Cable Upfront: A Wrap at $4 Billion


As New York Yankee legend Yogi Berra used to say, "It ain't over till it's over," but it looks like its over in cable's upfront, where almost all of the major deals have been wrapped.

This time around, it looks like the annual sales push will translate into about a $4 billion marketplace. That's down $300 million from last year's cable upfront, which was restated to about $4.3 billion after a number of advertisers recently exercised their options. Meanwhile, the broadcast networks' upfront wound up at $6.9 billion by most accounts, off some $900 million.

That would leave the 2001-02 push about $1.2 billion shy of the previous upfront. Various industry sources had reasoned that dollars had been held back for the subsequent scatter marketplace, while some saw calendar-year deals as another option.

Cable's upfront, like broadcast's before it, was very much a buyer's market. This year, Madison Avenue's annual mating ritual was characterized by tough bargaining sessions in which advertisers held the upper hand and were looking to make "adjustments" after years of paying significant increases.

Deals were finalized amid persistent chest-thumping from the buying side that caused some programmers to cave in to their demands for cost-per-thousand (CPM) cuts of 20 percent to 25 percent. Sellers have been just as adamant in retorting that they did not slash their CPMs anywhere near that much. Though some did concede reductions "in the teens."

"We're virtually closed," said Turner Broadcasting Sales Inc. spokesman Mark Harrad last Thursday, noting that the company had finalized all but one major agency's buys. "We made our budget, and at higher dollars for most deals, despite CPM decreases," he pointed out, without specifying the size of those reductions. But other industry sources indicated the cuts ranged from the single-digits to low double-digits.

Summarizing the company's strategy, Harrad said, "By moving first in the cable market, like NBC in broadcast, we believe Turner came out well in what is a very tough market." In the process, Turner "captured share from our competitors," he added.

Discovery Networks U.S. executive vice president Bill McGowan last Thursday also described this year's upfront as "a share game, aimed at maximizing share of dollars." He said his company, Turner and MTV Networks have been the most active in that effort.

McGowan predicted "the vast majority [of cable's upfront] will be wrapped [this] week… about a month behind" a year ago. But he, too, said a number of lesser deals would continue to be negotiated over the next eight weeks, including some clients that may shift into calendar-year deals.

Turner executives emphasized that some networks were far from finished and that Turner itself still was working on some smaller deals from outside New York.

Noting that it was just about sold out, Lifetime Television is also pleased with its upfront results. Executive vice president Lynn Picard agreed with Myers Reports Inc.'s projection that cable's upfront would ultimately tally $4 billion.

In its final upfront before it becomes the property of The Walt Disney Co., Fox Family Worldwide last week passed the halfway mark in completed deals. Executive vice president of ad sales Barbara Bekkedahl said that programmer also had just a smattering of buys left to finalize in the kids' upfront.

MTV Networks was close to one-fourth sold. Although MTVN executives have been mum for weeks, Viacom Inc. president Mel Karmazin reported during last week's analysts conference call that MTVN had wrapped 20 percent to 25 percent of its upfront avails.

USA Networks Inc. chief financial officer Victor Kaufman said during a conference call on second-quarter earnings results that the company's upfront sales were off by more than 20 percent versus a year ago, with CPMs declining in the low- to mid-teens range. "We don't see a quick turnaround," he said, adding that he expected ad sales to be down just slightly for the full year, with the fourth quarter likely to improve upon the weaker-than-expected third quarter.