NCC Finds Silver Lining in Sluggish Sales

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Leading spot cable ad-sales rep firm National Cable Communications Inc. last week managed to find some roses among the thorns of its downbeat reading of first-quarter business.

"We're going to be about 5 percent behind," said NCC executive vice president and director of sales Andrew Ward. But had NCC not aggressively addressed the situation, that shortfall would have been greater, he said.

During the first quarter, NCC realized that the once-hot dot-com segment would not match its 7 percent share of total volume from the year-earlier period, said Ward. It also figured that such perennials as the automotive and media/entertainment sectors-which last year accounted for a respective 40 percent and 21 percent of NCC's billings-would not approach their prior benchmarks, he said.

As a result, the firm sought to "insulate ourselves by focusing on non-traditional categories," according to Ward.

In fact, what's now called the "dot-bomb" category has virtually disappeared this year, said Ward, and the automotive and media/entertainment categories have plunged into "the high teens" in terms of their share of NCC billings.

But Ward found bright spots in the financial services, retail, restaurant and beer categories, which offset part of the aforementioned declines.

"We've generated 15 percent of our [first-quarter] performance from those sectors alone," he said.

March and April have also been sluggish, but "it looks a little better for May," said NCC vice president of affiliate relations Steve Houck.

The second-quarter spot marketplace was not dramatically affected by network ad-spending cutbacks by General Motors Corp. or DaimlerChrysler Corp., which were countered by related increases from Ford Motor Co. and the Japanese carmakers.

If anything, said Ward, clients have held on to their ad dollars until the last possible minute. DaimlerChrysler, for one, delayed its first-quarter spot spending until late in the game.

NCC won't get a true handle on ad spending for the second quarter and beyond until the outlook for the networks' upfront market becomes clearer, cautioned Ward.

"It's certainly a buyer's market, so buyers are able to dictate rates," Ward observed. That's in sharp contrast to a year ago, "when costs per points were healthy," he said.

Ad agencies are counting on the fact that the national pendulum will swing toward the buyers' side of the bargaining table during both the kids' and general-market upfront.

Fox Family Worldwide last week was the latest programmer to make its kids' upfront pitch to the agency buying community. In a reverse of a recent trend, executive vice president of ad sales Barbara Bekkedahl said that lately, the kids' scatter marketplace has been "stronger than primetime, [which is] a little soft."

With respect to the kids' upfront, which various sources expect to conclude in late April, Bekkedahl reiterated what she and others had said in weeks past-the market should wind up "similar to last year." Although toy spending has been off, she said, the packaged-goods and movie categories have shown promise.

Bekkedahl's assessment was in tune with previous industry sources' projections of a flat overall kids' upfront, at about $750 million in total. But cable's share may grow from last spring's $450 million take as broadcast's position declines, sources noted.

As for the general market, once-bullish executives at CBS seem to have given in to reports of a downturn. The broadcast network recently indicated that it would limit its upfront avails to 55 to 60 percent of its overall 2001-2002 inventory. Other broadcast networks have also hinted that they would tighten up their avails, but not to the same extent.

Typically, the networks allocate 75 percent to 80 percent of their commercial time for upfront selling.

Several agency buyers said CBS' maneuver-designed to spark a buyers' stampede-was a risky move.

In addition, the threat of Hollywood writers' and actors' strikes could affect the upfront. Positive or negative developments in the economy and stock market could also impact sales.

Published reports last week indicated that the ad-sales slump has now spread beyond TV and cable to radio, newspapers and magazines.

With all these factors aligning against them, most observers believe the broadcast network sellers will be hard-pressed to match year-ago levels. At that time, the TV networks' upfront topped $8.2 billion, according to industry sources. Since then, GM, Procter & Gamble and others have exercised options that cut untold millions from their spending.

Cable's upfront last year garnered anywhere from $4.5 billion to $5 billion, depending on estimates.

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