Strong Year for Ad Sales May Slow10/18/1998 8:00 PM Eastern
Major-market interconnects, having enjoyed a healthy
ad-sales year through September,
were cautiously optimistic about the remaining quarter of
Their hesitation came from question marks about the
National Basketball Association season, political ad-spending levels, the economic outlook
and President Clinton's predicament.
"The skittish nature of the economy could be a
problem," said Jones Intercable Inc.'s Kevin Dowell, group ad director for the
Chicago region, who also serves as chairman of the Chicago Cable Interconnect.
Moreover, the same concerns about the owner-imposed NBA
lockout that are hanging over the Chicago operators are affecting the Chicago
interconnect, he said.
That interconnect saw its total volume through August soar
68 percent, bolstered by a 133 percent national-business upsurge and 30 percent regional
growth, as well as by a rate increase, Dowell said.
But he cautioned that since national sales slowed
considerably in September -- probably to somewhere in the teens -- the percentage growth
for the nine-month span will be well below the 68 percent attained through August.
At the Philadelphia Interconnect, general manager Jim
Klunder termed the third quarter as "pretty good," considering that some dealer
business was lost due to the General Motors Corp. strike.
Although volume climbed by an above-budget 27 percent,
Klunder said, automotive remains a question for the rest of the year due to an uncertain
After having enjoyed "an enormous August,"
especially in national billings, the Philadelphia Interconnect also had a somewhat soft
September, Klunder said. For the year to date, he described regional as "on
fire" and national as doing well, although the latter segment wasn't up to the
interconnect's admittedly aggressive budget projection.
At Adlink, Vicki Lins, director of marketing, said the Los
Angeles interconnect enjoyed a strong third quarter, up about 10 percent, with growth
across virtually all categories.
But Eglon Simons, the New York Interconnect's vice
president and general manager, said he couldn't offer a clear-cut apples-to-apples
comparison with the first nine months of 1997. That's because of what he called
"the confusion" surrounding the interconnect, which was triggered last spring,
when Time Warner Cable pulled its 1.3 million subscribers out in a dispute.
He did offer an estimate for the third quarter, noting that
the division's 25 percent gain excluded Time Warner for 1998.
Looking ahead to October and the end of the year, some
executives were more overtly optimistic than others. Adlink, for instance, is banking on
another solid quarter, Lins said, en route to an anticipated $80 million in volume for the
year, versus the $61 million-plus that the Los Angeles interconnect tallied in 1997.
The Philadelphia Interconnect's October appears good,
with national on the light side, but regional picking up momentum, Klunder said, noting
that the two seemed to be counterbalancing each other since August.
Standout categories for Philadelphia included health care,
media and energy, he said. "Energy has been a big category here with the deregulation
of utilities," Klunder added.
Beyond October, however, the crystal ball was a bit foggy
for some. Adlink's Hank Oster, senior vice president of sales and marketing, said
that although the interconnect enjoyed a good first half (up 34 percent) and nine months
(up 31 percent), "the second half is looking more volatile. But it's still
intense, [and] we have great pace."
"We're keeping our fingers crossed for
November," Klunder said. A lot of factors are in play this fall that make
fourth-quarter projections unusually difficult, he explained. "The 1997 fourth
quarter was a sellers' market: Pricing went through the roof, and cable capitalized
In sharp contrast, this fall finds a much less aggressive
broadcast market, he said, and many clients seem to be holding back their ad dollars.
Politicians also appear to be waiting until the last minute with their campaign spending,
In Klunder's view, these developments translated into
a new trend: "More decision-makers [seem to be] deciding later than usual. They seem
to be further behind in their planning" than usual, he said.
Although the stock market hasn't fared well lately,
Klunder added, low unemployment, dropping interest rates and lots full of cars would
normally be factors that bode well for the advertising community. Instead, he said,
"there's not as much advance buying, even for holiday-related campaigns."
Klunder concluded, "This is a weird year."
Consumers are unsure how the year is going to turn out, in part due to President Clinton
being embroiled in a congressional impeachment inquiry, he said.
But Klunder wasn't as upset about the stalled NBA
season as others were. Turner Network Television's NBA package is typically not a
huge seller in Philadelphia -- unlike in other markets such as Chicago, New York and Los
Angeles -- he said. Even though the NBA All-Star Game is scheduled for Philadelphia,
Klunder said, "I haven't heard much buzz" about the uncertain NBA season.
In New York, Simons -- who cited automotive, airlines,
retail, banks and new technology among his interconnect's most active categories in
the third quarter -- expressed optimism that those segments' spending levels will
remain hefty, fueling a strong fourth-quarter finish.
Time Warner's exit from the New York Interconnect has
transformed cable buying in the No. 1 DMA into two-stop shopping, instead of one-stop
shopping. The only news to report on that situation, Simons said, was that all of the
parties have begun meeting to iron out their differences.
At Time Warner CityCable, the ad-sales arm for Time Warner
Cable of New York City, president Larry Fischer estimated that his ad-sales operation rose
39 percent overall, but that the number was closer to 25 percent when the interconnect was
factored into the year-to-year comparison.
Categories that continued to bolster TWCC most were
automotive aftermarket, pharmaceuticals, new technology and entertainment, he added.
Among the factors driving TWCC's sales gains, Fischer
said, were USA Network's U.S. Open tennis tournament coverage, MTV: Music
Television's Video Music Awards and Major League Baseball's comeback --
especially in New York, where both the Yankees and the Mets were in the playoff race.