What Price Youth for A&E?

Nov 1, 2004  •  Post A Comment

With new high-rated younger-skewing programs, A&E Networks is reaping rewards from young-skewing advertisers. Longer term, media executives’ question where this will leave A&E’s traditional high-arts brand name with its viewers and sponsors.

For this fourth quarter, the A&E Network is up some 10 percent in ad revenue, while its sister network, The History Channel, is posting 20 percent to 25 percent gains, according to Mel Berning, executive VP of advertising for A&E Networks.

Last year A&E Network posted $274.4 million in advertising revenue and History Channel pulled in $203.6 million, according to TNS Media Intelligence/CMR.

Documentaries and reality shows such as “Airline,” “Dog the Bounty Hunter,” “Growing Up Gotti” and “Family Plots” have helped the network improve younger viewership and grab new advertisers.

Entertainment, electronics, Internet, wireless communications, retailers and younger-targeted automobile brands are some of the advertising categories that have raised media budgets. A&E, which had been strong in older adult demos 25 to 54, are now seeing a 33 percent improvement in adults 18 to 49 ratings for prime time and a large 75 percent hike in 18 to 34 viewership.

“The movie companies are doing a fair amount of business in those [demographic] categories,” Mr. Berning said. “They are up a good 20 percent to 25 percent.”

Like other entertainment-driven networks such as E! and Comedy Central, the better viewer numbers have allowed A&E to garner more ad money from movie-oriented promotions. In the past year, Warner Bros.’ theatrical movie “Troy” did a deal with A&E and the History Channel. A&E also did a special marketing promotion for Paramount Pictures’ “Stepford Wives,” when it featured, among other marketing elements, a special “Biography” focused on Bette Midler.

“I know everyone is talking about the fourth quarter as being fairly soft, but we are having a reasonable quarter,” Mr. Berning said. “We are well ahead of last year. For History Channel, for instance, we have already beaten last year’s fourth-quarter total [advertising revenue].”

Brand Image in Danger

While advertising executives are impressed with A&E’s and the History Channel’s gains, they wonder whether A&E has forever lost its traditional brand image as a high arts channel. They are concerned the radical change in adding contemporary reality shows could be costing it some older and more affluent viewers.

“They lost their brand equity in that network,” said one media buying executive. “They were a leader in upscale audiences and they charged accordingly. They have had problems and they are trying to address them. It would be great if they could address them with the next `Biography.”‘

Another West Coast media agency executive said, “They are looking for the cheap fix. They may be watering down or confusing their brand for viewers. If you are putting out your Jane Austen movies, have you chased away your audience with “Dog the Bounty Hunter”?

A&E claims it hasn’t lost any of its quality and that it is getting more critical acclaim than at any other time in its history, with major programming specials such as its recent bio-series “Ike.” This year A&E earned 24 Emmy nominations, more than any other basic cable network. A&E won four of those awards.

That has helped A&E continue to do healthy business with its stable of older-skewing advertisers such as financials, pharmaceutical and packaged-goods companies.

In many cases, Mr. Berning said, a number of advertisers, including retailers, that reduced spending on the network because of lower ratings in previous years are now increasing media budgets.