Cable Upfront: The Beating Continues for Networks

Ad-sales executives, who had expected tough negotiations going into the cable upfront, have seen the bargaining sessions take some nasty turns.

Some anonymous ad-agency buyers have maintained in press reports that A&E Network and Lifetime Television had caved on pricing and were taking cost-per-thousand (CPM) cuts of 25 percent or more.

Earlier, some buyers crowed about having hammered Turner Broadcasting Sales Inc. into submission, securing deals at CPM reductions of 15 percent.

But executives at those networks said that those reports are false.

"It's getting ugly out there," one sales executive said.

Meanwhile, various sources said that The Media Edge, Starcom MediaVest Group and Chrysler's in-house PentaCom shop continued to add to their list of finalized cable-upfront deals last week. MediaCom Worldwide and OMD USA were also said to have closed their first cable buys; Lifetime was reportedly among the sellers.

Some other agencies still were hanging back, expecting the upfront to drag on another few weeks.

Mired amid a sluggish economy and a tepid advertising market, this upfront shaped up as the first buyer's market in years. As such, cable programmers have braced themselves for rollbacks in budgets, as buyers — pressured by clients who are seeking "adjustments" after years of paying significant increases — are looking to leverage their stronger bargaining position this time around.

Myers Reports Inc. CEO Jack Myers reiterated last week that cable's upfront will probably conclude with $4 billion or $4.1 billion in sales, even amid speculation that buyers had lowered CPMs by anywhere from negative 5 percent to 25 percent.

At A&E Television Networks — now 40 percent sold — the usually reticent executive vice president of sales and marketing Ron Schneier blasted reports that A&E had given into demands for 25 percent CPM cuts.

"That's an absurd number," he said. "Obviously, it was a buyer throwing numbers out to negotiate in the press. The [upfront] market has rolled back for cable and broadcast, but that's nowhere even close."

He added that some major buyers have been pushing networks to slash CPMs by "15 percent and deeper, but we just don't want to go there. We're not accepting those kinds of deals."

To cope with such cuts, "We would have to increase our commercial load or cut our programming costs," he explained. "We don't want to hurt the quality of our programming."

AETN negotiations with several other agencies remained at a standstill last week over pricing demands, Schneier said.

Lifetime executive vice president of ad sales Lynn Picard dismissed the leaks about plummeting CPMs as "outright untruths."

"That's a number that's never been uttered by anyone here," she said. "We'd walk away from that. I have walked away from that."

Picard, who also refuted reports of rate cuts in the teens, said Lifetime had finished about 70 percent of its upfront by mid-July, "almost all for more money. The biggest price concessions were early on."

By early this week, Picard expected Lifetime to be 85 percent sold, excluding some pending calendar-year pacts.

A Turner spokesman said its entertainment networks have now finalized all or part of their upfront deals with nine major ad agencies. Those come in addition to deals struck recently with Starcom, Media Edge and PentaCom.

"So far, we're pacing at roughly last year's dollar volume," he added.

A Fox Family Worldwide executive said only that "the primetime upfront is percolating," along with "lots of posturing."

Targeted networks such as Comedy Central, E! Entertainment Television and MTV: Music Television have fared better than most, holding CPM cuts to the single digits, compared to "the minus 15-percent range" for broader-based networks, according to several industry sources.