Syndication Plays Catch-Up, Follows Nets' Weak Upfront Lead

If broadcasters faced an uphill battle in the upfront, leading syndicators look to be in for an even steeper climb to improve on last year's approximate $2.89 billion upfront advertising take.

With aging off-net hits and declining ratings, syndicators are already doing deals with significant price cuts. There appears to be no rush to snap up the considerable inventory; syndicators appear eager to agree to the price cuts in exchange for more volume. Two media buying executives report that deals for some high-profile sitcoms are being inked at pricing under that of a year ago.

The weakness of the syndication market follows that of the network market. Early reports from the likes of Merrill Lynch projected syndication volume to grow 4 percent to just over $3 billion. Now, one veteran syndication media sales executive anticipates overall syndication volume to drop just as it seemingly has with the broadcast networks. "We'll follow the networks," he said.

Still other syndication executives report that other syndication shows are getting price increases, including shows such as Buena Vista's "Live with Regis & Kelly," Twentieth's "That 70s Show," King World Productions' "Oprah Winfrey," and Warner Bros.' "Ellen." Executives also report Sony Pictures Television to be getting higher pricing for some of its shows versus a year ago.

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"Syndication has a few 'haves,' but mostly 'have-nots,'" said Tim Spengler, executive vice president/director of national broadcast for Initiative Media.

"That 70s Show" is one of the "haves," coming off a year where it saw ratings jump 30 percent among adults 18 to 49, and 17 percent among women ages 18 to 49. "Regis" and "Oprah" will make pricing gains--although both have seen ratings dip in some demos, such as women 18 to 49.

In addition to some ratings stumbles, buyers said top-tier syndicated shows have risen to disproportionately high pricing levels that the market can no longer support, leading to the CPM declines. Even with the rollbacks, "Seinfeld" and "Friends" still command premium pricing. This past season, "Seinfeld" dropped 9 percent in women 18 to 49, while "Friends" has dropped 7 percent.

Cable also appears to be stumbling along, as top-tier networks were expected to make deals with CPM rollbacks. Executives said networks were willing to make deals at flat CPMs, with buyers pressing for decreases in pricing.

Both syndication and cable face the challenge of trying to negotiate with the sluggish broadcast upfront as a backdrop. One media buyer says the overall broadcast network upfront business could have dropped anywhere from $300 million to $600 million this season--taking the total broadcast upfront business down to $8.2 billion from the $8.7 total of a year ago.

Meanwhile, ABC closed its upfront Friday--selling what was expected to be less inventory versus a year ago, said a media agency executive. Initially, ABC was expected to lead the pack in CPM increases.

Early ABC deals were struck in the 3 to 4 percent increase range. But then the market got softer, and ABC struck later deals in the 2 percent range. As a goodwill gesture, ABC reworked those early deals with agencies to come in at about 2 percent. This is a typical process that networks sometimes go through in order to be fair to all marketers and to avoid discouraging early movers in the future.

Said one media buyer: "It's in its interest to take care of its agency partners."

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