ABC's strategy of finishing first seemed to have the desired effect of reducing CBS' and Fox's potential for greater CPM increases, noted Merrill Lynch analyst Jessica Reif Cohen.
"While we had anticipated CBS would garner similar increases as ABC due to its strong position--number 1 in total viewers--and stable schedule, we were pleasantly surprised that Fox was able to command similar increases given its year-over-year drop in ratings and weak first half," Reif Cohen said.
CBS appeared to finish up a solid 6-7 percent in total dollars. CBS President of Network Sales Jo Ann Ross had noted on Thursday that the network expected to close with $2.5-$2.6 billion. CBS apparently sold 83 percent of its inventory, in line with recent years, Reif Cohen noted in her analyst report issued Friday.
Meanwhile, Fox appears flat to slightly up, she said, as the network is said to be holding back inventory. Fox is on track to sell $1.6 billion in the upfront market, which is flat to slightly up versus last year.
"With Fox likely selling flat to slightly up ratings--after a 3 percent drop this year--this suggests that the company decided to hold back some inventory, i.e., lower sellout, versus last year," Reif Cohen said. "Holding back inventory essentially amounts to a bet that the scatter market, an area where Fox feels like it has traditionally had success, will be strong in the coming year."
As for last-place network NBC, sources said that there were signs the network had begun to cut some deals by the end of last week.
Sources said that NBC is reducing the CPMs of some deals by 2 percent compared with last year, as some advertisers are seeking bigger reductions. Because of its poor season, NBC's upfront sales are expected to fall from nearly $3 billion last year to $2.2 billion, sources said.
"After a 19 percent drop in its ratings--and with no change to its uninspiring Thursday night schedule--NBC is widely viewed as having little negotiating power in this year's market, leaving open the possibility that it will have to write negative CPMs," Reif Cohen said. "We believe that a 15-20 percent drop is likely, and that an even steeper drop is possible."
Aside from NBC, overall, buyers are saying that the upfront negotiations that are taking place right now--cable has shifted into a higher gear by the end of the week, sources said--are relatively short and very sweet.
"It's going at a more congenial pace compared to other years, that's for sure," said Bob Flood, evp, director of national electronic media at Publicis Groupe's Optimedia USA. "It hasn't been as intense. The dynamic of the negotiations has changed. It's been an evolving process because of the transition from just spots and dots and to branded entertainment and product integration, which require a more thoughtful discussion in terms of how those deals take shape."
Merrill is saying that the upfront prices so far appear decent--even assuming that NBC is down 15-20 percent--and the prime-time broadcast upfront market appears likely to finish up 1-2 percent. Still, media buyers say that until the scatter market is factored in, it'll be hard to say how strong or weak this current upfront really is.
"You don't look at these discussions in isolation," said one media buyer. "Obviously, the big money is spent in the upfront, but you have to look at the total market."