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NBCUniversal, Fox Networks Group, ABC Make Early Progress in TV’s Upfront Market

Variety logo Variety 6/14/2017 Brian Steinberg
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NBCUniversal, Fox Networks Group and ABC are making progress in the early stages of the annual haggling over upfront advertising sales, according to people familiar with the discussions.

The companies have all begun to sell ad inventory during the period in which U.S. TV networks seek to obtain commitments for the bulk of their commercial inventory for the upcoming season. Executives on both sides of the table caution that talks remain in their nascent stages and that buyers and TV networks continue to wrangle over pricing terms.

The major networks made initial requests for rate increases that buyers say they hope to resist. CBS and NBCUniversal initially sought increases in the cost of reaching 1,000 viewers – a metric known as a CPM that is central to these annual talks between TV networks and Madison Avenue – in the low double-digit percentage range for primetime inventory, according to people familiar with the talks.  Fox and ABC have been seeking CPM hikes in the high-single-digit percentage range for primetime, sources said.

CBS and some cable companies have also begun to sell advance advertising commitments for their schedules. CBS has been asking for mid-to-high single-digit percentage increases, with cable networks working to tuck underneath what executives perceive broadcast networks are getting.

The nation’s five English-language broadcast networks last year secured between $8.41 billion and $9.25 billion in advance commitments for primetime in the upfront, according to Variety estimates –  the first time in three years they managed to break the $9 billion mark. The figures, of course, represent indications of advertisers’ intent to spend, not cold, hard cash. The final numbers typically show up in some form in year-end earnings reports.

Among negotiators, it’s generally understood that everything is flexible until significant deals are struck. The networks sought to force big rate increases that were quickly rejected by buyers. “Everyone came out high” with rate increases, said one top media buyer. “There’s not a buyer who will stand for that.”

The industry remains focused on NBCUniversal. As the company that has so many of TV’s top-rated properties – “Sunday Night Football” and “This Is Us,” for example – NBC has a lot of the audience advertisers covet most. NBCU is also selling ads for the Super Bowl, the Winter Olympics and Telemundo’s broadcasts of the World Cup.

As such, the rates NBCU accepts could influence what sorts of CPM hikes rivals are able to negotiate. “There is no clarity on NBCU, and the ceiling they may be setting,” said another buying executive. Once that matter is resolved, buyers suggested, the market could move more significantly.

“Everyone wants to pay less than a year ago, but the question is how much less,” this buyer said.

Fox Networks is seeing early interest in its FX cable network, according to one person familiar with talks and in a suite of new ad products the company unveiled at its May presentation. At that time, Joe Marchese, president of ad revenue for the 21st Century Fox-owned unit, called attention to Open A.P., a joint ad sales venture with Viacom and Turner that helps advertisers cut deals based on targeted audience segments sold across the three conglomerates, as well as promoting new commercial formats for programs offered via VOD.

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