Cable Upfront Tallies $8B7/04/2008 8:00 PM Eastern
Boosted by a wealth of original programming and a shift of advertising dollars from broadcast, cable wrapped up a robust upfront market with sales that reportedly approached $8 billion.
Now it remains to be seen how much of that money will actually be spent, or if advertisers will be spooked by the troubled economy and put the brakes on some of those orders.
Estimates for TV sales during the upfront market typically vary, but industry sources said that cable's dollar-volume gains ranged from roughly 8% to 10%, a haul of $560 million to $770 million. Those increases would bring cable's total upfront sales, which the Cabletelevision Advertising Bureau pegged at $7 billion last year, to $7.7 billion or more this year.
“Cable did very, very well,” said Andy Donchin, Carat's director of national broadcast. “It was a much more healthy upfront than people predicted.”
Broadcast racked up an estimated $9.2 billion during its upfront this year, which reflects a slight increase — or flat.
Cable's strong upfront-take defied predictions that the market would suffer because of the sagging economy. But there were several reasons why cable stymied the pessimists, cable-ad sales and ad agency officials said. The medium got an upfront boost because some advertisers shifted their buys from broadcast — which has suffered audience declines — to cable.
“A lot of people moved money from broadcast to cable,” Donchin said. “Once again, we're just following the eyeballs.”
Bruce Lefkowitz, executive vice president of ad sales for Fox Cable Entertainment Networks, agreed that broadcast's primetime erosion helped cable.
“The fact is the GRPs [gross rating points] were down this year, and advertisers need their GRPs in any economy, most specifically in one as trying as the one that we've been going through,” Lefkowitz said. “So that money has to go somewhere, and cable continues to grow and cable continues to provide a very strong alternative.”
Some advertisers also took money from the scatter market, where prices were high, and put it in the upfront, both cable and ad agency officials said.
And finally, advertisers were not only drawn by cable's original and high-rated hits, such as USA Network's Burn Notice, they also sought more cross-platform packages, buying not only TV spots but also ads on video on demand and broadband, ad-sales executives said.
Cable players including Turner Broadcasting System, NBC Universal's cable entertainment networks, MTV Networks, Fox Cable's entertainment services, Lifetime Television and Hallmark Channel were among the programmers who had essentially sewn up their upfront business last week.
A number of media buyers last week suggested the picture for cable may not be as rosy as it seems. They questioned whether upfront orders that ad agencies placed on hold, pending approval of their advertiser clients, will get a final OK, or whether advertisers will instead pull back ad spending because of the increasingly troubled economy.
“With the economy still very much in flux, I would not be surprised if there was some fall-off through the year in spending,” said Ed Gentner, MediaVest senior vice president and group director. “There's a lot of money in flux.”
Aaron Cohen, executive vice president and media negotiation officer for Horizon Media, raised the same issue.
“The question will be when late August or September comes … will the amount of money that actually gets placed — ordered — be less than what is currently being estimated,” Cohen said.
Cable ad-sales officials, however, played down the specter of advertisers not going forward with upfront ad commitments.
“I'm respectful of the possibility, but I don't anticipate it becoming an actuality,” Lefkowitz said.
In terms of the upfront, Turner was at the “high end” of upfront price and dollar-volume increases for “all of television, not of cable, but of TV,” according to David Levy, president of Turner Broadcasting Sales.
He declined to offer specifics, but Turner reportedly saw upfront CPM — or cost-per-thousand — increases that hit 9% to 10%, and saw a gain in revenue of 20% to 25%, according to some officials.
This year for the first time Turner sold a “broadcast-replacement package” of all-original programming that airs on TNT, TBS and TruTV — shows such as TNT's Saving Grace and TBS's Tyler Perry's House of Payne — and the programmer received a premium price for those packages, according to Levy.
“Advertisers really embraced it,” he said. “In the past we didn't have enough inventory and enough capacity of original programming to actually be able to sell originals on their own separately.”
MTV Networks had some networks that saw revenue gains of over 20%, and price increases in the high single-digits, according to Hank Close, MTVN's president of U.S. ad sales. “So we're happy with both price and volume,” he said.
MTVN was among a number of programmers that said they'd seen increases in new-media spending this upfront.
“Cross-platform packages were very, very, very hot,” Close said.
Advertisers are looking at multi-screen options and integrated marketing offerings that incorporate TV spots with options such as broadband, VOD and mobile, according to Close.
Hallmark Channel enjoyed a strong upfront, according to executive vice president of ad sales Bill Abbott.
“We were up nearly 20% in volume and CPMs [were] up overall in the high single-digits,” he said.
Hallmark Channel sold entitlements — exclusive sponsorships with a reduced commercial inventory of just four minutes an hour — for 20 original movies, according to Abbott.
National Geographic Channel, a partnership of National Geographic Ventures and Fox Cable Networks, is seeing a more then 20% gain in upfront revenue versus last year.
Richard Goldfarb, Nat Geo's senior vice president of media sales. The network, home of Dog Whisperer, lined up two dozen new advertisers this upfront and has seen 50% growth in its digital revenue, according to Goldfarb.
“We have done a lot of business with our video-on-demand platform which, by the way, is now up to 30 million subs,” he said.
Lifetime saw price increases in the 9% to 10% range, and volume growth of 22%, according to executive vice president of ad sales Debbie Richman.
The women's programmer also saw strong ad-sales gains on its digital offerings, in packages that included TV shows along with ads on MyLifetime.com, like video streaming packages for Army Wives.
“We saw almost 100% growth on our digital platform,” Richman said. “We did sell a lot more cross-platform initiatives with upfront. It wasn't just selling Internet packages. It was extensions to TV packages. That's a big change for here.”