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Agency-Side Scuffle Ensues over C3 Ratings

The so-called C3 rating has served to artificially tighten the television ad marketplace, sending scatter prices soaring, said Bill Koenigsberg, founder and CEO of Horizon Media, during an International Radio & TV Society panel.

The rating is something the networks didn’t ask for and didn’t want; it was “forced upon them by some of our larger competitors… and it has backfired,” he is quoted as saying in Mediaweek.

According to the article, Koenigsberg was referring to Rino Scanzoni, chief investment officer of GroupM, who got the upfront marketplace started in June with an $800 million deal with NBC U based on C3.

Koenigsberg said that even with DVR viewing added into the mix, the commercial ratings would lead to lower GRPs, resulting in a reduced supply. This would give networks an advantage and the opportunity to raise prices, writes MediaPost.

Though the first batch of commercial ratings for the season has not yet been released, program ratings are down, which suggests that total GRPs will fall.

Scanzoni said in response that claiming the C3 has anything to do with the inflation of prices is unjustified.

 

“If you look at the program ratings for the five broadcast networks this season, you’re seeing 11 percent to 12 percent erosion. When you factor in live plus 7, it’s closer to 2 percent… So there’s virtually no erosion because people are watching on a delayed basis.”

Scanzoni said that, in the fourth quarter, the five networks will give out $300 million in makegoods against last year, when the total scatter market was $700 million. Clearly, he said, that has a significant draw down on remaining inventory. It will all sort itself out in 2008, he said.

Scanzoni says Koenigsberg’s remarks are an attempt to justify his comments, before the upfront got underway in June, to the effect that the agency would not make deals based on anything but program ratings.

Besides GroupM, the company that made the biggest splash during the upfront, ratings-wise, was Starcom, which did 17 deals based on minute-by-minute data. Starcom’s executive vp, chief broadcast investment officer John Muszynski, said that the networks actually demanded the new currency because they insisted on being compensated for DVR playback. “I think folks are trying to point to a buyer or a group of buyers who dictated the terms of C3, but let’s be clear - the networks wanted it. It was a compromise position for them, but they clearly needed to get paid for some of that time-shifted viewing,” he is quoted as saying.

On October 15, Nielsen will release the fall season’s first group of live-plus-three-day numbers (the 3 in C3). Both networks and buyers are anxious to see how the ratings will fall out and who got the best side of the C3 deals.

As for Koenigsberg, he managed to cut upfront deals without using C3 in a move that he calls doing “an exceptional job by our clients.” He adds, “I can’t say what we can do going forward, because unfortunately, C3 is the currency. It’s not going anywhere.”

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