The upfront market is nearly done, as sports acts as both negotiation driver and obstacle

“From a partner perspective, we still have a lot of the long tail to go, but for the most part, most of our priority partner deals have been completed,” said one investment executive at one of the holding companies who, like all others reached for this story, spoke on condition of anonymity.

“We’re done with all the majors, including Amazon, Netflix and the streamers,” said another head of investment at another media agency. “We’re mostly wrapped up, save for independent or tier-two cable network groups.”

According to five investment execs Digiday spoke with, somewhere between 75-80% of upfront spending has been committed to the major sellers in the market. Overall, according to the buyers, total upfront dollar commitments were slightly down, as they were in last year’s market, but those sellers with the right combination of content (read: sports) and ad-tech packaging walked away with some dollar-volume increases — from NBC Universal to Amazon

Sports has acted as both the primary mover of the marketplace, but then became the occasional obstacle to progress when there was too much of a gap in price negotiation, according to all the buyers. Still, sports content continues to lead the way in what media companies are putting on offer. For the second year in a row, the Super Bowl is largely sold out thanks to Disney putting its game-time inventory up for sale this year (NBCUniversal did the same last year).

In the gap between asking price (Disney was said to be seeking $10 million per 30-seconds of ad time) and where pricing ended up (broadly somewhere in the $7.75-$8 million range, according to the buyers), negotiations got bogged down until a happy medium could be reached. 

“Were they asking a lot for Super Bowl? Yes, they definitely were,” said the second buyer. “Did they have extremely high demand that warranted them taking an aggressive position? Yeah, they did. So, I get where they were coming from. Did I like it as a buyer? No, of course not. I want to negotiate and pay less. But I understand the position.”

The same dynamic, according to the buyers, happened with Netflix, which is selling access to the Women’s World Cup. Given the surprising strength of ratings for both Fox and NBCU’s Telemundo of the just-concluded World Cup, buyers said they were struggling to finalize deals that included WWC inventory. 

It’s in some part because of “match spending,” a relatively new term in the parlance of media negotiations, even if the practice has been in play in some form for years. It essentially means sellers try to secure ad commitments from agencies in non-sports content if those agencies want to get into to sports content like the Super Bowl or WWC — or NFL, NBA, college football or March Madness (men’s and women’s), which are the big-ticket sports items every year (unlike the Olympics, which only come around every other year). 

Buyers tend to go along with the selling tactic because sports is the hottest content in the marketplace — even moreso than big-ticket entertainment. And all the major streaming services, from Amazon to Netflix to Hulu and even Apple TV, have some amount of sports to sell as a means to land dollars into entertainment content. 

But with so much available inventory, buyers agreed that pricing levels have remained stable, despite streaming’s popularity. And with marketers overall spending a bit less, the market has played out more as a volume play than a pricing endeavour — not unlike 15-20 years ago when cable networks had to resort to the same tactics 

“Every single long-tail cable network is fighting for dollars,” said another buyer. “The money’s down, but they still want [to fill their goals]. They’re also trying to make their streaming properties a bigger part of the upfront — instead of putting dollars on linear, they want you to put dollars on streaming.”

 Flexibility on multiple layers was a key to getting buyers to commit their clients’ dollars. 

“If you had a lot of sports, you probably benefited. If you had a robust digital offering, you probably benefited. If your data offering melded well with each of the individual holdcos you were talking to, you tended to benefit,” said the first buyer. “If getting rid of waste was important for us and you could come to the table with better terms on non-working fees, you tended to benefit.”

That flexibility became all the more important to buyers given the uncertainty a few sellers faced as the market has moved. For one, Paramount’s proposed acquisition of Warner Bros. Discovery remains up in the air, as a judge earlier this week put a pause on it. Meantime, Fox is in the process of trying to purchase Roku and NBCUniversal’s parent Comcast is looking to offload its entertainment properties. 

But another investment head pointed out that those uncertainties will get ironed out, which brings the discussion back to what’s on offer for sale. “I think it’s really more about, who has the best offering? Who has the content? And who has the product offering to put it together best?”