Clouds Gather Over Net Sales

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After almost seven years of boom times-and a particularly strong last two years-there are signs from some quarters that the cable and broadcast television ad-sales market is softening. And that trend might continue into 2001.

Some industry sources last week cited uneasiness about the economy as a factor, while others pointed to the so-called "hammock effect" that follows years in which the Olympics and elections occur.

Still others blamed the dot-com marketers, who have pulled back sharply after spending prolifically on media in 1999.

On the buying side, "[the] fourth quarter has been traditionally soft for 16 or 17 years," said Jon Mandel, co-managing director of Grey Advertising's MediaCom media-buying unit. "People forget that because of the dot-coms last year."

Things were also pretty quiet at OMD USA, the former Optimum Media Direction, said senior vice president Chris Geraci.

"The dot-coms are virtually non-existent," Geraci reported. His shop conducts buys for Omnicom Group's BBDO Worldwide and DDB Worldwide.

Some of the market's softness is attributable to "earnings issues" at various marketers, Geraci said. The Screen Actors Guild strike against agencies also may have delayed some clients' ad plans, he said.

A blitz of movie advertising between now and Christmas may help, several cable executives said. But they admitted that it wouldn't make up for the dot-com shortfall.

In the current quarter, Mandel said, "There is no market." What business there is in the scatter market, he said, involves the broadcast television networks, rather than cable.

But that's not due to any weakening in the economy, he said. Rather, it's happening because "cable got greedy and overpriced itself" at the 2000-2001 upfront.

Looking into 2001, Mandel dismissed talk about another supposed tradition-the hammock effect-in which ad spending declines in post-election and post-Olympic years.

"That's a crock, a silly old wives' tale," he maintained. The Summer Olympics increased network spending levels by about 2 percent this year, he said, adding that the election doesn't do much for national figures.

But MediaVest president of U.S. broadcast Mel Berning wasn't so optimistic.

"I think we're right on track" for a 2001 slump, said Berning, whose shop buys time for Procter & Gamble. "I don't see this changing anytime soon."

He cited "no shortage of reasons" for the slowdown, including rising energy costs, steeper interest rates and "the tech guys pulling back."

No one seems to have a truly clear crystal ball, though. The outlook seems to vary widely from programmer to programmer, with the more targeted cable networks apparently weathering the slump better than the broad-based ones.

Two weeks ago, USA Networks Inc. chairman Barry Diller told analysts that the scatter market was "quite weak" and "advertising won't be as robust" in the months ahead. (See related story, page 49.)

By contrast, Viacom Inc. president Mel Karmazin said earlier in October that concern about ad sales was "in the stock market, not the company." Though the dot-coms may have curbed their spending, that's just one category, he added.

Viacom unit MTV Networks had just reported double-digit ad-sales growth in the third quarter-with indications from other company sources that it would keep up its pace into 2001.

But other buyers and sellers said many TV and cable networks have been hit with ad-sales slowdowns and buy cancellations, including revisions on deals made at the upfront.

Upfront buys are adjusted every year, but 2000 saw "more revised-holds or dropped money" from last June's upfront commitments than usual, said Lifetime Television executive vice president of ad sales Lynn Picard.

An executive at a midsized targeted network who did not want to be identified said there haven't been any major cuts, so last June's upfront totals haven't been altered dramatically.

At that time, basic cable had amassed between $4.5 billion and $5.1 billion, depending on which industry sources one believed. The broadcasters had tallied about $8.3 billion.

Although "a lot of networks seem to be facing challenges in meeting their fourth-quarter numbers," Picard said, "we're not in that boat-we're doing great."

Picard said she knew during the upfront "the dot-coms weren't expected to return" to the same degree as last year, "so we built that into our sales strategy." As for 2001 expectations, "it's hard to say" at this point.

Picard anticipated "a more normal marketplace than the past two years," which she described as "crazy."

At Fox Family Worldwide, executive vice president of ad sales Barbara Bekkedahl agreed that fourth quarter is soft, with "a lot of networks like us losing some [upfront] business for [the] fourth quarter as it was scheduled to go from 'hold' to 'order.'"

Fox Family has been active in the scatter market with various clients, but Bekkedahl said there were "no big 'hits, 'no big category, no big product launches."

A Turner Broadcasting Sales Inc. spokesman said this quarter is "very soft." Turner's cable networks have not shown much improvement over third quarter, the spokesman added.

But they are now picking up steam in booking calendar-year deals, he noted.

Turner executives "don't see this as a continuing trend" and are projecting a strong opening quarter in 2001, he added.

Two sales executives at two different niche-network companies, each speaking on condition of anonymity, offered very different appraisals.

"This fourth quarter is not as strong as a year ago, not by a long shot," one said. But he said his network's 2001 opening quarter would be better than 2000's.

Given the volatility on Wall Street, where many marketers are being "punished for missing their marks even by a little," he said, "advertisers are a bit skittish."

Still, those networks with attractive demographics and programming are "in OK shape," he continued, whereas "those with nondifferentiated audiences are having a rougher go.

"It isn't a disaster, isn't a train wreck," he said. "If fourth quarter last year was a ten, then this fourth quarter is a four or a five. A train wreck would be a one."

Another cable executive, who oversees several networks, described the current quarter as "very strong," with growth in double digits-a pace he expects to continue into next year.

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