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Dollars Appear Down as Upfront Gets Going

The upfront appears to be shrinking again, with some buyers and sellers expecting as much as a 10% drop in sales volume.

Pricing also appears to be weaker than last year, with the broadcast networks trying to squeeze out increases of 4½% at the high end and 2% on the low end from buyers who see a flat market. Last year 8% was the high water mark in the upfront.

Curiously, the slow-moving upfront is playing out against third-quarter market that’s on fire. Some sales executive says the strong demand for scatter comes from marketers who are finding that some of the money they put into digital hasn’t helped sales as much as expected.

But as far as the upfront was concerned, marketers and their agencies were seeking flexibility in their spending, and choosing not to commit to as much upfront spending as in past years, reducing the demand in the market.

NBCU and CBS were getting deals done with some of the major media agencies, according to sources. ABC still appeared to be holding out for price increases of close to 5%, the sources said.

Fox was the first network to complete a substantial amount of its upfront business. With its ratings falling and its prices on a cost-per-thousand basis the highest among broadcast networks, Fox let buyers know it was willing to make adjustments in its price and did its broadcast deals at prices flat to down 2%.

Last year, Fox consolidated its broadcast and cable sales operations, so in exchange for adjusting its broadcast pricing, Fox was able to get more advantageous terms for cable and digital inventory.

The other broadcasters wanted prices in the mid-single digits. But buyers initially indicated that they had sharply lower budgets to spend and held out for lower prices.

“The buyers played it right for a change. They refused to be stampeded,” said one advertising executive. “This time, some of the networks might have panicked.

It is increasingly difficult to get solid intelligence on upfront pricing and volume for individual networks. Like Fox, NBCU is selling its broadcast and cable properties as a portfolio. A significant amount of business is being done using the kinds of data products NBCU introduced to the market over the past year. That also makes apples to apples comparisons hard to make.

Some are predicting an even more difficult time for cable networks, following last year’s upfront, which shocked some networks by finishing down in volume.

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.