Cable appears poised to add around $1 billion to its upfront take from last year, in large part due to clients who've shifted dollars from the scatter market and steered money away from other media.
With registered budgets turning into orders, both general-entertainment networks and the more-targeted services were closing deals last week. The flurry of activity could push the industry's upfront total to some $5.6 billion when the process is completed over the next few weeks.
Industry players said that would represent a hike of more than 20% from the $4.6 billion or so cable garnered during last year's annual Madison Avenue bazaar, when advertisers secure schedules for the upcoming TV season. Cable is also said to be writing business with CPM (cost per thousand) increases in the high single to double digits.
Those levels follow broadcast's own robust upfront, in which outlays jumped by $1 billion from last year's then record $8.2 billion of commitments. The majority of networks rang up CPM increases in the 15% range.
The risk of clients again getting burned in the scatter market aside, both upfronts were also fueled by hefty overall budget increases, according to various sources.
Marketers may believe the economy is headed toward a turnaround and thus are encouraged to spend more, said Discovery Networks U.S. president of ad sales Joe Abruzzese.
Historically, cable networks have sold about 50% of their TV-season inventory during the upfront. Some networks may exceed that level this time around, given a robust marketplace with strong commitments from the fast food, retail, entertainment, pharmaceutical and import auto categories.
During 2002, the Cabletelevision Advertising Bureau pegged network cable sales at some $10.9 billion. Projections call for the total to approach the $12.1 billion mark in 2003.
Despite all the talk of clients shifting money from their scatter budgets so as not to be burned with bigger-than-upfront rate hikes, some cable executives maintain that there still will be a strong post-upfront marketplace. That's due in large part to tight inventory during a year that includes the Summer Olympics and a presidential campaign.
During the scatter market, media buyers purchase inventory on shows much closer to when they air.
But an agency veteran wondered how much money will be left for scatter.
"Every scatter dollar from this past season has been pushed into the upfront," PHD president of North America Steve Grubbs said of his shop's clients. Still, there is "some real budget growth of maybe 5 to 6%."
Leading cable's charge are market frontrunners Turner Entertainment, Discovery Networks U.S. and Universal Television's USA Network and Sci Fi Channel. All of those players were off to fast starts, concurrent to when the broadcast marketplace was moving during the Tuesday through Thursday period before the Memorial Day weekend.
"We're on target, more than halfway done," said Turner Entertainment Sales president David Levy last Thursday. His networks earned double-digit rate increases and double-digit volume growth in the process. He hoped to be "virtually done [this] week."
Last Thursday, Abruzzese said Discovery's upfront was between 65 to 70% done, and far ahead of last year's pace, when it didn't finalize its upfront until July 17.
"There's a lot more money registered — up to 50% more," he said.
Discovery's CPM increases have been in double digits, led by "high double digits" for TLC, including the popular Trading Spaces
series, Abruzzese added.
For Universal, "business has been great," president of ad sales Jeff Lucas said Thursday. His networks were "82% done — 82% of our goal. For all intents and purposes, we should be done Friday."
Market watchers maintain that Lifetime Television and A&E Television Networks have picked up the pace this week.
The more-targeted networks — from Comedy Central, E! Entertainment Television and MTV: Music Television — are moving briskly too, they added.
"The volume is historically huge and that's great," MTV Networks president and COO Mark Rosenthal said Friday. "We closed significant business at volumes that are quite large."
The Viacom Inc. unit's CPM increases have been "huge across all our networks — in double digits."
E! Networks executive vice president of sales Dave Cassaro said Thursday afternoon that he expected to be "burning the midnight oil" as the weekend drew near, with sushi and pizza on the late-night menu.
When the table is cleared, Cassaro expects to be "done with the upfront by the middle of next week," with CPMs gains in the 15 to 18% range.
Style is on a number of clients' plans this year, said Cassaro, as Nielsen will begin rating the spin-off network by year-end. Like E!, Style appeals to wide swaths of affluent, young adult, female and male demos, cutting across many categories, according to Cassaro.
More to sell
Despite the heightened level of activity, much work remains to be done. A number of industry sources noted that such mega-buyers as WPP Group's MindShare and the Interpublic Group of Cos.' Magna Global USA are not yet done with their upfront cable negotiations.
PHD's Grubbs also questioned the cable networks' sales estimates and sell-out percentages.
"That's hard to judge," he said. "Is it 50% of the 50% they normally sell-out upfront? Probably."
But various programmers maintained that they had withheld about the same amount or more of inventory for sale during the upfront sale, rather than less. Turner, for instance, held back "almost the same" amount of time for the upfront as a year ago.
"We kept a good chunk for scatter," said Levy, anticipating that the Olympics and political spending would tighten avails.
Discovery withheld 65% of inventory for upfront sale, versus an estimated 50% last year, Abruzzese said.
Cable's upfront surge was fueled by the scatter exodus, as well as clients moving out of other media and promotional vehicles, said Lucas. There were also healthy budget hikes from such sectors as retail, fast food and entertainment, he noted — especially marketers of films on DVD. Pharmaceutical and packaged-goods marketers are "back in a very major way," he added.
Turner's Levy also cited home entertainment (led by DVDs) and pharmaceuticals as categories that have fueled cable's upfront. In addition, spending on movies and automotive have also climbed.
Within the car sector, the domestic brands are "down to flat," but the imports are "up — at least in cable," he said.
Abruzzese also pointed to packaged goods and pharmaceutical as strong upfront categories, along with retail.
News is good
Business is also buoyant in the cable-news sector. Market sources said MSNBC and CNBC laid in large bases during the broadcast upfront, part of package deals with sibling NBC. Bravo is also said to have benefited from this strategy.
The rise of cable share points at the expense of broadcast — Turner research showed that cable grabbed a 56% share of news viewers in 2002, and that range could hit 60% in 2003 — has driven more dollars to the cable players.
"A lot more advertisers and agencies have carved out budgets for cable news," said Cable News Network executive vice president of sales and marketing Greg D'Alba, noting that CNN had "completed about 30% of its upfront process by Friday.
"Things heated up [last] week and we expect a lot of activity [this] week. Revenues could be up over 30%."
D'Alba also said CNN gets a second wave of business during August, when clients that operate on a fiscal-year calendar look to secure schedules.
The cable-news upfront is a "much more orderly process" than the entertainment bazaar, said Fox News Channel national sales director Roger Domal. "There are no late-night, 4 a.m. sessions."
Nevertheless, last week was a very busy one for the Fox News sales team.
"Things are moving much faster than the last couple of years. We'll have the majority of our upfront business written by early next week," Domal said.
"We're on a lot more advertisers' business plans and are seeing a lot more money. Fox News has moved up in the upfront pecking order. It's not only the No. 1 news network, but in cable's top five overall."
Mike Reynolds also contributed to this story.