Upfront Budgets For Cable Too Low To Be Believed
Cable sales executives say the upfront ad budgets that are being registered by media agencies are coming in lower than last year, but they’re fairly certain that the numbers will rise as they get deeper into negotiations.
With two of the Big Four broadcasters—CBS and ABC—declaring themselves mainly done with their upfront sales, buyers’ attention turned to cable last week. Since broadcast spending is believed to be down, some might have expected a portion of those broadcast dollars to show up in cable. But so far, with most of the big agencies having sent spending plans to the programmers, sales execs say budgets are down, in some cases by double digits.
Rather than reflecting a downturn in spending, sales executives believe the trend reflects a tactic by buyers to try to show that the market is weak, in order to argue for lower price increases than a year ago. Once negotiations center around a number that feels favorable to the buyers, more dollars will emerge as they seek to close deals, the sellers said.
Some buyers used similar tactics last year, with nearly all of the “missing” money showing up before deals closed, and the sellers said they were unlikely to fall for it this year.
Buyers want CPM increases in the mid-single digit range, while buyers would prefer to be closer to flat.
If the missing money doesn’t emerge during upfront negotiations, sellers expect it to show up just before the start of the new season when upfront holds—reservations to buy ad time—turn into firm orders. Or the money could show up in scatter.
Some money might be headed to digital, but most cable sales execs are skeptical that’s significantly affecting spending. “I don’t think digital offers enough reach to disrupt the market,” one said.
(Photo via Andrew Magill's Flickr. Image taken on March 18, 2014 and used per Creative Commons 2.0 license. The photo was cropped to fit 3x4 aspect ratio.)
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.
By Jens Koerner