• by David Goetzl  @dgoetzl, July 2, 2007

After it appeared MTV Networks might fight tooth-and-nail to do upfront deals based only on program ratings, the group was doing some business last week that included guarantees based on the new commercial ratings, a source said.

Another source added a proposed MTVN deal structure included program ratings for the fourth quarter, then commercial ratings for the ensuing three quarters.

That would allow MTVN more time to evaluate the commercial ratings data -- cable networks have questioned its accuracy even as buyers have embraced it -- and institute tactics to build viewer retention during ads to boost its commercial ratings. For example, Philippe Dauman, CEO of MTVN parent Viacom, has suggested using more pods, but of shorter lengths.

In early June, Dauman raised the possibility that MTVN would negotiate based only on program ratings, telling a group of investors the new data "needs another year of fine-tuning for cable networks."

But one source said MTVN is being "very flexible and open" and not digging its heels in. Another added the group is "more in partnership than it was early on in the process."

Marketplace conditions may have caused MTVN to shift direction. Massive buying entity Group M, for example, has made multiple cable deals based on the so-called C3 currency (commercial ratings covering three days of DVR viewing). It told networks it will not engage in conversations to use any other currency.

The issue is a potential hot potato for MTVN because two of its networks, MTV and VH1, experience such heavy viewer defections during commercial breaks, according to a report from Magna Global, which said both lose about 13% of their audience. Two other MTVN networks fare better: Comedy Central and Spike lose about 8%.

But at least two cable networks with similar viewer defection levels as MTV and VH1 have been involved in C3 deals. A deal NBC Universal chief Jeff Zucker said was worth $1 billion between the conglomerate and Group M included Bravo and Sci Fi, with 13% and 11% viewer defection levels, according to the Magna Global report. But the deal covered a slew of networks, so it's unclear how much involved Bravo and Sci Fi.