There has never been a year like 2020 and there’s never been an upfront like 2020’s.

At this point they’re not saying it out loud, but buyers and sellers say the 2020-21 upfront auction of ad sales has concluded, just in time for the start of the fall season. Network executives said it wasn’t as bad as it could have been and professed to be pleased about how resilient the TV advertising market was during a pandemic. 

“We got all the deals done. Most of them came in very late,” said one network advertising sales executive. “It’s been a long process, but it ended well for us.”

This optimism is hard to quantify, and comparisons to previous years are difficult to make, because of big changes in the market. Ratings this year include out-of-home viewing and the networks were selling tons of new digital inventory, which makes past pricing and volume numbers irrelevant.

“The numbers are very muddy this year, not just because of out-of-home but because the digital side of the business has expanded a lot,” said a sales executive who, like several individuals quoted in this story, asked not to be identified by name because of company policies against commenting on contract negotiations.

Of course, even in a “normal” year, the smoke-and-mirrors numbers that surface after the upfront aren’t predictive of what media companies will report as advertising revenue when their earnings reports come out.

All Sides Sought Flexibility

“The big push and pull was around flexibility, and of course price,” an agency media buyer said. “Agencies wanted much greater flexibility. The networks came back and said, ‘What’s the point of upfront then?’ So I think there were definitely some concessions on flexibilities overall, but not as much as requested.”

“To get the market moving, the networks needed to incent our client to put budgets together with all the uncertainty they were facing,” another agency buyer said. Options moved from 60 days to 45 days. Some upfront buys moved from 25% cancelable to 50%. And while fourth-quarter orders were firmed up, some clients have until October to lock in exactly what they’re paying for during Q1 through Q3. 

“There was definitely pressure to make TV more digital in terms of flexibility and option terms,” A+E Networks president, ad sales Peter Olsen said. “There was a blending of digital terms and TV terms.” 

The bottom line, according to people engaged in the market, is that volume in the upfront finished down about 10% to 15% for linear TV, while prices on a cost-per-thousand viewers (CPM) basis again managed to increase, disappointing some buyers and clients. Last year, $23.9 billion was spent in the upfront auction of ad sales, including $10.2 billion on broadcast ads and $11.7 billion on cable, according to Media Dynamics.

”It was probably the equivalent of a low- to mid-singles market, which is not disastrous in an economy like this,” A+E’s Olsen said.

“In all of our key categories, in entertainment, and sports and news, we’ve achieved, depending on the client, low to mid single-digit price increases across the board,” Fox CEO Lachlan Murdoch boasted at the Bank of America investor conference earlier this month. “That’s a tremendous result.”

Deals were made much later in the process — closer to Labor Day than to the Fourth of July, when media buyers start to begin their summer vacations because the upfront is wrapped up. One big reason for the delay was buyers waiting to see if sports, particularly NFL football, would be played. One network finished a deal on Sept. 18, just two weeks before the commercials are scheduled to air. Details are still being ironed out as the new terms both sides agreed to get parsed.

There is still money waiting to be spent. Ad executives expect this year’s calendar upfront — ads bought for the year starting in January — to be significantly larger this year and to be negotiated in October, a month earlier than usual.

“A large percentage of that 15% [decline in volume] are advertisers who moved to calendar, or scatter, and just needed more time, as opposed to stopped buying TV,” an agency media buyer said. “So at the end of the year, it won’t be down 15%, I don’t think.”

On top of that, prices are still hovering 10% to 20% above upfront in the scatter market for ad inventory not committed during the upfront auction.

“We’ve withheld; we’ve probably sold about 5% less volume than we would otherwise have done, say, last year and we’re comfortable doing that because of the strength in the scatter market,” Murdoch said.

None of that could have been predicted earlier this year.

Upfront’s Obit Was Premature

People were just learning about COVID-19 on March 3, when Fox News Channel canceled an upfront event scheduled for March 24. A week later, when NBCUniversal, Fox, ViacomCBS and The Walt Disney Co. canceled their lavish annual May upfront presentations and parties, it was clear the coronavirus would have a huge impact on the TV advertising business.

For a time, there were questions about whether or not there would even be an upfront — or a new television season to run commercials in. There were surveys and estimates that predicted ad spending could plunge by 30%, which in fact did happen in the early days of the recession caused by a virus that kept people at home and shut down businesses. 

“The prognostication in April that there’s never going to be another upfront, that this is going to be the end of buying and selling as we know it, that didn’t really come to fruition,” John Halley, chief operating officer of advertising revenue at ViacomCBS, said at Future’s Advanced Advertising Summit.

Procter & Gamble made a big stink about it being time to change the upfront and shift to a calendar upfront. But the packaged-goods giant quietly went to the networks and cut early deals, looking to get better pricing. 

