Cable Gains as Grey Breaks Kids Logjam

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New York -- After nearly three months of the waiting game,
buyers and sellers finally came out to play for real in the kids' upfront sandbox two
weeks ago, and they were virtually finished late last week.

When the dust clears in this "correction year,"
the overall kids' upfront will be flat, but cable's share will be on the rise,
perhaps by more than 20 percent.

"Mandel finally gave his permission," as one
cable executive remarked, not for attribution. He was referring to the decision by Jon
Mandel -- senior vice president at Grey Advertising, and the largest kids' buyer --
to wait until closer to May to begin the kids' upfront. In the past, upfront
negotiations had started in February.

Grey (chiefly for Kraft Foods and Hasbro Toys) and Leo
Burnett USA (for McDonald's Corp. and Kellogg Co.) were among the first to move.

The combined cable, broadcast-television network and
syndication kids' upfront will be "pretty flat -- maybe even less" than the
$800 million amassed a year ago, but cable's share will rise, said Karl
Kuechenmeister, senior vice president of the Turner Kids unit of Turner Broadcasting Sales
Inc.

Cable networks raked in perhaps $440 million, up from $365
million, sources said.

Going in, most industry sources had projected that in this
buyers' market, the total kids' upfront would grow by 4 percent or 5 percent.
So, what's the matter with kids today? Kuechenmeister blamed toy-company
consolidations and packaged-goods companies playing it safe.

Rate cuts also played a big role, mainly hurting TV-network
and syndication players.

"The big guys were friendly priced," said Gary
Carr, senior vice president at Ammirati Puris Lintas.

Some buyers and sellers singled out Fox Children's
Network and ABC among those dropping CPMs (cost per thousand homes), although the latter
boosted volume. Joe Mandese, senior vice president at The Myers Group, which tracks
upfronts, said Fox Children's Network suffered "steep" CPM cuts.

Meanwhile, Cartoon Network and Kids WB were among the big
gainers, sources agreed.

"The kids' juggernaut slowed," Carr
observed. "After a few strong markets, there was a correction [this year]. Supply
exceeded demand, so CPMs were friendly."

Carr noted, "Nickelodeon ate a lot" of kids'
money, with long-term deals commanding increases of 15 percent to 20 percent, and there
was "not a lot of money out there," keeping prices low. Another factor, he
added, was that much of the money that was out there went to Cartoon and Fox Family.

Nickelodeon made the lion's share of its deals long
ago, in keeping with its practice since 1995 of securing two-year contracts; many of those
have since been extended. So the leading kids' network entered the marketplace in
good shape, winding up with $300 million or more, by most accounts.

Having only a relative handful of new primetime avails to
sell, John Popkowski, president of ad sales/U.S. for MTV Networks, said Nick was for the
most part "just an innocent bystander" in this upfront. Those new avails
"didn't amount to a hill of beans," he added.

Cable's runner-up was Turner Kids, which
Kuechenmeister put at $100 million. Turner Kids now pretty much means Cartoon Network, he
said, since Turner Network Television sells just two hours of animation in the early
morning hours, and TBS Superstation will replace all of its remaining animation with
sitcoms this fall.

The entry of Fox Family Channel was one big reason why the
marketplace was delayed, as buyers scrambled to factor all of that additional inventory
into their plans and to leverage that glut against the competition's pricing.

Although Rick Sirvaitis, president of ad sales at the
network, was unwilling to assess the upfront until after its conclusion, other sources
estimated that Fox Family probably tallied $30 million to $40 million, as a lot of
agencies made small buys to get a presence.

A year ago, according to Myers Group estimates, Nick
garnered $250 million and Turner Kids $100 million, with miscellaneous other cable players
(notably The Family Channel and USA Network) taking in a combined $15 million.

Various networks had made some piecemeal deals with
agencies since February. But, as Mandel put it in mid-April, "the little people --
toy companies that you never heard of -- have done things here and there, amounting to a
couple of million dollars."

Some, like Fox Family, said, in effect, "It ain't
over till it's over," since some ad agencies were still doing deals late last
week -- but others countered that this "mop-up phase" won't change things
appreciably.

Kuechenmeister, noting that the selling never truly ends,
now felt that there may be a healthy scatter kids' market ahead.

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