The creation of Comcast Network Advertising Sales to oversee a companywide advertising sales effort sets the stage for the nation’s largest multiple system cable TV operator to ramp up cable- and satellite-delivered content services. Comcast Corp. already has interests in E!, Style, Outdoor Life Network, G4, the International Channel, Golf Channel and other cable channels.
“When you put these businesses together they are very substantial,” said Stephen Burke, executive VP and chief operating officer of Comcast Corp. and president of Comcast Cable.
The creation of CNS under Dave Cassaro (reporting to Mr. Burke) really represents a shift. Comcast historically has given each channel a lot of freedom, acting more like an investor than an operator. That no longer works on the ad side, Mr. Burke said.
“They’re growing very quickly. We need to be smart in terms of identifying opportunities and working together and making sure the businesses do as well as they can,” he said. “I think our feeling is that requires a little bit more in terms of centralized functions. But we definitely want to maintain an entrepreneurial and decentralized feel to our operations.”
The expanded sales effort will be key when Comcast launches four new branded domestic content services, primarily drawing on the film and TV library of Metro-Goldwyn-Mayer, which is in the process of being sold to Sony and a group that includes Comcast.
While declining to provide many details before an official launch announcement, Mr. Burke said one new channel will be aimed at children. At least two others will carry a brand (MGM or Sony) and offer a theme, such as comedy, drama or action. “Those will probably launch at the end of this year,” Mr. Burke said.
While Comcast is best known as the Philadelphia-based operator of cable systems along the Atlantic seaboard and elsewhere, serving more than 21 million customers, Mr. Burke sees the sale of commercial time as increasingly important.
“For a cable television company we are very focused on advertising,” Mr. Burke said. “We have a very large local advertising business called Comcast Spotlight-local, regional, national-that is part of our cable operation. Then, obviously, all of our cable TV channels have advertising components.”
Now, for the first time, they all will work together. “We really like the advertising business and really want it to grow,” Mr. Burke said. “What we’ve done with the consolidation effort … is we’ve taken the existing cable channel advertising businesses and put them all together, so that we can go to an advertiser and give them one-stop shopping.”
That is not their only advantage, as Mr. Burke sees it. “One thing that sets Comcast apart from almost anyone else is our ability-and this is particularly important as the world goes more into [digital video recorders] and [video-on-demand]-we are able to sell ads in a time-shifted format. A typical television or cable network can’t do that.”
The difference is that Comcast has been very aggressive in rolling out VOD services, and in January alone, according to Mr. Burke, did 72 million VOD sessions. Comcast also has in customers’ homes 200,000 DVRs and expects to add as many as 1 million in the next year. He said it will be able to offer ads on VOD and as part of the DVR service.
“We will increasingly be able to take the consolidated cable network ad sales group and Comcast Spotlight,” said Mr. Burke, “and walk in together and be able to do things with the technologies that other people can’t do.”
Comcast already has access to the top advertisers, but now will have a better story to tell, Mr. Burke said: “Advertisers like the option of aggregating. We’re going to be able to offer that. If you look at our cable channels, they’re very focused and niche-oriented. When you combine those niches, you’re able to give advertisers more demographic spread.”
Comcast’s move into new media technology has provided some unexpected benefits. For instance, the push into VOD has turned out to be a good way to test new programming concepts.
“What’s interesting is that there are things at work in VOD that are extremely popular in VOD that might not work as linear channels,” Mr. Burke explained. “You certainly learn a lot about what people are interested in watching. And you do so without having to commit [channel capacity]. I also think there will be business models-and we’re all trying to figure this out-where you could have a VOD product that never has a linear channel and you could make money.”
He cited the example of fitness videos. “We have yoga, Pilates, all sorts of cardio workout-type things,” he added. “Those could have a component where at the end of the video you do a direct-response ad for exercise equipment or sell videotapes. I think there are different models that could exist in the future that will be satisfying for content providers.”
So whether it is entirely new channels or creating advertising opportunities in VOD, Comcast feels it now has an improved structure to be opportunistic as the marketplace rapidly evolves. The consolidation of ad sales, Mr. Burke predicted, will boost revenue and allow Comcast to raise its annual profit targets.
“We believe we’re going to grow substantially in content,” Mr. Burke said, “and Dave Cassaro’s team will have the ability to speak for more and more channels. That makes it an even better idea to do what we did.”