Cagey Cable?
By MARIANNE PASKOWSKI -- Multichannel News, 4/9/2001
Most oddsmakers are betting that a two-pronged strike by screenwriters and actors is just about inevitable. And with the upfront buying season just one month away, cable networks could be sitting pretty, should the Writers Guild of America and the Screen Actors Guild take to the picket lines this summer.
The ever-increasing probability of a strike has brought some comfort — founded or unfounded — to cable programmers. They may benefit from a combination of sheer dumb luck, the nature of their business cycles, and some savvy advanced planning in the event of a work stoppage.
Unlike the broadcast networks, cable channels hold some aces up their sleeves in their upcoming ad-sales negotiations — and those cards could become a huge factor. Mainly, cable already has a huge stockpile of new episodes in the hopper and ready for September. The broadcasters don't.
Turner Network Television, for example, will hold off on running new episodes of the drama Bull until September. Should a strike occur, that will give TNT an edge in attracting upfront advertising commitments, as broadcast's fall cupboard of new programming will be pretty bare.
The cable networks have a clear advantage here. Many of them rely on news, sports and in-house programming, so they're not as vulnerable to bickering unions as the broadcast networks.
That much said, it's not going to be an easy upfront for any of the cable networks. All of them were battered when the downturn in advertising spending became a worrisome reality during fourth-quarter 2000. Many executives report that last December was the bottom, and spending has improved. But with the Dow Jones Industrial Average and NASDAQ indices swinging wildly from day to day, all bets are off.
The bummer right now is timing. Both the broadcast and cable networks are holding their pre-upfront sales meetings with advertising agencies and clients in a climate of diminishing returns for the U.S. economy.
And like most industries, the economic barometers for cable network ad sales are all moving in the wrong direction — south.
Just last week, the most bullish analyst of media trends, Myers Reports Inc., said in its Ad Confidence Index that agency executives and their advertiser clients are planning to decrease expenditures in every measured medium except network radio.
That's a sharp contrast from the Myers report earlier this year which essentially asked — seemingly through rose-colored glasses — "What Recession?"
Another bull pulled his own horns in last week. Bill McGowan, Discovery Networks U.S.' ever-optimistic head of advertising sales, said that when it's all over, cable networks' share of the upfront will be up 11 percent.
That sounds good, but it's not. That 11 percent translates into a $500 million total gain for the cable-networks sector. And if that's all there is, it would be the lowest percentage gain for the medium since 1992-1993.
In terms of ad spending, everyone is revising downward. Media buyer and planner Zenith Media, a media planning and buying agency is predicting a decline in ad spending this year for the first time since the recession of 1990-1991.
Whatever will happen with the economy is anyone's guess. But the cable networks have been smart to stockpile new shows for the fall in anticipation of the strike, which could be the best thing for cable from a competitive point of view.
The clock is ticking: The WGA's deal with the networks and studios is up May 1, then SAG's contract comes to a full boil June 30. Cable might once again prove just how nimble it can be in times of adversity, compared to the giant broadcast networks, who remain stuck in the mire of their dated economic structures.
