RASCOs Kline: CNI Is Reinventing Itself

Author:
Updated:
Original:

New York -- Rainbow Advertising Sales Corp. (RASCO) has
decided to officially leave the spot-cable ad-sales business in favor of such areas as
regional news and new media, David Kline, the company's president and chief operating
officer, said last week.

Those new areas will operate under the Cable Networks Inc.
umbrella, he added.

As one indication of its new direction, Kline disclosed
that CNI may package emerging networks -- particularly those destined for digital tiers --
for sale to advertisers down the road.

So far, Regional News Representation and Rainbow
Interactive remain the only concrete examples of CNI's new emphasis. Since last spring,
the latter has handled ad sales for EZSeek, Cablevision Systems Corp.'s locally focused
online service.

RNR -- which will also help to sell ad avails on news
networks' companion Web sites -- has grown briskly since this past fall, said Kline and
Deborah Cuffaro, senior vice president in charge of CNI and RNR.

Kline said RASCO has been fortunate, as its reconfiguration
from spot cable to regional news has meant shifting personnel, but minimal layoffs.

"We finished a very difficult year in terms of
transition," he said, "but not [in terms of] ad sales, which were very
strong" and ahead of budget.

Borrowing from the regional-sports-network field, RNR
intends to package its news services as an unwired sales network on a regular basis once
their subscriber count reaches critical mass.

Kline has said previously that the industry will reach this
mark -- 32 million homes -- in a couple of years. The current regional-news-network
universe is estimated at 23 million subscribers.

But RNR is already dabbling in that approach, having sold
the Internal Revenue Service on a first-quarter buy, Cuffaro said.

Entertainment, telecommunications and financial are the top
three categories for regional news, unlike spot cable, where automotive dominates, Cuffaro
said.

Thus, she felt that General Motors Corp.'s taking control
of its dealers' advertising funds -- estimated at $500 million -- could have "a huge
impact on the spot business, devastating," while RNR's business might escape
relatively unscathed.

With the signing of Florida's News Channel last week and
two others -- NewsWatch 12 in New Orleans and Ohio News Network -- earlier this month,
RNR's regional-news networks now approach 15.5 million cable homes, Cuffaro said, or
double the count of summer 1997.

Cuffaro is confident that RNR will top 17 million homes by
March, including Time Warner Cable's planned venture in Austin, Texas.

That MSO has been tight-lipped about its future networks,
but Cuffaro and other industry sources have said that it's eyeing Houston; Columbus, Ohio;
and North Carolina, while Cox Communications Inc. and A.H. Belo Corp. look elsewhere.

At rival rep firm National Cable Communications, president
and chief operating officer John Sawhill said the company in effect dropped out of the
regional-news business nearly two years ago, when it folded its dedicated news unit into
its spot-sales operation.

But NCC continues to sell Time Warner's New York 1 News
outside of New York, he noted.

"We want to stay in that business, but in a way, that
makes sense," observed Tom Olson, NCC's new CEO. "It's somewhat problematic how
money is divided among several participants" in such regional services, Olson added.

Besides RNR, RASCO handles local sales for parent
Cablevision, it manages the New York Interconnect and it oversees national sales for
MuchMusic USA.

But Kline disputed recent published reports that RASCO
intended to take over responsibility for AMC Networks' and Bravo Networks' ad sales, as
well.

Related