• by Wayne Friedman , David Goetzl  @dgoetzl, June 14, 2006

The two networks expected to lead the upfront are apparently taking different approaches to the market--with Fox having sold most of its inventory and ABC still in the early stages.

Peter Chernin, President-COO of Fox parent News Corp.--speaking at the Deutsche Bank Media conference in Santa Monica--said the network opted to go for volume increases rather than big cost-per-thousand viewer price (CPM) jumps, and has sold 70 percent of its upfront inventory at 2 to 3 percent CPM increases.

For his part, Les Moonves, chairman of CBS Corp.--who spoke at the same conference--said: "I was surprised that he said they had 70 percent sellout. I'm not denying that exists. Most of the marketplace is lower than that--granted that they have 15 hours of programming to sell versus 22. It's a watch and wait game."

Chernin said Fox went with modest price gains since its CPMs entering the upfront were near premiums--topping the market in the $30 range, the same as NBC.

Meanwhile, ABC--which has the Big 4 networks' lowest CPMs in the $24 to $25 range, according to Chernin--appears eager to leverage its increased ratings to boost CPMs. With buyers apparently resisting, the network is barely out of the gate. Tom Staggs, CFO of ABC parent Walt Disney Co., said Tuesday that the upfront has been "very slow to develop this year."

"It looks like advertisers are holding back more dollars than (last year)," Staggs said, also speaking at the Deutsche Bank Media conference.

Staggs suggested that ABC was prepared to take its chances in the scatter market if it doesn't get the pricing increases it's seeking.

He said that overall, the networks wouldn't sell as much inventory as in previous years. Typically, networks sell around 75 percent of their entire prime-time inventory during the upfront selling season.

In weak markets, some networks--such as CBS a few years ago--sold as little as 60 percent to 65 percent of their inventory, all with the hopes of making it back in the scatter markets.

Chernin said when ABC does start dealing full-bore, he expects it will be able to command CPM increases at a rate higher than the 2 to 3 percent jumps Fox is getting.

"There's no question in my mind that we will have bigger CPM increases than anyone, with the exception of ABC," he said.

In a sign of just how murky information about the true progress of the upfront is, Chernin took the unusual step of offering up information about his competitors' progress, saying CBS and NBC were each about 60 to 70 percent done with the upfront.

An NBC spokeswoman had no comment.

Moonves believes that CPMs at CBS, Fox, and ABC should get low single-digit increases this upfront. "Everyone is looking for volume," he said. "But at the end of the day, volume really doesn't matter as much as the press says...When Johnson & Johnson said they are staying out of the upfront, that doesn't mean anything. They'll be back in August; they'll be back in September."

Perhaps as a result of a perception that the upfront is merely churning along, stocks of the media companies that own the Big 4 networks--Disney, News Corp., CBS, and General Electric--have all fallen recently. But Chernin suggested that the press has fueled a flood of misinformation, terming the coverage of the upfront extremely "misguided."