Ad witching hour to be Friday the 13th for cable

Jul 9, 2001  •  Post A Comment

Will Friday the 13th turn out to be lucky for cable?
By then, many ad-supported-cable upfront deals are expected to be concluded, according to several veteran players in the upfront cable game. Almost universally, these sellers expect the upfront to be over before the end of the month.
But at least one savvy cable buyer scoffs at the idea that cable’s upfront will do anything except drag on all through the summer. “Wishful thinking,” this senior agency executive said.
By the end of the truncated Fourth of July holiday week, no cable network was yet shooting off celebratory fireworks or breaking out the champagne. Instead, cable’s budget dance with the agencies was still under way. And, as more than one cable ad-sales executive noted, there was fear in the marketplace. Still, some cable business was getting done.
So was some syndication business, though much of it was at drastically discounted rates from last year’s costs-per-thousand, according to studio sources. Overall, the syndication market is off by approximately 30 percent, the sources confirmed. As one former syndication executive now in network sales quipped, “When hamburger is selling at a discount, why do I need Hamburger Helper at a discount?”
Syndication sellers traditionally pin their hopes on the scatter market later in the year and are hoping for a strong one this fall to recover from the shortfall.
By the end of last week, the biggest general-audience cable networks were still jockeying for position with the agencies, much as the big broadcast networks had in June, until NBC broke the standoff with its CPM-discounts-for-share strategy.
At the Turner cable networks, deals at four “places” were concluded last week. One of those deals is part of a larger AOL Time Warner cross-platform arrangement that was still being hammered out at the other AOL TW entities, though its Turner aspect is finished. The other deals concluded so far are with StarCom, Chrysler and Media Edge, which has already completed deals at several other cable networks, including Lifetime.
By June 13, Turner expects to have concluded deals with seven more agencies that, with the four deals already finished, will bring the Turner cable networks to a 65 percent to 70 percent sold-inventory level, a spokesperson said.
Thus far, Turner’s business volume is “flat to down,” according to the spokesperson, who categorically denied that deals are being done at 15 percent negative CPMs. While the CPM discounts vary from deal to deal, the biggest drop so far has been 10 percent.
With the broadcast upfront finally over, most analysts are putting the shortfall at the six broadcast networks from last year’s record $8.2 billion upfront at around $1 billion to as much as $1.2 billion. Cable, when all is said and done, is expected to take a proportionally similar hit to its Y2K upfront gold standard.
At Fox Family, for example, “We’re seeing small decreases in our budgets-5 percent to 10 percent,” said Barbara Bekkedahl, executive vice president, advertising sales. Certain categories-autos and package goods, for example-were down even more at the end of the Fourth of July week, she added, emphasizing that many more budgets are yet to come in.
Like most of broadcast before it, cable is trading CPMs for share during the upfront. “Initially, our strategy is to shore up our share,” Ms. Bekkedahl said. “There is a scare in the market. There’s significantly less dollars, and we want to make sure we get a good portion of those dollars secured.”
At top-rated Lifetime Television, there was discounting for share, too, and a belief that ratings momentum and the desirability of the female audience would see the network through the tough marketplace. “I think we might see not just increased share but increased dollars,” said Lynn Picard, executive vice president, advertising sales, who predicted that cable overall would not take as big a hit to the bottom line as broadcast has. “The dollars still float well back into cable from the planning process to follow viewership,” she said.
Categories that will be down this upfront include domestic autos and computers, with the latter not being a big factor at Lifetime, Ms. Picard said, while “retail remains to be seen.”
Lifetime was one of the Media Edge buys, Ms. Picard confirmed. It was part of the recent ABC Unlimited Toys R Us deal, too. Ad-supported cable overall is doing deals in the CPM range of flat to down 10 percent, she said. Lifetime, like the other cable networks, would “play” the discount-CPMs-for-share game, “if somebody wants to support us with greater dollars [to] support our movie network.”
“Everybody is after share, share, share this year,” the savvy cable buyer said. “That seems to be the key. But what’s funny about that is that everybody’s budget is down, so it is a larger share of less. I’m not sure [the networks are] walking away with more money.”
According to the cable buyer, whose agency has not yet committed to any network in the marketplace, general-audience networks like Turner and USA are going to “take a real big hit,” while the niche networks are “in better shape.” Conceding that there is truth to the “general” perception that cable is offering discounts at around 10 percent, the buyer holds that some general-audience cable networks are discounting much more steeply.
That perception is fostered by the big cable networks’ competitors as well. “White-bread, broad, undifferentiated [cable] television is off,” said one senior sales executive at a targeted mid-tier cable network who maintained that returning budget registrations at the target mid-tiers are up around 10 percent to as much as 15 percent because, this year in particular, advertisers are looking for the “rich” demos the mid-tiers can provide. Among the networks benefiting at the expense of the big general-audience networks such as Turner, FX and USA, according to this sales executive are VH1, E! Entertainment and Comedy Central.
The general consensus, which this sales executive reflected, is that cable networks without “unique value”-that is, without a unique brand that attracts a specific, targetable audience-will be struggling for dollars and that syndicated programs that aren’t “must buys” on the order of “Live With Regis & Kelly” and “Rosie” will struggle, too.
One player that straddles the cable and syndicated worlds is World Wrestling Federation Entertainment, which sells the bulk of its advertising inventory itself. At this point in the upfront, the WWFE is “trending ahead” of last year, according to Jim Rothschild, senior vice president, North American sales. “Of the 10 upfront deals that are signed, none are at discounted rates, and some are at high single-digit percentage increases,” he said, calling the WWF’s targeted 12 to 34 demos the “key” to its success.
“The more money you spend [with a key network] in a down market, the better deal you are going to get,” Lifetime’s Ms. Picard observed.
Not every advertiser is buying that line or is even buying in upfront this year. Telcos, brokerages and other financial companies and insurance companies are among the categories of advertisers who have reduced or eliminated their upfront budgets. “AT&T is the biggest name that will not play in upfront but will play in scatter,” the mid-tier sales executive noted. One other big advertiser that is sitting out upfront, as it has in the past, is Prudential Insurance.
“I’ve heard every theory [of who is going to be hurt the most or helped the most this upfront],” said Ms. Bekkedahl. “Everyone’s got a theory that makes their particular network that they’re selling [not] get hurt.” If majority opinion is right, by Friday the 13th the time for theories should be over.
Chris Pursell contributed to this report.