Cable nets predict up to 10 percent bump

May 6, 2002  •  Post A Comment

Cable networks expect an increase in this year’s upfront, some say as much as 5 percent to 10 percent, but don’t tell that to advertisers, whose buyers are predicting a fairly flat marketplace. The discrepancies in opinion are expected, but both sides point to the same reason for their forecasts: cable’s growth.
Since audiences have grown, cable networks should be rewarded, networks said. To advertisers, that means cable should be treated like the overall television marketplace, which will be flat, they said.
They can agree on one thing: It’s much tougher to be a general entertainment cable network these days given that there are now so many successful niche networks.
“I believe that all general entertainment cable networks should be on notice to produce the most compelling programs they can, and that will ward off erosion from niche networks faster than anything,” said Peter Liguori, president and CEO, FX Networks.
Broad-based cable networks will experience erosion similar to what has occurred at the broadcast networks as cable has eaten into their share of audiences and ad dollars, said Rino Scanzoni, president of broadcast for Mediaedge:cia.
Market dynamics have changed for general entertainment cable networks during the past few years, and the channels are defining themselves more distinctly, carving out niches within the broad category they inhabit. Under that general entertainment umbrella, FX is refining its image as a cavalier, edgy, up-and-coming network; TNT as the home for drama; TBS as the site for contemporary adults; and USA as a network that is no longer just for guys but also for women.
While TNT and TBS are broad-based, they are also specific, said Mark Lazarus, president of Turner Entertainment Group sales and marketing for Turner Broadcasting Sales. TNT’s emphasis on drama comes from acquired series such as “Law & Order” and “ER,” coupled with original series such as “Witchblade” and original movies, he said. TBS caters to contemporary adults, especially with the launch of “Seinfeld,” “The Drew Carey Show” and “Home Improvement” as prime-time lead-ins later this year, he said.
“What I really think is [TBS and TNT] are clear substitutes for broadcast, but we are targeted in our approach. You can take a piece of your broadcast budget and move it to cable and not lose your reach,” he said.
This year may be the year of the little guy, predicted Sam Armando, media director for TV research at Starcom MediaVest. Smaller networks have great potential to increase penetration and ratings, especially with strong acquisitions such as Bravo’s purchase of “The West Wing” and “The Larry Sanders Show,” he said.
“General entertainment networks are fighting internally with what they set out to be-which is not the broadcast networks. They don’t want to become them, but their programming is,” he said.
Niche networks are poised to attack. “We’re doing to general entertainment what they did to broadcast 20 years ago,” said Roger Williams, president and CEO for Outdoor Life, which enters this year’s upfront as a metered network for the first time. Outdoor Life’s distribution has grown from 28 million to 41 million since last year, and the network is expected to bring in double the revenue it did in last year’s upfront, said John West, senior VP, advertising sales.
The risk that niche networks face as they grow is that they become broader, said Jeff Lucas, the newly installed president of advertising sales at USA Network, Sci-Fi Channel, Trio and Newsworld International. When a network such as Bravo acquires “The West Wing,” it distances itself from the niche model that has defined it. “You can’t get much broader than `West Wing,”’ Mr. Lucas said.
During this upfront, USA is revamping its image to be thought of as a network that is easy to do business with, as a top destination for men and women and as “niche by night,” since it will offer action programming on Wednesdays and mysteries on Fridays.
The network has a lot of ground to make up, but Mr. Lucas expects USA will realize some modest gains, along with cable as a whole. “The market looks stronger. You can see it in the budgets that are registered,” he said. Advertisers who backed out last year are returning, including telecom firms and automotive companies, he said.
High-single-digit growth for cable is a reasonable expectation, said Lynn Picard, executive VP of sales for Lifetime Television. Mr. Lazarus expects a 5 percent increase as the marketplace begins to return to normal levels.
Whitney Goit, executive VP, A&E Television Networks, estimated cable will see a 5 percent to 7 percent upfront increase that could possibly rise to 10 percent if networks offer innovative packages to advertisers, as AETN plans to do with more integrated marketing deals this year.
Not so fast, say buyers. With cable networks, where only a little more than half of the inventory is sold during the upfront, it’s important to look at the total market potential for the year, which will be closer to 3 percent to 4 percent growth, said Mr. Scanzoni. Cost-per-thousand growth will be limited because of the audience growth in cable, he said.
The entire TV landscape will be flat, said Annette Cerbone, senior VP and director of national broadcast for Universal McCann. “Cable is a mature business, and established networks are seeing erosion [just] as broadcast networks are,” she said. Besides the networks that reach the young 12 to 24 demographic, such as ESPN2, MTV and Much Music, there are very few must-buys on cable, she said. FX, however, is poised to capture a larger share of revenue because of its strong growth during the past year, she said.
The marketplace will surely be less dramatic than last year, and that is good for both sides, said John Rash, senior VP and director of broadcast negotiations for Campbell Mithun in Minneapolis. “It will not echo the galloping market of the ’90s, nor will it be the long, hot summer of 2001,” he said.