2010 upfronts ‘fast and furious,’ buyers say

MiC's industry inside sources say the pressure is on as nets are looking for double-digit increases and fast-moving inventory.

Fall TV looks strong, the economy is slightly rosier (the European debt crisis and oil spill not withstanding) and according to media buyers, Canadian broadcasters are feeling surprisingly frisky about this year’s upfronts as well.

In a series of conversations with MiC, senior-level broadcast buyers – who shall remain unattributed in this article – from several major agencies say that they’ve confronted a more aggressive stance than usual from the nets in the opening weeks of the upfront sales season. In a bid to create a high-pressure negotiating climate, several buyers said, network sales teams have been putting the heat on buyers with day-of decisions on pricing for first rate cards, and asking upwards of 10% increases in pricing.

Many attributed the ‘fast and furious’ nature of this year’s upfronts to a desire to recoup lost gains from last year. On the other hand, clients, who approved budget in early 2010 when things were still uncertain, were expecting stable pricing and even hoping to see a bit of deflation. Those days did not arrive: most buyers say that they expect, at final tally, to see price increases in the range of 4 to 6%, with an upper range of 10%.

Another negotiation point from the nets: PPM. These are the first upfronts with the new data and ‘broadcasters are using that as a club wherever they can,’ asking for rate increases that match the higher ratings under the new measurement, said one buyer.

It also started much earlier than normal, one buyer noted: ‘Usually you go down to New York, have some initial dinners and everyone starts to dance. This year the broadcasters were very aggressive in New York,’ one buyer said. ‘They wanted to talk deals, they wanted to talk volumes, even before they had committed to their own programming purchases. So that was unusual.’

When asked to comment on this year’s negotiating environment, CTV’s EVP of sales and marketing, Rita Fabian, offered the following: ‘The upfront market for conventional TV is buoyant, and specialty has been strong as well, with inventory moving earlier and faster than last year.’

However, an interesting evolution from last year’s upfronts, one buyer said, has been a new recognition from clients that the upfronts and long-term commitments provide the best cost advantage, rather than the short-term commitments popular last year.

‘I think what was proven is that the upfronts continue to be the cost advantage,’ one buyer said. ‘I think they recognize that there’s no better starting point than first rate card, especially for broadcasters who start at a good price point, so they want to get out there.’

Rogers’ strong play this year in LA – picking up two Bruckheimers and two J.J. Abrams shows – impressed many, and introduced a more competitive environment in which to negotiate. Also surprising for this year is the vitality of the Saskatchewan market, which many buyers said was the sprightliest in the country. Alberta is also a hot spot for buyers and sellers this year.

All buyers interviewed said client interest in TV remained strong, but one buyer pointed out that with so much changing in the broadcast environment today – the influence of PVRs and cross-platform media among the most disruptive – they are trying to change how the valuation of TV is perceived by all parties involved in upfront negotiations.

‘Overall, when we’re striking deals, we’re not just looking at content and price point, but also at trying to move away from that deal model that’s all about the CPM and the cost-per-point – if we’re always concerned about that, quite frankly, we keep perpetuating this business model that I think many stakeholders on all sides of the equation are like, what are we doing? If we’re not pushing it to more of a model of cost effectiveness, where does the insanity end? We’re fulfilling a foundation that we really want to break away from.’

Overall, many buyers seemed pleased about the ‘buoyant’ marketplace this year, but were largely taken aback by the nature of the negotiating environment coming off a recessionary year. Still, they reported, the surge in activity is a welcome change from last year’s upfronts, when things could not have been much more uncertain.