Time Warner’s King Fischer

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Larry Fischer began pioneering the cable system ad sales business 17 years ago when he created an ad sales division for ATC Manhattan Cable and Paragon Cable in New York City. But today Fischer has his eyes glued on a number of present brainteasers and future opportunities as the president of Time Warner Cable Media Sales. The division includes more than 30 field operations plus oversight of the Time Warner Cable’s involvement in several interconnects. Recently, Fischer talked with Multichannel News special projects editor Janet Stilson about a number of challenges and goalposts, including new audience-measurement tools now in the test phase that could bring startling clarity to the vulnerabilities and strengths of TV programming in local markets, as well as his high expectations for on-demand advertising revenue in the very near future. An edited transcript follows:

MCN: I understand that for some companies, the spot market in the first quarter was pretty soft. Was that true of you?

LARRY FISCHER: It’s always different in cable than in broadcast.

MCN: But was it soft?

FISCHER: Not as soft as it is for broadcast. Time Warner Cable Media Sales had a very strong January. Such was not the case in February, and for March, the jury is still out. I think we’ll be on budget for first quarter.

MCN: What are your expectations for revenue growth for the whole year?

FISCHER: I would say low teens.

MCN: Is that better than the growth you had last year?

FISCHER: Slightly.

MCN: Are there certain industry sectors that are performing stronger than they did before?

FISCHER: Yes, financial, health care, automotive — particularly import automotive — media, and entertainment.

MCN: Are there certain markets or certain regions where you’re seeing the most growth these days?

FISCHER: This year, the areas that are growing the fastest for us are Texas, the Northeast — believe it or not — upstate New York and Portland, Maine. And North Carolina.

MCN: Why upstate New York?

FISCHER: They have a wonderful team, and they do something that we’re sort of adopting around the rest of the country. We do an upfront market for our clients. When you think of upfront, you think of cable networks doing the upfront, but we actually offer a 52-week package to our advertisers. We don’t let them cherry-pick the programs that they buy.

Over the course of the year, these kinds of tonnage buys have proven very effective, and these advertisers will come back during the course of the year and buy some specific high-rated stuff. So by the middle of February, half of the budget has been hit already.

MCN: Is that the only region where you’ve done that in the past?

FISCHER: It’s the only region we’ve done it consistently for the past four years. Joe Noonan, who is our regional vice president in Albany, has been flying around the country showing the rest of the folks what he’s done.

MCN: What do you see as your major challenges right now?

FISCHER: I would say without question the major challenge is how soft the broadcast marketplace is without political [spending] and without the Olympics, and the downward pressure they’re putting on rates.

Even [in the markets] that aren’t people-metered, we are forced to compete on a cost-per-point and cost-per-thousand basis with the broadcasters. In many ways, we’re at the mercy of whatever efficiencies broadcast is charging.

That’s why I think we can’t abandon what got us here — which is the fact that we’re able to zone, so we’re able to carve up geography in a meaningful way for our advertisers. We have such wonderful demographic and geographic capability — target-ability, I guess. So Time Warner Cable Media Sales’ philosophy has been not to abandon the advertiser that helps our business.

The challenge for us with them is — as there are greater demands placed on our inventory — what we’re going to be able to sell them at a price that they can afford. We don’t want to disenfranchise them.

MCN: Is Time Warner Cable still in negotiations to join the New York Interconnect, or have you decided that you don’t want to be part of it?

FISCHER: I don’t think it ever got as far as negotiations. We engaged Kane Reece [Associates Inc.] to do some due diligence on the three companies, because Comcast [Corp.] is a player as well [as Cablevision Systems Corp.], and we asked them whether it made sense for us to connect, and it never really materialized. I think that they found that there were anomalies that they couldn’t justify in their own mind, or rationalize I should say, as to why we ought to do it.

MCN: So it’s dead as an idea?

FISCHER: I wouldn’t say “dead.” But I would say that I think we want to mind our respective businesses. There’s a lot on our plate these days, as you can imagine. I’ll speak for myself. There’s a lot on my plate. I’ve recently hired Howard Levinson to be our regional vice president in New York City, replacing Steve Berman who had been with the company for seven and a half years. Howard comes to us from WPIX-TV.

MCN: What has been the effect of the local people meters in the markets you serve that have them, Los Angeles and New York?

