Cable’s Folly May Be Syndie’s Gain

Jun 13, 2005  •  Post A Comment

Cable’s aggressive upfront pricing blunder might lead to syndication upfront gains.

When major cable networks asked for hefty price increases in the middle of the broadcast network upfront presentations last month, media buyers took action. They turned their back on cable and did deals with the broadcast networks.

But that’s not all. One little-known fact is that media buyers also started calling syndication advertising sales executives to find out how they would price their programs.

“Media buyers wanted to know what their options were, since cable was very aggressive,” said one veteran studio advertising sales executive. “Whether this turns into more business is another story.”

Another syndication executive who didn’t want to be identified also got phone calls and said, “I think it is translating into business.”

Syndication executives have kept a lower profile this upfront season-something that has helped their cause, media buying and selling executives said. For instance, they haven’t played a game of touting high price increases as a strategy to attain them.

On the eve of the spring 2004 upfront buying market, then Viacom President Mel Karmazin talked up 10 percent cost-per-thousand-viewers price increases. This year, months before the 2005 upfront period began, cable sales executives projected their upfront marketplace could see similar 10 percent increases for some networks.

But unlike with CBS a year ago, this talk backfired, angering media buyers. All this may have put syndication in a better light for this selling season.

“In theory, this should help them,” said Doug Seay, senior VP of national broadcast for Publicis & Hal Riney.

“People have been enamored of cable and blindly jumping into it,” said another syndication advertising sales executive. “Last year there was a madhouse rush to get cable done before network and syndication. Advertisers may have done that again-had cable not done what it did.”

True to their word, cable executives were touting high single-digit price increases as late as May, right before the broadcast network programming presentations were to begin.

Last week syndication executives said that sector’s part of the upfront market was moving at the same time as cable. “Usually [cable and broadcast] networks go before us,” said Mitch Burg, president of the Syndicated Network Television Association. “Some deals are done, discussions are happening.”

But media executives said syndication is not out of the woods. The business is experiencing the same problem as cable and broadcast: There may not be more overall money in the market. Many media buying executives said cable won’t see a gain in overall upfront sales over last year’s $6.2 billion, nor will broadcast networks attract prime-time revenues beyond the $9.2 billion of 2004. In 2004 syndication posted anywhere from $2.2 billion to $2.7 billion in upfront sales, depending on the media source.

Syndication pricing has been tracking around the same level as some cable networks: around 2 percent price increases for the best-performing shows and a “rollback,” or lower prices, for syndication’s weaker programs.

Late last week one syndication sales executive said he had completed only one major agency deal, with middling results.

“I’ve closed one big agency deal, with some minus and some plus advertiser deals,” the executive said. “I’ve also done some smaller deals.” He said he still had a long way to go, having inked only about 25 percent of his expected upfront business.

In the middle of last week syndication executives such as Clark Morehouse, senior VP of advertising sales for Tribune Entertainment, had not yet received many registered budgets from advertisers. However, he did make deals for the Comedy Central hit “South Park,” which will debut this fall in syndication, and for DIC Entertainment’s syndicated early-morning kids programming block, which is a co-venture with the Tribune stations.

“We have already started to write some deals and are pretty happy,” Mr. Morehouse said. “‘South Park’ is going to deliver advertisers we haven’t done business with before.”

That’s good news for advertisers but not particularly good news for their media buyers, who could be in for a long, slow, hot summer in making deals-especially with advertisers’ media budgets not yet in stone.

“This year it’s a negotiation of concept buys,” Mr. Burg said. “Clients are still finalizing budgets. They’ll get finalized after August. There is still a lot of work to be done this summer.” Concept buys are when buyers and sellers agree on total media budgets and CPMs, with specific program details to be worked out.

Syndication and cable advertising executives differ on the issue of gross ratings points, which are the total available advertising inventory for each sector’s programming.

Syndication says there are too many gross ratings points in cable and, according to one executive, “Many aren’t all that good.”

Media buyers say the same is true of syndication.

“Syndication has some very good GRPs and some very bad GRPs,” Mr. Seay said. “But the debate is who has the wider swing, syndication or cable?”

SNTA’s Mr. Burg had no comment on the subject of GRPs but did say syndication’s average program audience was up 4.8 percent this season versus a year ago.

Converts Sought

Syndication is still looking for advertiser converts. As of late last week Mr. Burg could be found on the West Coast trying to drum up support from automakers, a big advertising category that doesn’t buy much syndication. Nissan America was one car advertiser that broke into syndication last year.

One benefit of syndication is that, unlike cable and broadcast, it has longtime program stability, with shows such as “Wheel of Fortune,” “The Oprah Winfrey Show” and a number of off-network sitcoms.

“A lot of these shows have been on the air for years,” said Brad Adgate, senior VP and corporate research director for media buying company Horizon Media, New York. “People have a familiarity with them. That’s good in a market that is so crowded and cluttered. People know what ‘Entertainment Tonight’ is. These shows have been locked into time periods for years.”

Another major selling point is that syndication’s sitcoms-such as “Everybody Loves Raymond,” “Friends” and “Seinfeld”-are also stable, predictable performers. That’s good news for media buyers, especially when advertisers lament there aren’t any good sitcoms to buy on the broadcast networks.

Cable can make a claim in this area as well. Said Mr. Adgate, “You can also go to TBS or Comedy Central for sitcoms.”