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With No Must-Buy Broadcast Network Shows, Media Buyers Gain Upfront Upper Hand

The answer to why the broadcast networks are getting smaller
ad rate increases in this upfront than in last year's is not just that the advertiser-desired
18-49 ratings are down, but more to the point: there are no absolutely-must-buy

While some series are drawing more than 10 million viewers
and decent 18-49 ratings, those shows don't really offer a compelling reason
for media buyers to overpay like they may have done in past upfronts.

Conversations with assorted media agency executives, none of
whom would speak for attribution, say this is the upfront where they have felt
more comfortable holding their ground on paying ad rate hikes they believe are
too high.

They do concede that the movie and retail categories do need
to buy Thursday night programming during certain times of the year, but it is
the night they are buying, wanting to reach consumers before they shop on
weekends, rather than specific programming that might result in them paying a
slight premium on that night.

That's one of the reasons why Fox did early deals in this
upfront before watching negotiations start to lag. Even though American Idol
saw a 24% decline in its Thursday night 18-49 ratings this season, it still
averaged a 3.9 in the demo and 13.1 million viewers with a fairly young median
age of 49. And The X Factor on Fox on Thursday nights in the fall
averaged a not-too-shabby 2.9 18-49 demo rating (also down 24%) with a median
age audience of 45. For marketers who need eyeballs on Thursday nights, those
two shows can still fill the bill.

But for advertisers who don't need to be running commercials
on Thursday nights, they can opt for NBC's The Voice on Mondays or
Tuesdays instead. And they can play one against the other in an attempt to get
better pricing. The Voice has a median age audience of 45, averaged 12.5
million on Mondays and 11.8 million on Tuesdays, with 18-49 ratings of 4.4 and
4.0, respectively.

All that said, there's a bit of a downside to The Voice
that buyers can use in negotiations. Its 18-49 ratings were down this past
season by 15% on Mondays, although they were up 11% on Tuesdays.

With most marketers today looking more closely at return on
investment numbers, and with no broadcast series generating major Twitter buzz,
it pays for buyers to protract negotiations and shop around among the networks.
And with only a handful of major media agency holding companies representing
close to three-quarters of the upfront ad dollars, no network can afford to not
do deals with every one of them because of the large chunk of bucks each has to
spend. So if the agencies each stick to their guns -- with no collusion of
course -- they can hold prices down a bit like they have so far.

That CBS quietly completed virtually all of its upfront
deals before the other networks at rate increases at the low end of what CBS
Corp. president and CEO Leslie Moonves publicly projected going into the
upfront, rather than holding out for higher prices, indicates that the networks
just don't have that strong a hand to play this year.

If any network held out, it should have been CBS, which
reportedly got between 7.5% and 8.5% increases, lower than last year's upfront.
CBS won the 18-49 ratings category for the first time in 21 years (even
factoring out the Super Bowl telecast) and also won in viewers and in adults
25-54. The network had the top seven scripted series in total viewers and nine
of the top 15 scripted series in the 18-49 demo, most among all the broadcast

CBS is strong across the board, and it has the most stable
schedule, so other than buying CBS Thursday to reach those weekend consumers,
there is not an absolute must-buy show on that network either, media buyers

That's not to say advertisers aren't going to spend big
dollars on the network, and in this upfront they have once again, to the tune
of about $2.6 billion. But the CBS sales team gauged the marketplace and did
its deals at the best prices it thought it could get.

CBS drama NCIS was the most-watched series in all of
television among viewers and posted a solid 3.2 18-49 rating, which was down just
a tick from last season's 3.3. But the series also has a median age of 60, so
lots of older folks are watching and many advertisers hold them in less regard,
rightly or wrongly. Similarly, NCIS: Los Angeles averaged 15 million
viewers and a 2.7 18-49 rating, down only slightly from a 2.8, but it too has a
median age audience of 60.

CBS' top comedy, The Big Bang Theory, which airs on Thursday nights, was
probably its biggest upfront draw after averaging 15.5 million viewers and a
4.8 18-49 rating, up from a 4.4 last season. But there are some media buyers
who at least tried to negotiate by saying they could buy Big Bang
cheaper in repeats on cable where it airs on TBS.

Fox's top freshman drama this season, The Following,
was a solid performer but certainly not must-buy in the eyes of media buyers, and
the ratings declines of Idol, The X Factor and other Fox series resulted
in the network's 18-49 cumulative rating decline of 22% to a 2.5.

ABC's Dancing With the Stars still drew over 13
million viewers this past season but viewership was down about 4 million over
the previous season and its 18-49 rating declined double-digits to a 2.2 for
both nights it airs. And it also has one of the oldest median age audiences on
television -- 62.

ABC sitcom Modern Family is still one of the top
series on broadcast primetime, drawing 9.5 million viewers and a 3.5 18-49
rating, but that demo rating, while still solid, is down almost 15% -- creating
more negotiating fodder for media buyers.

Even ABC veteran drama series Grey's Anatomy, once
the flagship of the network's primetime schedule, saw its 18-49 rating decline
this season by almost 10% to a 2.8. While that number might still put the
series among the leaders in primetime dramas, it is down from the previous
season and that can be used by buyers in negotiations.

Other than The Voice, NBC has little to use to prop
up its primetime entertainment schedule, and ads on the still-popular Sunday
Night Football
telecast are sold by the NBC Sports sales team. While the
NBC plan was to sell both its cable and broadcast network properties together
in packages, media buyers have been slow in coming to terms with that strategy.

Broadcast upfront negotiations right now are about where
they were last year in terms of deals done, with prices being paid by the
agencies a few percentages points lower. While more ad dollars will again
trickle out of broadcast primetime and into cable, media buyers still recognize
that the quickest way to reach a mass audience on a national basis is via
broadcast primetime television. But that doesn't mean they're willing to
overpay for it.

The broadcast network entertainment divisions are clearly on
the hot seat. Media buyers for the most part have not been blown away by any of
the new broadcast primetime series scheduled to premiere this fall. That's not
to say the buyers won't be wrong. But if the networks go through another season
like the one that just ended, with few new hits and a continuation of ratings
declines for their most-watched series, the 2013 upfront could well be
duplicated in 2014. The broadcast networks need to develop some must-buy shows,
or else watch more dollars slip away to cable.

Media buyers say while there are few individual series on
cable that have the ratings and reach of broadcast network series (AMC's The
Walking Dead
in one of them), each of the more targeted cable networks has
a chance to grab a small percentage of dollars away from broadcast and
cumulatively that can add up to a big chunk for cable overall.

Media buyers also say that as the larger
ad-supported general audience cable networks spend more and more dollars on
original scripted programming, and look to cover those costs through ad
dollars, upfront negotiations with them could become as protracted as those
with broadcast.