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Upfront Notebook: Nets Get Closer to Finish Line

After a slow start, the broadcast networks appear to be more than halfway done with their upfront deals.

Despite protests by ad buyers, the networks seem to be getting the double-digit price increases on a cost-per-thousand viewers basis they have been pushing for. At the high end some networks are commanding prices around 13%.

But market sources say that the high prices might be keeping some of the dollars that had been expected to enrich this upfront—dollars that had been spent in scatter or on digital advertising last year—on the sideline. Of course, the networks could still see those dollars between now and October, when upfront deals go from being holds (or reservations) to orders.

Even with double digit price increases, network ad revenue might not go up. In a report, Michael Nathanson said that, excluding the Olympics, national TV ad spending will be up just 2% in the third quarter of 2016 and flat in the fourth quarter, when new upfront deals kick in.

Last week NBCUniversal CEO Steve Burke told an investment conference that NBCU had completed a majority of its business.

Market sources indicated that NBC was getting prices in the low teens selling inventory at both its broadcast networks and its cable networks.

Fox, which only has two hours of primetime per night to sell and often closes its upfront earlier than its competitors, was also at least midway done with its deals.

After years of American Idol fueled increases, Fox cut its rates last year to be more in line with its competitors as its ratings fell. Fox’s rates are still on the high end, but with its ratings starting to turn around it was able to negotiate rates in the high-single digit to low double-digit range.

CBS, which usually leads the networks in broadcast ad volume—and led in viewership last season—was also getting double digit increases.

ABC, which was very aggressive on pricing last year, was getting CPM increases just over 10%, market sources said.

On the cable side, Viacom, despite the soap opera going on in its boardroom, was able to close out its upfront deals.

Despite lower ratings, Viacom was able to increase its volume by double digits, according to market sources.

Viacom’s healthy volume was the result of several factors. For one thing, ad sales chief Jeff Lucas was satisfied with price increases in the 7% to 9% range. And several of Viacom’s key categories were hot including toys and family films at Nickelodeon.

Viacom was able to bundle digital impressions on social media and Snapchat into its upfront deals. It also used its data products to get incremental spending out of clients. (Viacom CEO Philippe Dauman has told security analyst he expected the number of clients using Viacom Vantage to rise to 33 from 11 in last year’s upfront.)

Market sources said that Viacom did not require a minimum level of spending for clients wanting to use Vantage to more efficiently target its advertising. But Viacom did insist that those advertisers increase their volume, which meant moving dollars from other networks to Viacom’s.

How did Viacom and other programmers offering to sell audiences based on data other than traditional Nielsen age and sex C3 ratings sell? Do ask. Some sources said that prices aren’t set until after optimizers select the right inventory and the ads run. But they are fairly certain prices will be up and that the higher level of reach against target consumer and sales prevent clients from getting sticker shock.

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.