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Cable Nets’ Upfront Moving — Slowly

5/29/2005 8:00 PM Eastern

Some cable executives were expecting their upfront activity to pick up this week, following the opening of the broadcast marketplace last week in which ABC reportedly finished its deals.

At press time Friday, cable-network ad sales chiefs said that they were still talking with agencies and that completed deals were still few and far between.

“We’re getting budgets in right now,” a cable ad official said.

That’s in stark contrast to a year ago, when some major cable programmers moved before the broadcasters and had wrapped much of their upfront business before Memorial Day.

TURNER, MTVN DEALS

Turner Broadcasting System Inc. reportedly has completed a few early upfront deals, several sources said last week, but still had a lot more business to finalize. And MTV Networks had closed some select business, another source said.

ABC wrapped up its upfront deals at single-digit CPMs, sources said. There was the possibility that ABC’s play could trigger more upfront-marketplace action — by other broadcasters or cable networks — late Friday or over the Memorial Day weekend. But several cable ad-sales officials doubted that would happen.

Jack Myers, editor of Jack Myers Report, wasn’t forecasting a big upfront rush over the holiday.

“I think individual deals are going to be done on a scattered basis for the next few weeks, but all the indications right now are that buyers are moving very slowly,” Myers said.

“There’s more fungibility in the marketplace this year between broadcast and cable, and buyers have more flexibility,” he added. “They’re going to play a wait-and-see game. The question for cable is going to be one of backbone: confidence in the strength of the market. Buyers are going to be slow to move. Depending on where the broadcasters price themselves, the market’s going to move relatively slowly until the buyers get a real sense of where they are, and sellers get a real sense.”

Jack Myers Report last week re-evaluated its projections for this year’s upfront, increasing its estimates for cable and reducing them for broadcast. But Myers doesn’t expect cable to be the beneficiary of any huge shift of spending from broadcast.

For the second year in a row, broadcast may not increase its upfront dollar volume, according to Myers Report, which now pegs a 0.5% decline for the medium to $9.03 billion, from $9.075 billion a year ago. Cable will increase 10% to $7.04 billion, compared to $6.4 billion last year.

“While most forecasters are projecting a shift of upfront spending from broadcast to cable ranging from $600 million to as much as $1 billion, our estimates suggest a far more conservative shift of less than $400 million,” Myers Reports said last week.

The industry publication tags the entire upfront at $18.36 billion, a 3.4% gain from last year’s $17.675 billion.

KIDS CLOSE TO WRAP

Meanwhile, the kids’ upfront market moved nearer to completion. Jim Perry, senior vice president of Nickelodeon advertising sales, last week said the sector’s kingpin was “still working with some small shops, but we’re virtually done.”

Cartoon Network and Disney ABC Cable Networks Group, including children’s fare on ABC Family, Toon Disney and the Saturday morning kids block on ABC, had finished much of their sales the previous week.

Perry said that Nick scored a high single-digit in overall kids’ volume. On the CPM side, Nick was into the double-digits during the key pre-Christmas and Easter weeks, and in the single digits for the balance of the year. “When you roll it all up, we’re happy where we ended up,” said Perry.

Assessing categories, Perry said that theatricals were strong. “The studios are reaching out with kids and family movies,” he said, adding that there had been more DVD activity as well.

After great fears about the strength of the food business, linked to widespread governmental concerns about childhood obesity, Perry said a lot of brands are introducing reformulated lines and “needed to get the word out.”

As for the traditional toy sector, “the big guys didn’t support a lot of growth. However, we did better with a lot of mid-sized and smaller players.”

GAMES ARE GROWING

While video games remain largely the province of networks that reach young adult males, Perry said this sector is “not a high-volume category for us, but it is a growth category.”

Perry’s group also went to market for the first time for animated service Nicktoons and The N, the teen-skewing side of Noggin. Offering only an average six-minute load per hour, The N inked deals with studios, food and beverage marketers and health and beauty aids companies, according to Perry. He added that other category targets for The N’s upfront business would be handled in the adult market.

Nicktoons, meanwhile, is selling even less inventory at this juncture, said Perry, noting that “revenue/pricing was in line with our expectations. We think there is a value to reach Nickelodeon viewers on other screens. We and some of our clients agreed to disagree about that,” he said, noting that Nicktoons and The N represented incremental revenue opportunities.

September