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MTV Wants Bigger Share of Upfront

May 12, 2003  •  Post A Comment

MTV is aiming straight for the Big 4 network’s share of the upfront market, targeting a 15 percent to 25 percent spike in absolute dollars by aggressively selling MTV Networks and its diverse branded cable channels.
The goal is not only to reposition MTV Networks as a multipronged powerhouse in an increasingly fragmented marketplace but to push all of ad-supported cable for a greater share of the upfront revenues.
“The challenge is to see if we can take some of the 60 percent of the money from the broadcast networks, [which] have only 40 percent of the viewing.” Said MTV Networks chairman Tom Freston. “The real game is not how much I can take from TNT but how much I can take from ABC, NBC and The WB. That’s where our growth is going to come from.”
In its first broadcast-style upfront pitch to Madison Avenue, Mr. Freston-accompanied by none other than Sir Elton John-made the point that MTV Networks collectively has the much sought-after 18 to 34 demographic viewer cornered.
According to Mr. Freston, MTV Networks outdistances all of its cable channel rivals in total day viewing among 18 to 49 and 18 to 34 adults. It delivers nearly 10 percent of all 18 to 34 ad-supported TV viewing, including broadcast, making it a “true alternative to broadcast.” MTV scatter time has been pricing an average in the low $20 per spot. MTV networks has tripled the volume of its advertisers in the past several years.
While MTV Networks’ collective and individual house brand metrics (from Nickelodeon to MTV to VH1 to TV Land ) are also impressive, some agency executives said they are not sure how many clients will lay chunks of spending on the line when they are being very targeted and deliberate in their spending.
“Advertisers have been telling cable for years that our distribution is too low; to come back when we have ratings; they have to buy too many networks and work with too many sales forces to get the kind of reach we want to get,” said Mr. Freston. “There always have been these excuses that have allowed this great pricing disparity between broadcast and cable. We are now at a tipping point. Where we are a lot more efficient. We do have the ratings, we do have the distribution.”
Emphasis on Originals
MTV Networks is expected to realize a 12 percent rise in earnings before interest, taxes, depreciation and amortization this year to about $1.7 billion on a 10 percent rise in revenues to nearly $4 billion.
Except for the music video on MTV, most of the programming on MTV, VH1, Nickelodeon and some other MTV Networks is originally produced fare. MTV spends more than $1 billion on programming annually. “If it’s choosing between an episode we can own and do what we want with, like paying $300,000 for Real World vs. paying $1 million an episode licensing off-network shows like Seinfeld, we’ll go with our own product,” Mr. Freston said.
“We have decided to build our in-house creative capabilities. It removes us from the normal supply-and-demand situation of the TV marketplace and of trying to buy those fewer and fewer hits at higher and higher prices to try and recycle and recover money spent,” Mr. Freston said. “In the face of all this fragmentation, we’ve increased our audience share and our ratings share. The more fragmentation there is, the more confused the consumer, the more stronger our brand.”