HGTV put on the spot

Apr 16, 2001  •  Post A Comment

The Home & Garden Television Network has once again been accused of questionable advertising practices.
HGTV is said to have allowed local cable systems to pre-empt HGTV programming-including the national commercials accompanying the programming-without telling the national advertisers.
In 1999, HGTV, which is owned by E.W. Scripps, conceded that local cable systems substituted local spots for some national commercials. At that time Scripps took a $2.5 million reduction in revenue for make-goods to advertisers because of possible underdelivery of audience levels.
In the latest brouhaha, a recent letter from the American Association of Advertising Agencies to HGTV states in part, “HGTV promised the industry in the past that the network would cease practices that created situations where the network delivered a different product than the buyer had been lead [sic] to believe he was getting. Unfortunately, the actions of HGTV … suggest that the network still does not deliver what it sells.”
The April 5 letter, a copy of which was obtained by Electronic Media, was signed by Jon Mandel in his role as chairman of the AAAA National TV/Radio Committee. Mr. Mandel, who is also co-managing director and chief negotiating officer of MediaCom Worldwide, the media arm of Grey Advertising, actually recently ended his tenure on that committee, but since this latest problem with HGTV came up during his watch he signed the letter.
“The biggest problem I have with this is that it appears that the advertisers were never informed about this pre-emption or of HGTV’s program pre-emption policies,” Mr. Mandel told Electronic Media after expressing his displeasure that the letter had become public. “The whole point is that we need to know all the ground rules before we actually buy a spot. And that’s what’s not happening.”
Indeed, in his blistering letter, Mr. Mandel wrote, “No one who was in the Committee meeting was aware that HGTV allows local systems to preempt programs and advertising (remember that HGTV previously allowed systems to preempt advertising). On polling various buying departments, we have found that this misunderstanding is not limited to the senior people who sit on the Committee.”
Mr. Mandel’s letter is in response to a March 8 letter he received from Steven Gigliotti, senior vice president of ad sales for Scripps Networks.
That letter, a copy of which was obtained by EM, explains an incident that had mutually been brought to the attention of Mr. Mandel and Mr. Gigliotti.
This is what happened:
In the fourth quarter, a buyer, Karen Shuster, purchased a schedule of spots on HGTV. Mr. Gigliotti’s letter asserts, “While watching on a local cable system, Ms. Shuster found, to her dismay, that during one half-hour time period the MSO in her city inserted a locally originated program over HGTV.” EM has learned that though it was not specified in the letter, the cable system Ms. Shuster was watching was Cox Cable in Providence, R.I.
The letter from HGTV explained that several years ago, to increase distribution, HGTV allowed cable systems to insert “locally produced half-hour programs over our network during three specific half-hours.” The letter stated that currently, only two (unnamed) multiple system operators still have that privilege in their contracts, and negotiations are under way to halt the practice by the end of the year.
Furthermore, the letter said, “When the Local Advertising Sales issue arose in fall 1999, we undertook a massive audit of not only our local ad sale inserts, but also of the number of cable systems inserting on us. … We determined that, even if all viewers served by an inserting cable system lost all three of the National time periods each day, each week, the maximum impact on a post-buy analysis would be between 1 and 2%.” (Emphasis in the original.)
In his response, Mr. Mandel wrote, “You also state that your research department estimates the worst-case fall-off in the buy in question to be 1-2%. The point of fact is that you can not deliver all promised impressions if you do not know what you delivered. Quite simply, HGTV does not know if the preempted programs are in markets that overdelivered the national average or underdelivered. Thus, you can not even know what the actual delivery of any schedule was.”
In the letter from HGTV, Mr. Gigliotti said the specific program pre-emption Ms. Shuster saw “was an unauthorized insertion by her local cable system.”
To that point, Mr. Mandel responded in his letter, “If you do not have a system to know about and make good pre-emptions, you can not know if you are delivering what you promised. Nielsen can not do proper research if they are not informed of what you ran where.”
Sources said HGTV has been working with Nielsen and is close to implementing a methodology to measure HGTV programming and also account for local pre-emptions. What is unclear is if the method will be able to somehow account for an unauthorized preemption such as the one Ms. Shuster viewed.
Mark Gosciminski, general sales manager, Cable Rep Advertising, Rhode Island, the advertising division of Cox Communications, said he is familiar with the HGTV policy on pre-empting programming. However, as to the claim that the program Ms. Shuster saw was an unauthorized pre-emption, Mr. Gosciminski said, “I know of no unauthorized insertions. None. I haven’t the vaguest idea of what they’re talking about.”
In another bone of contention between the AAAA and HGTV, the cable network claimed in its letter that in all sales plans sent to buyers and in all sales sheets, a statement is included stating, “Programs in these time slots may be replaced by programs of your local cable provider’s choice.”
In response, Mr. Mandel wrote, “In point of fact, we have not been able to find this statement on even recent sales plans. We have found it on order letters and contracts which are after negotiation documents.” (Emphasis in the original.)
Asked to respond to the AAAA letter sent by Mr. Mandel, Mr. Gigliotti said, “Recently we received a letter from the members of the Four A’s concerning preemptions of the HGTV programs by certain local systems. We believe there to be a number of inaccuracies within the content of that letter, but feel it is important that we resolve these issues directly with the Four A’s and not within the press.
“We are convinced that these issues involved a very, very small percentage of audience in four non-prime-time half hours. Even so, HGTV always takes the concerns of our advertisers very seriously and we have already, as I said, taken steps to address these concerns and will continue to do so.”
John Lazarus, senior vice president for broadcast operations at TN Media, is also a former member of Mr. Mandel’s AAAA committee and is familiar with the HGTV brouhaha. “They have to be more clear with what is running and what is not running,” he said. “Unfortunately, it makes you wonder about other cable networks.”
He said TN recently had a problem with AOL Time Warner’s CNN. “We had a situation where they preempted some spots and we didn’t find out about it until a month after the fact. To not find out about something like that is not acceptable. We went ballistic. It’s not a question of getting our money back or even that they got preempted. It’s a question of having to get spots on the air in the time frame when our clients want them on.”
To CNN’s credit, he said, the news network has been very responsive and is working closely with the media agency to change its system and make sure the time lag won’t happen again.
Larry Goodman, president, CNN sales and marketing, said, “Unfortunately, one person made a mistake. We’re jointly attacking the problem with TN, and we’re putting safeguards in place to prevent another occurrence.”