Broadcast and Cable Network Upfront CPMs Increase 8%; Scatter Up Even More

Overall broadcast network primetime costs-per-thousand increased an average 7% in the 2007/2008 Upfront season, an increase that while inflationary, marketers are recognizing as a bargain compared to current scatter market pricing. With broadcast networks delivering audience deficiency units to compensate for ratings under delivery issues next season and with continuing under delivery issues this season, dollars are flowing to cable, syndication, out-of-home and emerging broadband video options. In the 2006/2007 season, Upfront costs declined an average one percent.

Due to the complexities of the marketplace conversion from program to commercial live +3-day ratings, it is more difficult than usual to estimate individual network CPM increases. However, based on limited and incomplete data, we estimate the CW Network led the pack with 9.5% increases, followed by ABC at 8.0%, CBS and Foxat 7.5% and NBC, which was first out of the gate making Upfront deals, at 5.5%.

All inflation estimates are based on the commercial +3-day measurement and actual increases vary significantly based on individual negotiations and packages. Myers' estimates are based on a compilation of multiple network and agency information.

Andy Donchin, Director of National Broadcast for media agency Carat US, advised Jack MyersMedia Business Report, "Although in many cases the marketplace seemed to have commanded high CPM increases, the net gains to the networks when the 'C3 gap' is factored in resulted in only modest upfront inflation. This, coupled with the presently strong scatter marketplace, reaffirms our commitment to the Upfront negotiation process."

Hispanic networks, led by Univision, generated an estimated 10.0% increase. Morning News cost-per-thousand increases set the gold standard for the Upfront season, with the three major network morning news programs generating CPM increases of 11.5% on average. In all cases, actual negotiated pricing will vary by as much as 1.5 to 2.0 percentage points based on specific budgets, daypart and program packaging, network composition, sponsorships and special support services delivered by the networks, plus other unique aspects of each agency's and marketer's relationship with the networks.

Cable entertainment networks captured increases slightly higher than broadcast primetime, averaging eight to nine percent, with cable news CPMs growing an estimated 7.5%. Broadcast network evening news programs averaged 9.5% CPM increases for the 2007/2008 season. Broadcast network daytime CPMs increased 8.0% and late night network programming increased 5.0%. NBC captures nearly 50% of late night Upfront spending. In last year's (2006/2007) Upfront, morning news generated 3.0% increases; late night CPMs declined by 3.0%; daytime increases averaged 4.0% and evening news 2.0%. Cable CPMs in the 2006/2007 Upfront averaged 1.0% gains with syndication being generally flat year-to-year. In this year's Upfront market, high tier syndication generated estimated 7.0% increases while middle and low tier programming saw 3.5% gains.

Although total broadcast network costs-per-thousand increased almost eight percent, total primetime revenues for the five broadcast networks combined were an estimated $9.2 billion dollars, down from an estimated $9.460 billion spent during the 2005/2006 season. The declines reflect continuing broadcast network primetime ratings erosion, even though agencies and advertisers agreed to move to commercial ratings and accept live plus three days of time shifted DVR viewing (+3). Overall calendar year broadcast network revenues are projected by Jack MyersMedia Business Report to increase two percent to $18.936 billion with cable year-to-year spending increasing 5.0% to $17.7 billion.

National Television Upfront Cost-Per-Thousand year-to-Year Changes
2007/2008
Source: Jack Myers Media Business Report estimates based on industry compilation. Individual agency and advertiser changes vary significantly based on multiple factors.