“I’m surprised they didn’t get called out for that,” a network executive said.

Media agencies saw an opportunity to reset the market and get lower prices. “There was this narrative early on the minds of clients,” a network executive said. “They were thinking there was going to be a rollback. You were hearing 20%, ridiculous numbers.” 

Most of the networks dug in their heels and eventually, buyers had to put their money down and get their clients on the air. One buyer said the turning point was when COVID shut down television production. “In our models, supply went from being down 15% to being down 18%, 22%, 25%,” an agency media buyer said. “All of a sudden, it became a seller’s market.” 

“Yes, there were concessions made around flexibility,” Halley said. “It had to be done.” But in the end, the market “landed in a place that supported the model that we work under,” he said. Pricing moved in a positive direction and, “depending on what parts of the business you’re talking about, the volume was also there.”

On top of pricing, some agency executives were annoyed the networks waited until after many deals were struck to announce when they would start to air big hits, like NBC’s This Is Us. 

Nielsen threw a brief monkey wrench into the market when it said it wouldn’t be adding out-of-home viewers to its 2020-21 ratings as planned, a move that would lift audiences of entertainment programming by anywhere from 3% to 6%, network executives said. The networks erupted and Nielsen quickly reversed its course.

Digital inventory was also a big factor with ViacomCBS owning Pluto TV, Fox buying Tubi and The Walt Disney Co. taking control of Hulu.

One market participant estimated that linear volume was down 15%, while nonlinear revenue rose 50%. That leaves overall revenue down about 10% because, last year, media companies got 90% of their revenue from linear and 10% from nonlinear. This year it will be 80%-20%. “Advertisers are following the audience,” the participant said.

With their new OTT services, the networks can also offer buyers top shows like Fox’s The Masked Singer at better prices when they stream and attract a younger audience than when they appear on broadcast.

They could also offer buyers better pricing on broadcast if they agree to increase the dollars they’re spending on their streaming platforms.

“The nonlinear space is creating a lot of discounts,” a network executive said. “The dream that these companies have is that the streaming services are going to take off. And then you can reconfigure what the business really is.”

Talks Get Personal

Negotiating an upfront during a pandemic turned out to be a more personalized experience, some executives said. While the big presentations and parties were replaced by Zoom calls, negotiations tended to be more one on one with senior execs as the stakes grew and deadlines neared.

“A lot of times our negotiations are done with a group of us in one room and a group from the agency in another room, but this was a lot more one-on-one discussions than large group with large group,” one network executive said.

Where does this upfront market leave the business? 

“Well, we all had had to be flexible,” a network executive said. “But we also have to manage our business, and I think we’re going to learn whether we can live with what we’ve agreed to.”

One buyer said he remains concerned that the networks can’t do anything to keep ratings from continuing to fall. “Our retail clients don’t want their fourth quarter schedule to underdeliver and to get make-goods on some digital channel in January,” the buyer said.  λ

With the concentration of the TV business, and the consolidation of advertising sales teams at those companies, a handful of top sales executives now control more than $22 billion in commercial inventory in the cable business.

Most of that inventory will be negotiated and sold over the next few months in the upfront market, determining the financial fates of those companies or the coming year.

Here is a Multichannel News scorecard of the executives responsible for selling cable advertising and what kind of hand they’ll be bringing to market for next season.

Donna Speciale

Title: President, Turner Ad Sales
Company: Turner
2017 Ad Revenue: $4.033 billion**
Outlook: A top media buyer before joining Turner, Speciale has been on a quest to make the television experience better for viewers and Turner’s portfolio of networks more attractive to media buyers. Turner has been among the early movers by cutting commercial clutter at truTV, creating audience-targeting products and building up branded content production studios. She sees her competitors moving in her direction and ad dollars flowing as a result.

Jon Steinlauf

Title: Chief U.S. Advertising Sales Officer
Company: Discovery Inc.
2017 Ad Revenue: $3.809 billion**
Outlook: Steinlauf, who had been in charge of ad sales at Scripps Networks Interactive, became head of sales for Discovery when the latter company acquired Scripps. The two companies both feature nonfiction programming that is viewed live; as a single company, it will continue to emphasize that advertising works on strongly branded networks because much of it is contextually related to the content, and because fans are receptive to the messages they see in their favorite trusted shows. Discovery’s respected head of sales, Ben Price, will leave after the upfronts.

Sean Moran

Title: Head of Marketing and Partner Solutions
Company: Viacom
2017 Ad Revenue: $3.699 billion**
Outlook: Under Sean Moran, Viacom is looking to build a variety of marketing services that go beyond selling spots. Viacom acquired WhoSay, a social-media influencer marketing company, and VidCon, a place where content creators convene. It has also put together a shopper marketing unit. Viacom expects its Advanced Marketing Services to generate $300 million in revenue this year and that after years of shrinking ad revenue. Viacom forecasts that ad revenues for the fourth fiscal quarter will actually be up.

