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Upfront Cable Bump to $6 Bil

Jun 2, 2003  •  Post A Comment

Cable is heading for its own record upfront.

The same rising upfront tide that carried the broadcast networks to a record dollar take in a pre-Memorial Day Weekend buyers’ frenzy is lifting the top- and mid-tier cable networks to new highs, too, with some estimates putting the total dollar volume for cable as high as $6 billion, up 25 percent over last year, which would translate into a $1.2 billion increase over 2002.

Syndication, meanwhile, managed a 12 percent average bump in prices to pull in around $2.3 billion for the upfronts.

Other estimates of the cable upfront total begin at $5.2 billion and range upward. Even that low-end estimate, however, would set a new dollar record, fully $400 million over cable’s previous upfront high.

That rising tide will not lift all cable networks equally, said Tom DeCabia, executive VP of PHD USA, a New York-based media buying firm. “The cable guys are so much different than the broadcast guys, in that they have a lot of inventory, they’re not all chasing that same dollar, that same demo,” Mr. DeCabia said. “Some guys are going to hold out; some guys are going to sell what they can because there’s a lot of inventory that they have to sell to meet their nut. Everybody plays a different ballgame in this arena compared to what the broadcast guys are doing.”

Off-network series led the way for the syndication sector, as upper-tier series pulled in prices as much as 30 percent higher than last year, although lower-rated series still managed an 8 percent hike in rates.

Some buyers also are privately complaining that the biggest cable networks have been trying to stampede them into making deals quickly, using the same essential broadcast-network argument about limited “desirable” inventory-despite the fact that there are more than 60 ad-supported, Nielsen-measured cable networks and that cable overall suffers from a glut of available time.

“If that’s the number that they’re touting, more power to these guys,” said one senior cable buyer, when apprised of one of the lower-end cable-upfront estimates. “I don’t know where that number’s coming from. Are they just trying to panic the market and follow suit with the network guys?” said the buyer, who requested anonymity because deal-making was still under way.

Although the variety of niche and targeted cable networks means a wide variety of costs-per-thousand, too, many larger, broadly distributed networks were asking for, and getting, increases in the 14 percent to 17 percent range, according to several sources on both sides of the negotiating table.

A record cable upfront is good for the spot business, said Marc Bodner, VP, marketing and communications, National Cable Communications, the leading spot-cable rep firm, which is jointly owned by three large multiple-system operators, Comcast, Cox and Time Warner Cable. “If the networks are up 15 percent, then spot’s going to be up 30 percent.”

At the so-called top-tier networks-the flagships of Turner Networks, MTV Networks, Discovery Networks, Lifetime Networks, Universal Networks and others, senior ad sales executives are generally claiming double-digit dollar and CPM increases.

That’s certainly true at the Discovery Networks, where ad sales President Joe Abruzzese expects to be 80 percent done by the beginning of this week. “Dollar volume that’s been registered with us is up over 75 percent,” he said, “and we haven’t given up price to get the volume.”

It’s true at MTV Networks, too. “We’re ecstatic,” said Mark Rosenthal, president and COO of MTV Networks. “We’ve closed significant, significant business at heavily increased volumes over last year.” On average, CPMs are “all in double-digit territory,” he added. “This market is historically huge.”

“Definitely up, CPMs,” said Lynn Picard, Lifetime’s executive VP, ad sales. “There’s just more volume period out there … We’re not turning away volume, but we are concentrating on value increases.”

Ms. Picard was one of several cable sellers to say that this is the year that cable stopped being viewed as “hamburger helper” in relation to broadcast, “especially in the top tier, where the reach is there as well. I do think there has been a shift,” she said, pointing to cable’s high-visibility original series and its sharply increased programming budgets.

Smaller Nets Continue

Though the upfront is essentially over for some of cable’s biggest players, many mid-tier and smaller cable networks are still negotiating and their upfronts won’t be over until later in June, with the last wheeling-and-dealing expected to continue right up to the Fourth of July break.

“The Turners, the Lifetimes, the USAs feed first,” said one ad sales executive at a smaller network.

“If this pace continues, we’ll be done well before the Fourth of July,” said Charlie Collier, Court TV’s ad-sales executive VP, “and I like the sound of that.” His expectation was that “north of 60 percent” of the inventory would be sold in the upfront.

Not surprisingly, one of the more modest goals is the brand-new Tennis Channel’s.’ “We’re not really worried about how much we sell in the upfront versus plan,” said head of advertising sales David Safran. “This is a wonderful opportunity for us to be able to participate and start long-term relationships…. Whatever we gain in the upfront is just gravy for us.”

Beyond “tennis endemics,” the categories showing great interest in Tennis include automotives, pharmaceuticals, telecommunications, packaged goods and financial services -“advertisers looking to reach an upscale adults 25 to 54,” Mr. Safran said.