Cable Upfront Slow But Healthy

Jul 11, 2005  •  Post A Comment

Despite bruising negotiations in an upfront that has been less robust than expected, top cable ad sales executives say they have emerged with healthy revenue increases.

“For Turner, at least-I can’t speak for the marketplace-the slowness of the upfront market really didn’t indicate softness for us,” said David Levy, president of ad sales for Turner Entertainment.

“It was difficult from the standpoint of price and better than we expected on volume,” said Larry Divney, president of advertising sales at MTV Networks.

Most buyers have said the cable upfront market was flat at best from last year’s $6.2 billion level, or down. And with the hottest broadcast network, ABC, opting to make deals that hiked CPMs by just 5 percent, buyers let that be the ceiling for the top-tier cable networks. Poorly performing and high-cost cable networks were under pressure to roll back prices, as were smaller independent networks.

“Clients seem to be relatively happy with what we’ve been able to achieve to date,” said Harry Keeshan, executive VP and director of national broadcast for PHD. He expects the upfront to be wrapped up in a couple of weeks.

Mr. Keeshan said he thinks cable spending has been a little ahead of last year, but he questioned how some networks could be claiming anything close to double-digit increases in revenue. “I don’t know how that’s possible,” he said.

“There’s a lot of money being shifted around,” he added. “The guys whose ratings are up have the potential to take in more money.”

Market sources said Turner initially sought more aggressive price increases and butted heads with buyers. But Mr. Levy said, “As the upfront unfolded, the most important thing we did here at Turner was to have patience.” And though it took a while for buyers to respond, he added, “You’re going to see that TBS and TNT will end up on the high end of CPM growth, comparable really to ABC and CBS growth on CPMs.”

With its deals about 95 percent done, Turner will show “double-digit revenue increase year over year,” he said. “You’ll see we’ll exceed for the third year in a row cable marketplace growth.”

Mr. Levy said the extended negotiations gave Turner time to focus on its original programs and to talk to clients about sponsorships, promotions, product integration and broadband and video-on-demand opportunities.

“Based on what conditions were in the upfront, we’re very pleased with that performance,” he said.

MTV Networks, which historically has moved briskly through the upfront, also had to negotiate harder with buyers, who saw a weak market and no need to rush.

“We were pretty concerned about volume as we got into it, but as everything came down to a hold, when we got to the final finals, money showed up. So it was a nail-biter,” Mr. Divney said.

With about 95 percent of his deals done, Mr. Divney said MTVN’s revenues were up in the high-single-digit range: “The company had higher expectations than that, but we think, relatively, we did fine.”

He said his networks that aim at older viewers-Nick at Nite, TV Land, Spike and even Comedy Central-did better than the younger-skewing networks.

“The pendulum swings,” he said. Networks like MTV were hurt by lower spending in sneakers, autos and personal care items.

Mr. Divney said some advertisers are holding money that will be spent later in the year in the scatter market. “Our scatter business in first quarter and second quarter had been terrific and continues to be even in the third,” he said. Unless the money went elsewhere, into other screens like online, there should be a fairly healthy fourth-quarter scatter market, he said.

He added that MTVN saw a big increase in its online business, with registrations up more than double.

Mel Berning, executive VP of ad sales for A&E Networks, said he’s seeing a little more money than last year. “The longer it takes, the stronger it is,” he said.

“We’ve had some clients who are not spending as much this year … but they’re spending less across the board,” he said. He added that new programming on A&E has enabled the network to compete better in other categories that look for younger viewers, including soft drinks and beer.

“There’s demand against our real-life shows,” he said.

A&E’s History Channel has added about $20 million in new business from clients it didn’t have last year, he added, including some corporate advertising, computer software and travel clients.

For some networks, being small means waiting even longer.

“It’s inching along, but every day we make some progress,” said Arlene Manos, president of national sales for Rainbow Advertising Sales. Ms. Manos said some advertisers are seeking rollbacks on some of her networks, but she has made only one deal at a reduced CPM.

She said high ratings have made it hard for buyers to seek lower prices on Rainbow’s AMC. “We’re reasonably priced. They don’t need us to be under the market,” she said.

Bill Abbott, Hallmark Channel executive VP of ad sales, said, “It’s been a tough market.” Buyers were very tough on pricing, he said, but in terms of revenue, “We’re up double digits.”

He said product placement, advertiser entitlements, VOD and the new Hallmark Movie Channel were key parts of getting many deals done. “Clients were looking for different ways to experiment with technology,” he said.