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Without Must-Buy Shows, Broadcast Upfront Negotiations Will Take Longer

Lots of media outlets reported Thursday that some upfront
deals were beginning to get done on the broadcast network side, but by and
large, media agencies seem to be in no great rush to pour money into network ad
coffers for next season. Budgets have been coming in slow from clients and the
agencies have, in turn, been submitting them slowly to the networks.

By this point last year, Fox was just about done with its
upfront selling, but it is seemingly not close to being that far along this
year. Fox has always been an early doer of deals with certain auto clients,
movie companies and retailers that are particularly interested in buying the
network's Thursday night shows. Those shows include The X Factor in fourth quarter and American Idol in second and third quarters. And Fox clearly helped
itself draw more advertiser interest on the night for the coming season by
moving Glee to Thursday at 9 leading
out of X Factor in the fall and out
of Idol beginning in January. That
younger median age audience of Glee,
39, on Thursday night is exactly the demo that movie companies and
retail chains are looking to target for weekend openings and store sales
events. That's why Fox is busy right now writing their ad business.

But most agencies don't seem to have great urgency across
the board in wanting to rush in and put all their clients' money down.
"It's not really up to us about how the upfront moves," Jo Ann Ross,
president of network sales for CBS, said. "It's up to the clients."

An executive for one of the larger spending media agencies added
that there is no strong motivation on the buyer side to move quickly in this
upfront. "We want to make sure the pricing is right," the agency
exec said. "That's what our clients want. They want us to maximize value,
and that means doing the right deals at the right price."

At this point, they can at least afford to take their time
and make the networks sweat a bit.

The problem all the networks could potentially face is
that regardless of ratings, most media agencies and their advertiser clients do
not believe there are any must-buy shows on broadcast television, returning or
new. Gone, the buyers say, are the days when media agencies could be fired by
their advertiser clients for failing to get them a suitable amount of ad time
on the Thursday night NBC "Must See TV" block of series. That was more than a
decade ago and times have changed.

Yes, American Idol averages 17 million
viewers per night, still a huge audience, and averages a 5.1 18-49 rating for
its two weekly shows, but Fox has the luxury of adding more episodes during the
season, or extending the length of the shows if advertiser demand is
there. So most marketers know that if they want to get into Idol, they probably will be able to.
There is less of a chance of being shut out than there was in the heyday of big
Thursday night hits like Seinfeld and Friends that were limited
in episodes and were only a half-hour each.

On ABC, Dancing With
the Stars
 draws about 16 million viewers, but it has one
of the oldest median age audiences on television. It's nice to reach a
mass audience, but when it has a median age of 60, it takes some of the
luster away for many advertisers. DWTS
averages about a 3.0 18-49 rating, which is not bad, but not exceptional for a
show that is reaching so many viewers overall.

CBS Corp. president and CEO Leslie Moonves said he expects
his network "to lead the pack in dollar volume and CPM rates," and
CBS may ultimately do that. Other than Fox's Thursday, which certain
advertisers are flocking to, CBS clearly has the best story to tell and the
best schedule to sell. Advertisers love stability and CBS has the most stable schedule
by far. It also has become a major player for the 18-49 demo ad dollars. This
past season, CBS had nine of the top 20 series in the 18-49 demo. It also had
seven of the top 10 sitcoms in the demo and 6 of the top 10 dramas. And moving Two
and a Half Men
to Thursday night, leading out of the highest-rated 18-49
sitcom on television, The Big Bang Theory, is going to bring CBS a nice share of those Thursday ad
dollars once the advertisers are finished doing business with Fox.

Can CBS hold out and get double-digit cost-per-thousand ad
rate hikes? Moonves says the network will get its CPM number or it will hold
back its ad inventory. What CBS has going for it is it has so many high-rated
shows, and advertisers will need to be in a lot of them and can't totally
avoid putting money down on the network. And if any show has a case to make for
being "must-buy," it is The Big Bang Theory because it does
have limited first-run inventory and airs on Thursday night. But buyers will
argue that there are so many comedies in broadcast primetime now, they can buy
around Big Bang and spread their dollars into other sitcoms.

It is also not helping the broadcast networks that none of
the new shows have the buzz within the media agencies and ad community of being
a breakout hit. All shows are bought in packages and most deals are based on
returning shows rather than new shows, but having a major buzz-worthy series or
two can enhance a network's upfront position among advertisers big-time.

Industry reports Thursday quoting media buyer sources said
Fox was doing deals in the high single-digits. But at least one major media
agency said Fox had initially sought "mid-teen" CPM increases, so if Thursday's
media reports are accurate, then Fox came down significantly from its opening
price, and that would seem unlikely if it is doing deals for its best inventory
on Thursday nights. That should be among its highest-priced inventory and a
night that the network would fight to protect. These early reports, therefore, don't
seem to hold much water. Fox, like all the networks, is not commenting.

Cable Draws the Buzz

Regardless of the pace of this broadcast upfront, and
regardless of the various CPM rates charged for each deal, the networks will
cumulatively bring home about $9.5 billion in upfront ad commitments for
primetime. Each client has a certain ad budget to get spent and the agencies
have to eventually place those dollars. But in talking to the buying side,
there doesn't seem to be any grand excitement about the broadcast programming.
In fact, there is more buzz among agencies and advertisers about many of the
cable network shows being offered by Turner, USA, History, Discovery, FX and

Cable networks have traditionally done most of their upfront
selling after the buyers have completed their broadcast deals, mainly because
cable has more inventory to sell. However the big ad-supported cable networks
have more recently been running their top-rated scripted shows like broadcast,
with less repeats and "encore" airings -- and, in some instances,
running them in shorter arcs. That puts more of a premium on the ad inventory
in those shows, and could motivate some agencies to look to do some cable deals
simultaneously with broadcast.

Expect more deals to get done next week, and for Fox to most
likely once again be the first broadcast network to complete its upfront
selling. Remember, Fox only has 15 hours a week of primetime to sell, while
ABC, CBS and NBC have 22 weekly hours, plus other dayparts to sell, while Fox

NBC Brings Up Rear

Media buyers did say that right now, their focus is not on
NBC, and that many have registered budgets with The CW before they have with
NBC. While The CW's live ratings were down significantly this year, the network
gains about 20% more audience in DVR mode, which many media buyers find not useful
for their clients because of potential ad skipping. But The CW also streams all
of its shows on its website beginning eight hours after they air on the TV
network, and sells commercials separately for those shows -- commercials that cannot
be fast-forwarded through.

"The CW can deliver an important niche audience and we
buy the network that way," said one media agency executive. "They are
starting to sell their content beyond the first screen and that's a good
thing." And the exec added that despite the network's ratings
declines this past season, "The CW is still in the mix for our clients [when
they are buying broadcast]."