Laura Molen, Mark Marshall

Titles: Executive VP, Lifestyle and Hispanic Advertising Sales Group, NBCUniversal; Executive VP, Entertainment Advertising Sales, NBCUniversal
2017 Ad Revenue: $3.397 billion**
Outlook: Cable networks are an integral part of NBCUniversal’s expansive television portfolio. Entertainment networks, including USA Network and Syfy, are ratcheting up high-profile programming. USA recently announced a new country-music competition show headlined by Shania Twain and Jake Evans. Its lifestyle networks — Bravo, E!, Oxygen — boast strong connections with consumers that benefit advertisers. With NBCU joining the OpenAP audience-targeting consortium, advertisers will have a broader pool of viewers they can reach using data-driven buying techniques.           

Ed Erhardt

Title: President, Global Sales and Marketing
Company: ESPN
2017 Ad Revenue: $2.609 billion*
Outlook: Live sports events continue to be attractive as on-demand viewing reduces ratings of on-demand programming. That leaves ESPN in a pretty strong position, despite its well-publicized decline in subscribers. Under new president James Pitaro, ESPN continues to position itself as an alternative to primetime for a broader range of products, not just beer and razors, with a large number of women tuning in. In April, ESPN launched its new app and its direct-to-consumer streaming product ESPN+, designed to capture the attention of sports fans and cord cutters and create additional advertising opportunities for sponsors.

Peter Olsen

Title: Executive VP, Advertising Sales
Company: A+E Networks
2017 Ad Revenue: $1.491 billion *
Outlook: At its upfront event in March, Olson promised media buyers that A+E Networks was planning to deliver “no gimmicks, just results.” The company’s networks, led by A&E, History and Lifetime, are doubling down on real-life story telling and it has signed deals with prominent women including Leah Remini, Elizabeth Vargas and Gretchen Carlson. A+E has also been aggressively pressing its work with Data Plus Math, the company getting attention for its attribution platform, which should provide marketers with a scorecard on what media work best and, within TV, which networks and shows really make the cash register ring.

Marianne Gambelli

Title: President, Advertising Sales
Company: Fox News
2017 Ad Revenue: $1.068 billion*
Outlook: With a hurricane of political news blowing across the nation, the category is gaining audiences, and those curious eyeballs are attracting ad dollars from additional advertisers looking for big numbers and live viewing. President Donald Trump’s favorite network has maintained its ranking as the No. 1 cable news channel and viewership is increasing for Fox Business Network. Fox News Channel has also been updating its digital product to attract users and advertisers. With tightly contested midterm elections coming up in November, viewership is expected to rise even more on Fox News and its cable news competitors, all of which will be offering special election-year political news and results packages at premium prices to sponsors.

Scott Collins

Title: President, National Advertising Sales
Company: AMC Networks
2017 Ad Revenue: $960 million**
Outlook: Known best for The Walking Dead, AMC has parlayed owning television’s No. 1 scripted series into big increases in ad rates over the past few years, despite declining viewership for the zombie apocalypse drama. And at a time when “peak TV” conditions are ratcheting up competition for viewers, AMC is doubling down on burnishing its reputation for airing high-quality scripted programming at scale on networks that gladly accept advertising. This year, AMC is also rolling out its data-driven advertising unit, featuring Aurora software that optimizes campaigns across networks.

Ed Georger

Title: Executive VP, Advertising Sales and Digital Media
Company: Crown Media Family Networks
2017 Ad Revenue: $505.9 million *
Outlook: Like the little engine that could, Crown Media’s Hallmark Channels keep increasing viewership with family-friendly and advertiser-safe programming, especially during the fourth-quarter holiday season, which is crucial to a whole range of marketers. Hallmark Channel continues to prosper with its focus on other holidays — Valentine’s Day, Mother’s Day, etc. — and its support of pet-related projects, including its Kitten Bowl. Crown is producing additional movies for its maturing Hallmark Movies & Mysteries channel and, at a time when many are looking for skinnier bundles, is pushing another linear network with Hallmark Drama.

Louis Carr

Title President, Media Sales
Company: BET
2017 Ad Revenue: $313.0 million*
Outlook: With linear ratings rising for the past three quarters, BET has maintained its status as the No. 1 cable network among African-Americans, a title it has held for 17 consecutive seasons. The network continues to emphasize how its viewers are avid consumers in many categories, including movies. BET special events — such as the BET Awards, the Hip Hop Awards and the Soul Train Awards — also pull big numbers. BET is big on social media and digital, and its BET Experience is the prototype in Viacom’s strategy for bringing fans to live events.