WBD: Higher Upfront Volume, Zero Price Gains

While Warner Bros. Discovery says total dollar volume is tracking higher as it completes its upfront TV season advertising deals, pricing is another matter -- it looks to be virtually flat or slightly down versus that of a year ago.

“We’ve nearly completed the U.S. upfront and our volume is up and our price levels are consistent with the prior year -- a very good result in a tough market,” said David Zaslav, Warner Bros. Discovery CEO, during the company’s second-quarter earnings call Thursday.

A year ago, Warner Bros. Discovery said it closed those TV ad deals at $6 billion in total upfront ad commitments.

Zaslav did not provide specific details, although he alluded to possible price stagnation or declines in some areas: "We got price increases on some of our affinity networks... Some of these networks are really important to advertisers and we’re still doing a lot of original content, which makes us unique," he said. 

More positive news, as with other big TV-network based media companies, comes with better deals for sports programming. “We’re seeing mid-single increases on the sports side,” said Zaslav.

Overall, this put the company at flat pricing -- the cost-per-thousand viewers (CPMs) -- which would be a victory of sorts in this difficult TV marketplace. 

Media agency analysts generally say TV networks have inked many deals for this upfront ad selling period that began in June at rare single-digit percentage declines -- 1% to 3% or so -- largely for non-sports linear TV programming content. 

“This year’s upfronts mark the first time we are seeing declines in CPMs in a non-recessionary year,” says Robert Fishman, media analyst for MoffettNathanson Research.

This upfront process comes under a still weak current TV ad market, and a recovery that isn’t forthcoming anytime soon. “We haven’t seen it and we need to figure out how to make up for that,” said Zaslav.

The company says there is also strong advertising news for its premium video streamer Max, which was renamed and relaunched from HBO Max in the spring.

Unlike other premium video streaming services such as Hulu, Peacock, Paramount+ -- where TV advertising revenue can represent rom 30% to 40% of their revenue, due to their more highly developed ad-supported streaming options -- Max is still just developing.

Warner Bros. Discovery posted direct-to-consumer (D2C) revenues -- which includes Max -- at just $121 million for its second quarter. That amounts to just 6% of its revenues from subscription fees, which were $2.19 billion in the second quarter.

With regard to Max, Zaslav says: “We’re seeing really good pricing.”

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