NBCUniversal finished its upfront negotiations on a high note, citing CPM increases of 12.5% for prime-time slots and even higher percentages for some networks – 13% on USA, for example.
Comparatively speaking, NBC aimed for 7% to 8% CPM increases in 2015, but settled in at about 5%, which speaks to the strength of this year’s upfront market.
That strength could suppress development of the programmatic TV market for a year or more, as AdExchanger reported earlier this month.
NBCU executives also claimed the broadcast network saw 10% growth in volume of inventory transacted upfront (for the broader cable network, it was a 5% increase), with about 20% to 25% of volume remaining for scatter as the network aims to bring “more profitable advertising” into the mix.
“We’re taking advantage of the fact that it’s a strong ad market both in scatter and upfront,” said NBC CEO Steve Burke during parent Comcast’s Q2 earnings call on Wednesday. “We realize digital is an important part of the mix, but if you’re an automotive or beer brand [and you] have a big product launch, you need the reach and depth [of TV].”
NBC also has big TV tentpole opportunities on its side.
NBCU claims it will draw three times the ratings of ABC, FOX and CBS on any given night of the Olympics, and that NBC has already fulfilled its Olympic “quota” three weeks prior to the official start of the games next week.
As a point of reference, NBC made $120 million in profit during the Olympic games in London in 2012, which included both ad sales and affiliate fees paid by telco providers, and said it expects to pull an even greater profit at the 2016 games in Rio de Janeiro.
NBC claims its interactive TV system X1 now has 40% market penetration, and it plans to roll out an Olympics dashboard combining live TV, digital and on-demand content searchable from the X1 remote.
In addition to seasonal ad spend increases due to the Olympics and elections, analysts peppered Comcast and NBC management with questions about internet and TV service Xfinity’s expansion, as well as about its over-the-top TV strategy.
“We’re making sure we’re in every bundle because we have more channels and eyeballs than anyone else,” Burke said. “We do think the vast amount of OTT subscribers will be incremental and additive to NBCUniversal and Comcast as a whole.”
That said, Comcast called the discussions between networks and MVPDs “contentious,” and said it didn’t plan to put all its eggs in a single basket.
Because a bulk of Comcast’s cable net revenue comes from key channels like NBC, Bravo, E and USA, it makes more sense to support those channels as integral parts of external bundles.
“You’ll see us and others continue to trim marginal channels that are not fully distributed,” he said. “You want to put most of your money into your biggest channels. The good news for us, and you’re seeing this with OTT, is if you have NBC you really need to have it in your bundle.”
