MSOs See Clouds in Ad-Sales Silver Lining

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For most MSOs, the local-ad-sales pace for the first nine
months of 1998 was brisk, but some have noticed slippage since then.

Among those willing to talk about the marketplace outlook
for the remainder of 1998, there was concern about the stalled National Basketball
Association season and about potential storm warnings regarding the U.S. economy.

Kevin Dowell, Jones Intercable Inc.'s group
advertising director for the Chicago region, said that region's local sales rose
nearly 15 percent for the third quarter and just over 20 percent year to date. The
nine-month figures were above budget, while the quarter was just about on plan, he said,
explaining that "huge" July and August results were followed by a weak
September.

October is starting off slowly, as well, with Dowell
fretting about "the skittish nature of the economy." That could be a problem --
although that same situation does lift ratings for CNBC and other networks covering the
stock market, he said, half-jokingly.

But for Dowell's Chicago region, "the biggest
black cloud right now" is the uncertainty surrounding the upcoming NBA season.
Without the NBA -- and especially Chicago's historical powerhouse Bulls -- he said,
"ad dollars will be sitting on the sidelines."

Among the categories lifting his region to date were home
improvement, political and automotive, Dowell noted.

Meanwhile, others, like Cable One, expressed some concern
that with time running out, political ad spending has yet to materialize to the extent
anticipated. Looking into the final quarter, Ron Pancratz, Cable One's vice president
of ad sales, said, "We've been teased so much by political that we're
lathered into a fit waiting [for those dollars to come in], but we haven't really
seen them yet."

Jerry Machovina, executive vice president of ad sales at
Tele-Communications Inc.'s TCI Communications Inc. (TCIC), agreed that political has
not been "what we expected it to be" thus far.

Looking ahead, Larry Zipin, Time Warner Cable's vice
president of ad sales, said, "In some of our heavily clustered states, we're
looking for a very healthy political season." He's banking on that to contribute
to accelerated sales in the fourth quarter, without going into percentages.

Whatever uncertainties may loom on the horizon, the top two
MSOs expressed confidence in a strong final quarter.

Machovina said TCI's local ad sales for the third
quarter and year to date are pacing ahead of budget, without offering percentages.

"The [General Motors Corp.] strike softened us a
little" during the third quarter, which typically lags behind the second quarter in
any case, he added.

But the fourth quarter appears to have gotten "off to
a great start," he said.

Zipin likewise was bullish on a strong fourth quarter. He
noted that projections showed the first nine months of the year running "about 26
percent ahead of last year" -- over plan, since Time Warner had budgeted closer to 20
percent growth. Zipin said he didn't have a separate third-quarter breakout.

Pancratz described Cable One's third quarter and year
thus far as "excellent in both cases," and well ahead of budget. Although July
proved "soft," the third quarter finished "healthy -- a good solid
quarter" overall, he said, singling out Biloxi/Gulfport, Miss., as a standout market
that enjoyed "a terrific quarter."

In terms of categories, Pancratz said, health care and
automotive were strong contributors. Regarding the latter, he said, "Despite the [GM]
strike, automotive was very strong, which speaks to the credibility of our medium.
It's become more important and less discretionary" to agency buyers and their
clients, he observed.

Turning to the developments earlier this fall in the
national spot-cable rep business, Pancratz said Cable One has been repped by National
Cable Communications for years. Despite that MSO's being in second- and third-tier
markets, he said, "there's a trickle-down [effect] in spot, and ultimately, we
benefit" when the market is strong.

"We do believe in competition, however," he
continued, "so we hope that CNI [Cable Networks Inc.] can restructure and continue,
or that someone [else] emerges to keep NCC sharp."

At MediaOne, Ed Dunbar, vice president of ad sales, said
through a spokeswoman that the MSO's August results were good, but data for September
and, thus, for the year to date, won't be tabulated until mid-October.

Executives at other MSOs were either unavailable or
unwilling at press time to project third-quarter and year-to-date sales results.

At the Cabletelevision Advertising Bureau's Local
Cable Sales Management conference this past July, however, Ajit Dalvi, Cox Communications
Inc.'s senior vice president of programming and strategy, predicted that Cox's
ad sales should hit $120 million this year, or 11 percent of cash flow. And Lou Borelli,
executive vice president at Marcus Cable, said its ad sales would be close to one-third of
Cox's.

A CAB spokeswoman said it's "too difficult"
to project any but annual estimates for local sales.

The CAB -- which estimated last month that national spot
dollars alone skyrocketed 45 percent for the first half, fueled by a 53 percent jump in
the second quarter -- predicted that national spot and local combined would hit $2.2
billion by year's end, up from $1.9 billion in 1997, based on Paul Kagan Associates
Inc. data.

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