Although clients are still hammering out their budgets, early indicators suggest the upfront marketplace will prove slow-moving and contentious, with both sides at an impasse on pricing. Three of the broadcast networks (ABC, CBS and Fox) are looking to secure hikes at or near last year's levels, which ranged from 7%-10% compared with the previous year. On the other side of the table, media buyers refuse to so much as consider rate increases, given the foul economic environment and an ongoing GRP bleed-out. (In the 2008-09 TV season, only CBS grew its deliveries of total viewers and adults 18-49; in the aggregate, the Big 5 were down 3% and 6%, respectively.)
Buyers said they'll cut deals at flat-to-negative CPMs versus last year across broadcast and cable. That sort of declarative assessment has sales executives shaking their heads.
"The agencies are going to want to be really careful about what they bring to the market," said one ad sales chief speaking on condition of anonymity. "If they really want to press it, if they really think they're going to get rollbacks on volume and pricing, then (forget) it. ... I'll just hold back for scatter."
Another sales exec echoed that sentiment, saying that while he understood why clients might be baying for blood, nearly every conceivable scenario sees cable profiting from a squeeze on the broadcast nets.
"If the client is looking for minus-10 and the network guy wants a plus-two, the buyer's in a stalemate," the exec said. "It's one thing to say you're three or four points apart; it's another to have to bridge a 10-, 12-point gap. And the longer they stare each other down, the more likely a bunch of these guys are going to say, '(Forget) it, let's buy our cable now.' "
As onlookers try to predict which fighter will come out swinging first, in recent days network higher-ups have begun to telegraph their punches. Last week, CBS executive vp and CFO Fred Reynolds told investors that his company would "probably be the upfront leader because we have the ratings to do it." He added that because client budgets remain unsettled, CBS wouldn't close its deals until the Fourth of July at the earliest.
Reynolds sidestepped questions about CPM increases but insisted CBS will look to be compensated for its ratings performance. "We want to get paid for our content," he said. "In some ways, we way overdelivered. We had no ADUs in the 2008-09 broadcast season, which says we probably could have raised our guarantees."
Since the broadcasters trotted out their fall lineups a few weeks ago, buyers have called this year's content the strongest in years. Although CBS and ABC were judged to have the strongest schedules, the enthusiasm for the network harvest extends to NBC's comedies as well. (In Rumsfeldese, the 10 p.m. Jay Leno experiment remains a "known unknown." Leno might be "a proven talent, but the show is unproven, and that's what makes buyers skittish," Reynolds said.)
Not all buyers are down on the Leno gambit, and already it seems the move to 10 p.m. has inadvertently spared the rest of the industry a lot of agita.
"NBC looks at Leno as the fulcrum," one national TV buyer said. "They have to: It's going to account for a quarter of their primetime. Because this is for all the marbles, they're taking a lot of time to work on their live commercials and integrations, and that may hold them off."
Said one sales chief: "Between the rollbacks clients are already screaming for and their ratings erosion, NBC will be out of sale by the time they move $1.3 billion. They'd be much better served if they were to hang back and let (ABC's) Mike Shaw or (Fox's) Jon Nesvig or (CBS') Jo Ann Ross lead things off."
Regardless of who takes the plunge first, volume will drop all the way down the line should clients prove intractable. Analysts eyeball a 13%-15% broadcast decline from last year's $9.1 billion take. Bullish sales execs argue the drop won't be any more dire than 10%. Of that $900 million, half to two-thirds will remain in clients' hip pockets, while the rest might go to cable. In a best-case scenario, that influx would bring cable close to last year's $7.65 billion haul, offsetting much of what will be left behind as sellers hold back more inventory for scatter.
"This has all the earmarks of World War I and trench warfare," one cable sales head said. "We're 17, 18 months into the recession -- there's something to be said for that. We've done business closer and closer to airdate and survived, so if we have to get up from the table and try to get those dollars back in scatter, that's what we're going to do."
As the three sides wait for the dance to begin, others downplay the upfront's overall impact.
"At best, you can draw a rough outline on the health of the overall TV market if you look at how everyone does in the upfront," one buyer said. "I don't know when this all turned into such a spectator sport."
Anthony Crupi writes for MediaWeek.