• by Wayne Friedman , David Goetzl , June 7, 2006

The reality of the upfront is now clear and financially brutal: Program prices for many broadcast networks will be lower than year-ago upfront deals--an event that hasn't happened in a number of years.

In a slow-moving market, about 20 percent of network inventory has been sold so far to advertisers, with CBS, Fox, CW, and NBC making deals late into Tuesday evening, according to media buying and selling executives.

Contrary to earlier reports, pricing is much lower than first assumed, with most deals lower in price than the upfront of a year ago. For example, CBS' cost-per-thousand viewer prices (CPMs) are 1 percent below last year, say media buying and selling executives. Fox is registering flat pricing versus a year ago, while NBC will take a mighty hit, dropping anywhere from 5 percent to 6 percent in CPMs versus a year ago. The CW is posting CPMs about the same as WB prices last year.

"It's slow, real slow," says one veteran media-buying executive. "Agencies are in one place and networks are in another. The money is just not there. The market is much closer to negative than people think."

ABC has yet to move, as a result of its delayed decision to drop DVR viewers from its rating guarantees to advertisers. Still, most believe it'll began inking deals today. This will mean the bulk of the broadcast network upfront business will be done by the end of the week.

Network buyers and sellers now believe that ABC will probably be the only network to see price hikes--about 2 percent to 3 percent CPM increases. Still, these estimates are down versus earlier predictions that ABC would pull down 5 percent price hikes.

ABC, CBS, Fox, and NBC spokespersons had no comment. A CW spokesman said via e-mail: "We have definitely made a number of deals. Things are moving quickly."

Because of ABC's delay, the network spent the better part of Monday and Tuesday registering budgets. Executives believe the network's move of "Grey's Anatomy" to Thursday will get a lot of attention from movies--with some saying there will be a movie commercial in every break of the hour-long show for the upcoming season.

But in contrast to upfronts of years past, not every movie marketer is in a hurry--with any network.

"The market isn't earth-shattering," said a West Coast media agency executive, who, as of late in the day on Tuesday, had yet to make an upfront deal for his movie client. "What's the rush? The networks clone enough shows [especially procedural crime dramas] to take the pressure off pricing. How different, really, is the 'CSI' viewer on Thursday night than the one on Monday night?"

The upfront market has changed over the last two seasons.

First, marketers are now willing to hold back money--seven hundred million dollars, according to executives--for possible digital platform deals and traditional mid-season TV spur-of-the-moment program opportunities.

Second, for the first time in years, ratings points are plentiful in both cable and on broadcast TV. All this means that marketers are in no rush to complete deals. For the last two seasons, broadcast networks' 18-49 rating supply has been virtually flat--which is stabilizing the situation from years past, when network ratings points would traditionally drop 4 percent to 6 percent per year.

The cable part of the upfront looks to began next week--although some deals are starting to happen. OMD, for example, has already renewed and enlarged its agency deal with Viacom's MTV Networks (see related story in today's MediaDailyNews). Many other agencies have also registered budgets with MTV.

Some agencies have registered budgets at Turner entertainment networks (TNT and TBS) and the CNN news family. The fact that TNT and TBS would attract some early interest from agencies is not surprising -- the pair are tied for second place behind USA Network in 18-to-49 prime-time ratings race among advertising-supported cable networks.

Elsewhere in cable, discussions are taking place--but the market is barely at stage one, a cable executive said.