Cable Execs: Upfront's a Wrap, And Might Be 20% Over '02


Cable ad-sales executives were busy putting the finishing touches on the upfront market last week. Fox Cable Entertainment and Hallmark Channel among those who've hung "sold out" signs and are preparing for the subsequent scatter sales.

Fox Cable Entertainment executive vice president of ad sales Bruce Lefkowitz estimated the industry's average cost-per-thousand increases "in the high single digits," while pegging the upfront volume advance at 20%.

That would put the upfront at $5.6 billion, up $1 billion from last year's $4.6 billion.

Jack Myers Report
editor Jack Myers said last week that ad-supported cable is now between $5.5 billion and $5.6 billion, but that tally could "stretch slightly" toward $5.7 billion.

"We're finally done" except for "mopping up one or two small deals," Hallmark Channel executive vice president of ad sales Bill Abbott said last Thursday.

"Revenues rose more than 100% and CPM increases were in the high teens," he added. For incumbent clients, CPM hikes were in "high single digits."

Hallmark wrote new business in the credit card, automotive and restaurant categories, Abbott said.

E! Networks executive vice president Dave Cassaro said, "We've been done two-and-a-half weeks, [with] volume way up, CPM increases way up," though he declined to get more specific.

"We're pretty much done," except for a couple of deals, Lifetime Television executive vice president Lynn Picard. She said volume rose roughly 20%, with CPM hikes "in the mid-teens."

"We did hold out [on pricing] and we did achieve our goals," she said.

Game Show Network was "about 90% done," said senior vice president of ad sales Michael Sakin, who added that dollars were up 75% and CPMs grew "in the mid- to high-single digits."

The fast-food/restaurants category was "up tremendously," said Sakin, who cited pharmaceuticals, automotive (mostly imports), packaged goods and retail as other sectors that notched big spending growth.

Scripps Networks executive vice president Steve Gigliotti said his company had achieved 80% of its upfront goals, posting double-digit volume and CPM increases.

Fox's Lefkowitz described this upfront marketplace as "almost a tale of two markets" — "the fast, early frenzy and then that little lull" that came earlier this month, when some mid-tier networks "bent a little" on agencies' pricing demands. Some had been holding out for double-digit increases, another executive said.

News Corp. doesn't disclose specifics, but Lefkowitz said Fox Cable "dramatically outpaced the market volume and CPMs had above-market increases."

Magna Global USA was the last of the major media-buying entities to finalize upfront deals with Hallmark, said Abbott, but they did so "with significant increases in volume."

Magna was among the most hard-nosed media negotiators with many of the networks it targeted, other programmers said.

In trying to explain why agencies toughened up on cable, one veteran cable sales executive said: "The broadcasters kick [the buyers] in the teeth, and then the agencies say, 'Who can we kick in the teeth?' "

Looking back on another upfront, PHD North America CEO Steve Grubbs pronounced the process flawed, but viable.

"[The networks] offer audience guarantees and price discounts versus the short-term market," he said. "We can lock in inventory for key sales periods, and they offer us options and other chance to reduce our long-term commitments."

As for its shortcomings, Grubbs said, "It's our job to react, adapt [and] anticipate those flaws."

In the scatter market, Lefkowitz said, "third quarter is starting to heat up." Abbott concurred, and said that Hallmark's prices are "10% to 15% above upfront."

Most network executives said it was too soon to gauge fourth-quarter scatter. But E!'s Cassaro said agencies have already submitted their fourth-quarter scatter plans.

Lefkowitz felt "fourth quarter will be the true indicator" of the strength of scatter and spending into 2004.