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Upfront's Upside

Syndicators were right: The syndication upfront closed last week with syndicated programs boasting the strongest increases they have seen in years. Pricing for CPMs (cost per thousand) was up as much as 9% for top-rated shows, while volume was up some $200 million to a total of nearly $2.3 billion.

“We're seeing very good, healthy increases that seem to be at least consistent with the marketplace or even a little bit better,” says Bo Argentino, NBC Universal's senior VP of sales.

Syndicators were bullish on this year's upfront from the start for a few reasons. In 2007, the upfront was up 3% from 2006, indicating to many that this year would be up as well. An even better indication was a very strong scatter market.

“Advertisers feel it's better to protect themselves and get into the marketplace now,” says one syndication executive. “A 4%, 5% or 6% increase is something they can manage. Advertisers feel it's far better to pay that than 20%-30% increases in the scatter market.”

Those expectations were confirmed when the broadcast and cable upfronts also outperformed expectations.

The five broadcast networks—ABC, CBS, NBC, Fox and The CW—collectively sold $9.2 billion in advertising, up from last year's $9.1 billion. That was true even though The CW was down $220 million, largely due to its handing over of three Sunday primetime hours to Media Rights Capital, a production venture that is partly backed by the Endeavor talent agency. The broadcast nets also boasted CPM increases in the high single digits.

Cable networks were still negotiating deals at presstime, but were expected to improve upon last year's $7.68 billion take by a high-single-digit percentage.

Those strong sales come in the face of several seemingly contradictory indicators. First, the economy looks precarious, with gas prices higher than ever. Second, ratings for syndicated shows are down year-to-year across the board. In fact, for most of the year, CBS's Judge Judy was the only first-run strip to show any improvement over 2007.

In television, however, lower ratings means less inventory, which means higher pricing for the best-performing shows. And daytime represents an “efficiency buy,” with CPMs costing a third less than primetime and half as much as late-night.

“Daytime's advertisers are predominantly packaged-goods companies who just want to have their message repeat,” says one executive. “Their brand identity stands out because viewers are constantly seeing it. Daytime is valuable, inexpensive, and it's a way to get your message across on a repetitive basis.”

Syndicators say that thus far, advertisers have taken well to their new shows. Those include Warner Bros.' The Bonnie Hunt Show and NBCU's Deal or No Deal. Bonnie is gaining traction because it's paired with Warner Bros.' The Ellen DeGeneres Show in many key markets. Meanwhile, Deal “is turning out to be every bit as good as I thought it would be,” Argentino says.

Besides efficient pricing, daytime also offers advertisers many other reasons to buy. The daypart breeds familiarity, which in turn creates habitual viewing. Shows such as CBS's genre-toppers The Oprah Winfrey Show, Jeopardy!, Wheel of Fortune, Entertainment Tonight and Judge Judy all have been on the air for many years, usually in the same time slot on the same station. And syndication is fresh, with fewer repeats than network primetime or cable.

“At the end of the day, television reaches more senses than any other medium,” says Dave Morgan of Litton Entertainment, which saw its locally customized show, Storm Stories, sell well in the upfront. “To motivate your consumer to act or think in a way that will deliver your marketing and advertising strategy, you want every one of those senses in play.” 

For complete coverage of the upfronts, click here.