PRIMETIME: It’s Upfronts Week! (What the Hell Does That Mean?)

Woo-hoo… it's Upfronts Week, the biggest week of the year for TV broadcasters! Which means… wait—what the hell does it mean?

I'll tell you what it means. It means-- first of all-- you should all click HERE to check out my interview on Gray Jones' TV Writer Podcast. You can also download it HERE on Apple and iTunes. If you've never listened to Gray's podcasts, they're a terrific trove of TV advice, stories, and insight from some of TV's top writers and producers.

Secondly, for those of you interested in attending next month's annual Great American Pitchfest, where I'll be leading a free seminar on pitching, I've arranged for a $50 discount if you mention my name when you register! (The Pitchfest offers many FREE seminars, but other classes and opportunities are only for paying attendees.) Click HERE to sign up... and just be sure to mention my name at the prompt. Click HERE for more info, or simply email info@pitchfest.com.

Anyway, onto the question at hand...

I always get tons of emails, and questions in classes, about exactly how Upfronts work—what they are, who goes, why they're so important, etc.—so I wanted to spend this week exploring that.

If you follow TV and/or advertising news, you know that this week is indeed the annual "Upfronts Week," traditionally the third week of May, when the five main broadcast networks (ABC, CBS, NBC, FOX, CW) hold giant New York presentations to announce their next season schedules. Here's this year's schedule of Upfronts:

(Spanish-language broadcasters Telemundo and Univision, as well as several cable networks like Adult Swim, TNT, and TBS, are also holding Upfronts this week. Other cable nets held Upfronts earlier; SyFy, for example, held its Upfront presentation at New York's Foxwoods Theatre on March 22.)

Upfront presentations tend to be massive parties where networks spare no expense wowing and impressing their guests. Previous years' Upfronts have included musical production numbers starring the likes of Marc Cherry, Teri Hatcher, and Seth McFarlane; short films starring A-list TV stars like Kiefer Sutherland; interactive carnival games and sports (NBC once had a play-along version of American Gladiators); stand-up sets from the network's comedy stars, such as Jay Leno or Jimmy Kimmel; last year's CW Upfront even featured a special performance by Katie Perry. Somewhere in the festivities, the network president announces the network's upcoming fall and midseason schedule, trotting out the stars and showrunners of each new and returning show.

So who are the guests at these multi-million-dollar, invite-only parties? Primarily, three groups of people:

Now, while Upfront presentations are often seen simply as sensational "coming out parties," intended to get the press, public, and local station heads excited about the upcoming TV season, they also serve an important practical/financial purpose.

They kick off TV's "Upfront buying season." In fact, even calling the parties "Upfronts" is a bit of a misnomer; the real Upfronts aren't the presentations themselves, they're the weeks of "upfront buying" that come afterwards.

Most new TV series premiere in the fall, usually around mid-September. These series are (obviously) filled with commercial breaks; each break contains a specific number of 30-second slots which can be sold to advertisers.

A network's total number of available ad slots is called inventory… and the network's sales department wants to sell as much inventory as they can—as quickly as possible. They especially want to sell as much inventory as possible before the fall season starts. After all, many new shows fail, and once a show's performance becomes evident, it's harder to command significant dollars for its ad space.
Thus, networks try to incentivize advertisers by offering lower prices or guaranteed audience levels to those who buy ad space "up front," ahead of September's premiere week. NBC, for example, may promise Colgate toothpaste that the new Wednesday night comedy, Up All Night(which looks hilarious), hits 15 million viewers. (I'm making these numbers up, just as an example.) If, once the show airs, it fails to hit 15 million viewers, NBC will have to give Colgate a "make-good" or "give-back," refunding Colgate's money or giving them comparable ad space somewhere else. But if Up All Night hits its 15 million viewers… or more… Colgate has gotten a bargain, because once Up All Night is a hit… the price of its ad spots goes up.

Here are some average upfront prices paid for 30-second slots during last year's 2010 upfronts:

(These numbers are averages because not every ad buyer pays the same amount for a 30-second spot. Each buy is a negotiation between the advertiser and the network—usually hashed out by middlemen called "ad buyers.")

Once the fall TV season starts, we enter the "scatter market," where prices of unsold ad slots begin to fluctuate. If a show does exceptionally well, bringing in a large number of viewers (especially viewers in the show's target demographic), prices of available ads rise. This year, advertisers buying space in the scatter market are paying almost 30 percent more for ad space in shows like those above than they paid during last summer's upfronts. (A few years ago, ad space in FOX's American Idol garnered about $750,000 per spot during upfronts. By the time the hit show aired, however, advertisers were paying over one million dollars!)

On the other hand, if a show fails to meet expectations, its ad prices drop… and the network may offer "make-goods" to advertisers who bought upfront ads at higher prices.

Thus, the upfront buying season offers both sides—networks and advertisers—a chance to buy or sell inventory at bargain rates.

(FYI—networks also hold back some of their inventory, intentionally, to sell on the scatter market. Typically, networks withhold about 25 percent of their ad space to sell during scatter, but if they don't feel they're getting the upfront prices they deserve, networks may gamble and hold back even more.)

Many people also analyze the upfront market as an indicator of the industry's health. In 2008, just before the financial collapse, broadcasters took in a whopping $9.2 billion of upfront ad sales. But once the recession hit, sales began to drop. In 2009, they made only $7.4 billion, causing many analysts to predict the end of the broadcast TV business model. Last year, broadcast networks improved a bit… generating approximately $8.5 billion during upfronts—an improvement, but still less than previous years.

This year, industry observers are predicting double-digit price increases for ad spots at most of the broadcast networks. Although viewership is down almost 10 percent, advertisers are recognizing that broadcast TV is still the most effective means of reaching a large audience. And with buyers already spending 30 percent more in the scatter market, networks are well-positioned to command higher prices upfront.

While it's exciting to watch the new shows and schedules being unveiled during Upfronts Week, this is actually—for the networks, the kingpins of the TV world—just the beginning of an even more critical period.

Having said that, while Upfronts Week is just beginning, many networks have already leaked their new shows and schedules. HERE is a link to Variety's special page of Upfront coverage. And HERE is a link to clips of NBC's newly announced shows!

I'll be back next week with more reader questions… and if you have a question you'd like answered, please email me at chad@chadgervich.com… or tweet me @chadgervich… or post it in the comments section below.

In the mean time, here's a clip of Up All Night, NBC's new comedy from Parks & Recreation writer Emily Spivey, starring Will Arnett and Christina Applegate (come on, with that cast... and a writer from the best show on television-- how could you go wrong?)... followed by a clip of Terra Nova, Steven Spielberg's new sci-fi thriller for FOX, which looks AWESOME!