Sales Slump Trickles Down To Local Ops


The national advertising-sales downturn that started last November now seems to have worked its way down to the local and spot markets.

The slowdown's ripple effect has radiated from the local broadcast and basic-cable networks to MSOs and interconnects-even though some programmers, like MTV Networks, have adamantly professed that they haven't been hurt.

Last fall, most MSOs and interconnects were optimistic that the sales sluggishness wouldn't reach them, at least in any major way. But for many, that was wishful thinking.

"Off the record, first-quarter sucks!" one cable sales executive griped.

Another added that "dot-com is long gone" as a meaningful category.

And a spending slump in local cable's No. 1 category-automotive-contributed to a poor showing in many markets, although that pain wasn't felt across the board.

Adlink, the Los Angeles interconnect, was one that was hurt by the car-sector downturn.

"It literally is a cloudy day in L.A. today," senior vice president of marketing and communications Vicki Lins observed wryly. "From our perspective, we're definitely seeing a slowdown. We're pacing at 80 percent of [first quarter] last year and at 85 percent of budget so far."

In New York, Time Warner CityCable president Larry Fischer said he refuses to get caught up in "gloom and doom."

"We have a shot, though probably an outside one, at [matching] our year-ago numbers," he said. But that would require a "Herculean" effort, he said, in part because the 2000 opening quarter was "insanely active"-and lasted a week longer than the current 12-week quarter.

Comcast Corp. senior vice president of ad sales Roger Sverdlik said the MSO is "struggling to get to budget" for first quarter. Even so, "we'll still have substantial double-digit sales gains" over a year ago, he said.

He's particularly bullish on the MSO's 10 interconnects. Philadelphia is especially "starting to really rocket, exceeding budget in national and at budget in regional," Sverdlik said.

CableOne Inc. vice president of ad sales Ron Pancratz described January as "pretty miserable." Clients held back spending due to concerns about the slowing economy and being hit with hefty winter energy bills, he said.

At another interconnect, a sales executive took note of a trend that bodes well for the second quarter.

"We're not going to make budget for first quarter, but things seem to be coming back," the executive said.

Fischer, Sverdlik and Pancratz agreed with that assessment, as did South Florida Cable Advertising general manager Charlie Slaight.

"January was a real mess, but February and March have shown a dramatic improvement, pacing slightly above a year ago," noted Slaight of the Miami/Fort Lauderdale interconnect. "It's been a tough quarter, largely because January was so abysmal."

Slaight now projects modest increases for the second quarter.

Pancratz said that February and March are definitely picking up in Cable One's much-smaller markets-so much so, he said, that the MSO likely will "come pretty darn close" to making up for its January sales shortfall and could wind up "a little short of budget."

Spending by automakers and car dealerships has taken a major hit, Adlink's Lins said. She also noted that for the opening quarter, "media/entertainment is way down, 60 percent, and technology is gone-none to date."

Political-client spending was somewhat disappointing last year, even during March's California primary, but it's totally absent this year, she noted. Unfortunately, there are no big spenders to offset those negatives, she lamented.

But automotive remained strong in No. 1 DMA New York, and Fischer expressed optimism about several other categories as well-including political. New York City holds a mayoral primary in September.

Fischer already anticipates "a strong mayoral [campaign] season" from four Democratic contenders and prospective Republican candidate Michael Bloomberg.

In addition, Fischer cited solid spending from entertainment and telecommunications accounts, the latter led by Verizon Communications Inc. and AT&T Corp.

Among auto clients, he said, "General Motors [Corp.] has a deal that's laid in for the full year," and Mercedes-Benz spending is "very strong."

Various broadcast and cable-network executives recently said that Ford Motor Co. and the Japanese manufacturers are increasing their budgets for the second quarter and beyond to take advantage of cutbacks by GM and DaimlerChrysler Corp.

Comcast's Sverdlik said "that's pretty much the same story" in terms of his MSO's local and spot sales. But Adlink's Lins said, "We're not seeing any shifting so far."

Softness in the network marketplace could ultimately help local and spot sales, Lins noted.

Systems and interconnects "often pick up some of those dollars [falling out of the network side]," she said. "During economic slowdowns, clients tend to cut back ad spending. Then their [retail] sales drop, and advertisers try to offset that by spending more. That's the cycle."

GM's spending is down, "but some imports have upped spending," Slaight said, noting that "South Florida is a pretty good market for import automotive."

Elsewhere, he said, "telecommunications is not what it was last quarter, even banking."

At the end of 2000, Myers Reports Inc. projected that combined local and spot-cable ad sales would climb 18 percent to $4.31 billion in 2001-surpassing the 14-percent gain estimated for network cable.

Various cable executives said it remains to be seen whether those levels can be attained in the months to come.

In general, Fischer said he senses "cautious optimism" from most accounts. Citing consumer-electronics retailer P.C. Richard & Son as a case in point, he observed, "People out there are not panicked, but they find it harder to part with dollars."

Pancratz, who anticipated that CableOne could wind up about even with last year in terms of automotive ad dollars, said many dealerships were "wringing their hands and not spending, but a lot of others feel the best time to advertise is when times are tough."