News

Cable Upfront Deals Are Wheeling Fast

6/06/1999 8:00 PM Eastern

New York -- Cable's upfront market for national ad
sales blasted off last week, with some participants again predicting that the medium would
be up $1 billion versus last year.

But what did surprise most involved in the annual wheeling
and dealing was the alacrity on the part of advertisers and their agencies and the
rapid-fire speed at which deals were being reached with cable networks.

One of the cable executives leading the recent charge of
the $1 billion prediction has been Bill McGowan, senior vice president of ad sales at
Discovery Networks U.S. "This marketplace should not have caught anyone by
surprise," he said. "The only question now is whether it's going to go
north of $1 billion."

The $1 billion increase, from $2.8 billion to $3.8 billion,
would represent a 36 percent jump from the 1998-1999 upfront held last year.

Mid- to high-teen increases in CPMs (cost per thousand
homes) were being widely reported as buyers and sellers headed into a pivotal year. The
1999-2000 season will bear witness to three highly anticipated events: the presidential
election; the Olympic Games in Sydney, Australia; and the dawn of the new millennium.

Other cable-network executives were nearly as optimistic,
but they hedged a little against the $1 billion bounty. Lynn Picard, senior vice president
of ad sales at Lifetime Television, predicted a $3.7 billion total, or a $900 million
jump.

And a Turner Broadcasting Sales Inc. executive who declined
to be identified weighed in with a projection of $3.6 billion.

According to several cable sales executives interviewed,
the momentum from the previous week's broadcast-primetime upfront seeped into last
week's proceedings with cable.

Estimates of the primetime tally for the six broadcast
networks all registered in the ballpark of $7 billion, an increase from the previous
year's $6.4 billion.

"We've never seen it like this before,"
McGowan said. "This is unprecedented velocity. The broadcast market closed on
Memorial Day, and the cable market is getting done at record speeds." TBSI expects to
have its entire market locked down by the end of this week. "It's amazing that
we are wrapping this up before the Fourth of July," a TBSI executive said.

Many executives attributed the frenzy in both cable and
broadcast to advertisers' fears of getting shut out of inventory, as well as to
concerns over getting smacked with huge increases in the scatter market.

"This momentum of signing up early to get the best
deals is not just about all of this new money coming in," Picard said. "Lots of
scatter money is also coming into the upfront because people are worried about increases
later on."

McGowan likened the TV-media marketplace to the stock
market. "You have the same emotions of panic and fear," he said.

Prior to the start of the upfront, many had predicted that
the laws of supply and demand would feed much of the extra advertiser bounty.

New categories have emerged such as telecommunications,
Internet and pharmaceutical advertising -- the latter of which has gotten a boost in the
past couple of years due to relaxed Federal Communications Commission regulations
concerning prescription-drug ads.

Sales execs reported, however, that increases were across
the board in most categories. In fact, Internet dollars were being held back for scatter.

"People are holding back on the Internet because of
the unpredictability of those companies," said Arlene Manos, senior vice president of
national sales at A&E Television Networks.

Picard -- who predicted that Lifetime would have closed 75
percent of its deals with agencies by the end of last week -- said she was pleased with
the volume from "nontraditional advertisers to women," like financial-services
and insurance companies.

September
October