make up: Its average prime-time CPMs are 25% lower, on average, than other networks.

According to some media executives, NBC has completed more than 50% of its upfront deal-making and is on track to achieve higher volume than a year ago. It is estimated that the network pulled in some $2.1 billion in the 2013-2014 upfront selling season. An NBC spokeswoman had no comment regarding any upfront deals.

Just like last year, NBC’s selling efforts are pushing to include package deal-making for its array of cable networks including USA Network and Bravo, among others -- as well as digital platforms -- that one media executive also believes are far along in upfront deals.

But one media agency questions the extent to which NBCU and its cable networks have completed deals: “Word on the street is negotiations have stalled with a few big shops, [because] NBC refuses to close without cable and syndication.” The executive adds: “Agencies refuse to close cable in a vacuum.”

ABC has also completed more than 50% of its upfront business, according to executives -- with mid-single-digit CPM increases. An ABC spokeswoman had no comment.

On the flip side, Fox, with sinking viewership this season, is tallying deals on the lower end of the CPM increase range, according to media executives. A Fox spokeswoman did not have a comment by press time.

One issue of greater concern may be overall upfront broadcast volume. Initially, upfront broadcast volume was estimated to  be down 1% to 3% from the $9.2 billion totals pulled in a year ago.

Some of that money, according to executives, is being shifted to cable networks, which are poised to hit the $10 billion level in upfront advertising deals. Network cable advertising sales executives believe much of the cable upfront process will take place next week.

“We have been moving since early last week,” says one veteran cable TV advertising sales executive. “It will be all done in a week, same as usual -- albeit one week later.”

Some media executives are still alarmed that broadcast networks might be looking at greater overall volume losses in the upfront -- down about 5% versus a year ago. This is due to viewership erosion, as well as TV marketers' efforts to shift money to cable networks and some digital video platforms.

But C7 still remains a wild card, other executives say -- depending on the number of upfront TV advertisers shifting to a C7 Nielsen viewing deal-making metric from C3.

A marketplace shift to a C7 rating guarantee to marketers -- C7, the average commercial ratings plus seven days of time-shifted data -- could boost overall volume for national TV broadcasters about 2% to 3%. This will come from adding four days of viewing data from the current three days of time-shifted viewing metric.

Early projections were that the vast majority of upfront deals this season could be under C7 ratings guarantees  -- but that does not seem to have occurred. One media executive estimates that this year, there could be only around 25% of upfront deals being shifted to C7 -- resulting from a majority of GroupM TV advertising clients.

In return for making those higher numbers, TV marketers might benefit from lower CPM price hikes than those buying with C3 guarantees.

Concerning C7, CBS, in its statement said:  “Agencies and clients continue to value the strength, stability and delivery that we provide as a pure-play broadcaster, and we are very pleased that in addition to C3, C7 is now playing a meaningful part in our negotiations.”

"Watching TV" photo from Shutterstock.