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Upfronts 2019: Ad-supported streaming on programmers' minds, if not in sales

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Upfronts 2019: Ad-supported streaming on programmers' minds, if not in sales

The glitzy New York upfront presentations to advertisers for the upcoming 2019-2020 TV season focused almost as much on ad-supported video on demand as on the linear programming lineups, even though some of the touted streaming offerings have yet to make ad inventory available to marketers.

Executives at NBCUniversal Media LLC and AT&T Inc.'s WarnerMedia extolled yet-to-be-named services they said will give advertisers opportunities to associate their products and services in brand-safe environments — a term reminding advertisers of ad-placement scandals on digital rivals — that pair with key data insights from in-house analytics divisions. Likely incentivized by the NBCU and WarnerMedia proclamations, CBS and The CW piled on, talking up their current multiplatform offerings.

The traditional network owners face continued pressure to innovate amid the success of subscription-video-on-demand kingpin Netflix Inc. and Amazon.com Inc.'s Prime Video, which siphon live linear viewership for many scripted network shows.

Yet despite their prominent placement in upfront presentations, the pending NBCU and WarnerMedia ad-supported VOD, or AVOD, entries will not be much of a factor during this year's upfront negotiations, during which programmers look to sell TV schedules to advertisers.

Catherine Sullivan, chief investment officer for North America at Omnicom Group Inc.'s Omnicom Media Group, said in an interview that the media buying agency has yet to be presented with any particulars about the AVOD offerings and is not expecting a preview during upfront negotiations. She noted that WarnerMedia, after a beta launch late this year, is not inserting ads until the first quarter, while the NBCU product will not bow until mid-2020. "They will be part of next year's [upfront] discussions," she said.

Scott Robson, an analyst with Kagan, a research unit within S&P Global Market Intelligence, also believes it is "probably too early for these upcoming AVOD services" to be used in this round of upfront negotiations. Moreover, Robson believes broad AVOD monetization is still in the nascent stages. He noted that while Viacom Inc. has high hopes for recently purchased Pluto Inc., its internet-based, ad-supported video unit, recent reviews of the service revealed a lot of unsold inventory, with direct-response spots and promos for other channels on the service also on display.

Streaming 'blueprint'

At The CW's May 16 event, Rob Tuck, executive vice president of national sales, reminded advertisers that the channel's episodes have long been available on its website and CW Seed, its home for digital-native fare, along with library content. Now counting almost 60 million downloads of The CW app, Tuck described the network's streaming efforts as "the blueprint for the rest of the industry."

For her part, Jo Ann Ross, president and chief advertising revenue officer, told advertisers May 15 that CBS Corp. is "not crawling in the streaming space; we're already running." News service CBSN launched five years ago, and the company rolled out three ad-supported vehicles in 2018: sports highlights and analysis service CBS SportsHQ; entertainment-oriented ET Live; and local news offering CBSN Local.

Donna Speciale, president of advertising sales at WarnerMedia, said its upcoming streaming platform will "complete the engagement loop" connecting its brands directly with consumers, while also providing viewer insights that can inform programming decisions.

'Bringing' advertisers in

Linda Yaccarino, NBCU's chairman of advertising sales and client partnerships, opened upfront week by taking aim at Netflix and Disney+. "While other companies are pushing advertisers out, we are bringing you in," she said.

Free to cable TV viewers, the NBCU service, housing originals and library fare, is scheduled to launch to 50 million Comcast Corp. and Sky PLC's video customers. It will be made available to other legacy distributors, with an eye toward 80 million subscribers.

Yaccarino called the yet-to-be-named service the "largest initiative in our company's history."

Consolidating Hulu

As reporters gathered with programming executives during a May 14 pre-upfront event, Walt Disney Co., which launched direct-to-consumer sports streamer ESPN+ in April 2018 and will debut Disney+ on Nov. 12, announced that it struck a deal to gain operational control of streaming proponent Hulu LLC and will buy out Comcast's minority stake in five years. Disney secured majority control of Hulu with the March 20 closing of the deal to buy myriad assets from 21st Century Fox Inc.

Fox Corp. is taking a different path, emphasizing entertainment and a sports-fueled lineup at FOX (US)'s May 13 upfront. Four days earlier, COO John Nallen, speaking at the company's investor day, said Fox Corp. will continue to engage audiences digitally through Fox Nation, the flanking subscription service for cable new leader FOX News Channel (US), and its various authenticated apps. The company, though, does not foresee a broad, sustainable direct-to-consumer offering at this juncture.