Sources said that while "every network is in the midst of doing deals" by announcing its completion of the upfront negotiations, ABC has possibly outmaneuvered its rivals--notably the No. 1 network, CBS--in terms of garnering CPM increases.
In the race of completing deals, several media buyers from a variety of agencies, as well as sources at rival broadcast and cable networks, tend to agree on the score: by Tuesday afternoon, CBS was said to have completed 45 percent of its deals, while NBC, in last place among the major networks, is still hovering around zero.
"It was smart of ABC to move this quickly," said one rival network source. "By doing so, they were able to offer bargains, and the networks that follow will have to find ways of matching it. This affects CBS most of all because they were expecting CPM increases of upwards of 9 and 10 percent. I don't think that will be the case anymore. It'll have to be more in line with what ABC got. As for ABC's CPMs, their increases were right in line with what Wall Street was saying."
A week ago, Merrill Lynch analysts forecast that the network would be generally flat compared to last year's $9.1 billion upfront--with ABC and CBS realizing at least 5 percent CPM increases because a number of their shows had done so well, while NBC fared poorly.
In its announcement, ABC said its estimated advertising commitments reached approximately $2.7 billion--with CPM increases in the 4-6 percent range--and a potential rise in year-to-year revenue of more than 30 percent, with approximately $600 million estimated for prime-time sports sales, which includes "Monday Night Football," the National Basketball Association, and the Bowl Championship Series. Although not included in the upfront tally, ABC will also broadcast the highest-rated and largest revenue-generating television event in 2006, Super Bowl XL.
In assessing its apparent success in CPM increases, Mike Shaw, president of Sales and Marketing for the ABC Television Network, said in a statement that these developments will further improve the network's position in the scatter market.
"Historically, in the last 12 out of 13 years, the scatter marketplace for all networks has seen increases over upfront pricing, so having the right inventory to sell in scatter can give you a strategic advantage," Shaw said.
"This does give them a certain competitive advantage, especially considering the kinds of years ABC had before the previous one," said one veteran media buyer. "But I think to most buyers, this announcement simply reflects the fact that the market is moving quickly, and that ABC was the first one with their hand up. It doesn't necessarily mean that they're going to get the best grade, in terms of CPM increases. But it does put pressure on the other networks, undoubtedly. All told, ABC had a very good year, and this is a nice capper for them."
Other networks had no official comment on ABC's announcement.
ABC finished the 2004-2005 season up 12 percent in total viewers, up 16 percent in the key adult 18-49 sales demographic, and up 15 percent among adults 18-34, a network representative noted.
As to how cable will be affected, buyers said they expected flat CPMs compared to last year's double-digit CPM growth.
"Broadcast has done a little bit better this year, so that will tip the scales slightly," said one media agency executive. "Still, I don't think the major cable networks will be complaining."
Sean Cunningham, the president and CEO of the Cabletelevision Advertising Bureau, said that as far as he can tell, buyers were not waiting to finish ABC to get started with his members.
"Every member I've spoken to is at some stage of putting deals together," Cunningham said. "As for broadcast, my sense is that broadcast was down in some parts and media buyers were looking for bargains. It looks as though they may have achieved that."