B’casters’ Wrap Puts Onus Onto Cable Upfront

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With three of the Big Four broadcast networks completing their upfronts last week, cable is poised to take center stage.

CBS, ABC and Fox finished up their upfront business in deals that added up to a stronger-than-anticipated marketplace for broadcast. NBC — which once dominated the market, but has been hammered by last season’s double-digit rating declines — last week was the upfront laggard among the major broadcasters. The Peacock Network was expected to have to accept flat prices or even CPM decreases.

As of press time Friday, cable had done some scattered deals but hadn’t closed a whole lot of business, according to several cable-network sources. Only a few programmers seemed to have made any progress.

Turner Broadcasting System Inc., for example, had completed some initial deals, sewing up 20% to 30% of its upfront business, sources said.

And MTV Networks, USA Network, FX and National Geographic Channel reportedly have some scattered deals.

Cable ad-sales officials were predicting more action on the cable front now that most of broadcast has moved.

“That gives the agencies the ability to focus,” one cable ad chief said. “Even if they’re not finished with NBC, they can still focus on both NBC and the cable networks.” Cable executives were also claiming that broadcast’s healthy upfront gains wouldn’t come out of their hides.

“It’s still a very vital marketplace for cable,” said David Cassaro, president of Comcast Network Advertising Sales.

Last year, some major cable programmers moved before the broadcasters and finished their upfront deals ahead of Memorial Day. That’s not the case this year.

ABC last week was the first of the Big Four to announce that it had completed its upfront, racking up $2.1 billion in sales with price increases of 4% to 6%.

30% UP AT ABC

With about $600 million in primetime sports sales — which includes Monday Night Football, the National Basketball Association and the Bowl Championship Series — ABC tallied $2.7 billion in revenue, which reflects a potential year-to-year increase of more than 30%.

ABC was in the catbird seat for the 2005-2006 season because of surprise hits Lost and Desperate Housewives.

But later in the week, the upfront champion — unseating once-No. 1 NBC — was CBS, which registered a whopping $2.6 billion in upfront sales, compared with an estimated $2.3 billion last year. Fox wrapped its upfront sales last week, too, at an estimated $1.6 billion, basically flat compared with last year.

Both CBS and Fox reportedly enjoyed CPM increases in the 4% to 6% range, just like ABC.

Based on last week’s deals, and projecting a 20% drop in sales for NBC from last year, Jack Myers Report last week forecasted that the broadcast upfront will reach $9.46 billion, a 4.2% increase in total revenue. The report also offered some new projections for cable.

“Cable is moving 'in earnest,’ according to senior sales executives, and there are strong indications the cable market could increase by 8% to 12% or even more,” Jack Myers Report said. “Overall cable CPM gains appear to be averaging 5% to 7% with networks selling significantly more inventory than previous years.”

The forecasts for cable’s upfront have been anywhere from $7 billion to $7.3 billion, up 10% to 11% from last year’s estimated $6.4 billion to $6.6 billion.

Some cable sales chiefs said they were unperturbed by the slower pace for the cable upfront this year or by broadcast’s tidy haul.

'NO BIG SHIFT’

“If you look back in history, network has always gone before cable,” one cable executive said. “Last year was an exception to that. The agencies couldn’t come to an agreement with broadcast, so they decided to put them aside and work the cable business. I don’t think it has any major impact.

“A lot of the planning, in terms of what budgets go to broadcast versus cable, was done months ago. So I don’t think there’s a big shift in monies. What happened in broadcast is where the money went is what changed, which broadcast network, but they didn’t take money from cable necessarily. So from our perspective, we’re not worried about that.”

Cassaro predicted the cable upfront will come in waves. Programmers with strong brands and a lot of ratings points should close their deals first, he said, as advertisers try to get in with them early.

That’s what happened last year, he said.

“I like to say that cable is like the relentless tide,” Cassaro said. “It just keeps coming and coming and coming. And broadcast is the beach that’s being eroded away, slowly and surely.

“And the erosion wasn’t as bad this year, but I would bet you money next year you will see further erosion in broadcast and further growth in cable in terms of audience. And as we know, dollars follow audience. So the dollars will continue to migrate to cable.”

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