Basic cable's take of upfront ad sales will grow by $500 million this year, to $4.5 billion, Discovery Networks U.S. executive vice president of ad sales Bill McGowan said last Wednesday.
On the broadcast side, the major networks' take should hold steady at $7 billion, McGowan said at Discovery's annual upfront press briefing, held at the Rainbow Room here.
McGowan's prediction, if it holds, would translate into a 3 percent uptick in cable's share of the total upfront ad-sales volume, to 39 percent from 36 percent last season. It would also lift cable somewhat above the 38 percent share it had attained in the 2000-2001 upfront — before a confluence of factors led to a "seismic shift" in the marketplace, he said.
That shift — which McGowan dubbed "national television's version of The Perfect Storm
" — was sparked by the collapse of the dot-coms, an overall economic downturn, consolidation in the ad-agency sector, more cross-platform deals — and the ad-spending rollback that followed the Sept. 11 terrorist attacks.
Jack Myers Reports has also assessed the upfront, in which marketers and their agencies secure ad time from networks in shows set to air during the upcoming TV season. It projected that the overall selling season would be flat, with "some redistribution of budgets based on which sellers are most willing to reduce CPMs [costs per thousand] in return for share" of ad revenue.
Myers had predicted that CPMs, averaged across broadcast and cable networks, "should be down 4 to 6 percent, with CBS, The WB and Lifetime [Television] at the high end of CPM increases."
Last season, McGowan said, CPMs dropped anywhere from 5 percent to 15 percent, depending on who made the calculation.
A NEW PARADIGM
This year's Madison Avenue sales ritual will mark "the death of the traditional upfront as we have known it," McGowan predicted, with clients having more control.
Advertisers are now emphasizing enhancements and targeting, and that affords cable an advantage over the "boxcar ratings" of the broadcast networks, which have dwindled due to audience erosion. That should lead to a "shift from price to value" in upfront negotiations, he maintained.
McGowan also expects the upfront to move away from its historical concentration in May and June. With the "transition to … a year-round upfront," he said, "for the first time, cable is going to lead the market."
At the outset, during May and June, the upfront will move slowly, driven by opportunistic and bargain-hunting buyers. Later, it will develop a more moderate pace and eventually, a surge in activity — though McGowan could not say just when in 2003 that latter phase would kick in.
Myers holds a somewhat different view, noting that early deals will be struck between "the large mega-buying shops and multiplatform media companies." By July 4, he predicted, "a surge of deals [will include] networks such as ABC, USA [Networks], Discovery [Networks] and Turner [Broadcasting Sales Inc.], followed by a long summer of protracted negotiations."
PEEK INTO NEXT YEAR
McGowan even ventured a guess on the 2003-04 upfront. At that point, he believes cable could notch a record $5.5 billion ($1 billion over this year's projection), while broadcast's take would expand some $300 million, to $7.3 billion.
Under that scenario, the combined upfronts — helped by the Summer Olympics on NBC and its co-owned cable networks — would amass $12.8 billion in ad sales, the same amount broadcast and cable had attained back in 2000, he noted.
Cable should pull in 43 percent of all upfront ad dollars in 2003-04, McGowan added.