FISCHER: I think the anticipation was that people meters were going to be a home run for the cable industry, and it hasn’t proven to be that. I think people meters have marginalized, basically, everyone’s audience. Not everyone, but in other words, broadcasters for the most part have lost a piece. [Highly-rated] cable networks have lost a piece. And I think that some of the medium and lower-tiered cable networks have come up.

So it’s a question of the agency community digesting what this change is all about and responding to us appropriately. I don’t think we’re there yet.

MCN: It’s not doing much for anything that works to your advantage?

FISCHER: [News channel] NY1 is our highest-rated network in New York, and we’ve seen the numbers come down slightly in the morning. It doesn’t mean that we can’t sell NY1, because we can and we are, but it does make it a little more challenging.

MCN: Will the problem expand as more local people meters launch in other markets?

FISCHER: No. The other thing I want to say about Los Angeles is that as you might imagine with such a high percentage of Hispanic viewership, more and more ratings are going to Hispanic broadcasters in L.A., making the L.A. market challenging for [the interconnect] Adlink. But to answer your question, no. We don’t have any other top 10 markets.

MCN: How many networks do you sell avails on at this point and how will that change in the coming year?

FISCHER: On average we have around 40. In New York, we have 52. But I think with digital insertion, we’ll probably add another 12 and then another 12 on top of that. In the not too distant future, at least 60. Maybe more.

The exciting part is that I think everyone else is being marginalized. Newspapers have been marginalized by the Internet. Young people aren’t reading newspapers; young people are online. Older people aren’t online. They are still reading newspapers. Radio stations are getting very concerned about satellite [radio], kind of where our industry was years ago.

At least we have the ability to aggregate eyeballs. The broadcasters don’t. Radio stations won’t. Newspapers can’t, and the Internet is still tricky.

MCN: What are you doing in the realm of on-demand advertising? Are you starting to experiment with that?

FISCHER: We are, indeed. We have a test going with Coca-Cola called Coke Entertainment on Demand in North Carolina. It’s the movie trailers, and it’s some music, and it’s the winners of their contest — when you go to the movies and you see these short 60-second vignettes that were shot by amateur videographers.

We took the top 12 winners on our server, and we’re getting lots and lots of hits. So it’s sort of an experiment. So Coke is something we experimented with.

We also did that with American Express. Last year during the [National Basketball Association] playoffs, American Express produced eight-minute vignettes. One was about the NBA rookies; the other was about international players in the NBA. We called it an NBA Showcase. American Express promoted the free-on-demand feature in Los Angeles, San Antonio, Houston and Minneapolis. All four of those teams were in the playoffs.

MCN: What industry sectors do you think are going to be the best bets for this kind of advertising? I would have to think that any type of company that would do classified advertising, like automotive and real estate, would see the advantage.

FISCHER: Yes, you know, in Austin, for example, we have a real estate channel. We have a home channel. We have a wheels channel — I guess it’s called Beep TV — and job listings. I think those can be local, and I think the automotive can be national. We’re talking with a national-content creator for the automotive sector, and we’re talking with the movie studios about B-trailers.

MCN: When will it be a meaningful portion of the revenue?

FISCHER: You’d have to define meaningful, but I think it could be driving as much as 25% of our business next year.

MCN: What will it be this year?

FISCHER: It will be a fraction of that, because I think we’re still experimenting.

MCN: Are you increasing your emphasis at all on research?

FISCHER: Right now the focus is in Honolulu. We’re doing an experiment with a company called TNS [Taylor Nelson Sofres plc], and it’s playing off our middleware platform, basically telling us what the viewer is doing every three seconds — what they’re watching and how they’re watching. It’s really quite interesting to see what they’re doing.

MCN: What are the more interesting revelations that you’ve come up with so far?

FISCHER: A show like American Idol, obviously we know rates very well. After the show is over, and the Fox affiliate goes into news — which isn’t exactly the American Idol demo — the drop-off in viewership is precipitous.

MCN: And where are they going?

FISCHER: They’re going to MTV [Music Television], to Comedy Central, to E!, to a local-access network.

MCN: So do you expect to roll that research out more widely over the course of this year?

FISCHER: I don’t have the answer to that. Obviously, the challenges of how to rate viewership are enormous.

MCN: Are you doing any local promotions with channels that are particularly interesting these days?

FISCHER: I know that we’ve recently done a [National Geographic Channel] promotion. We did a Monk promotion — a “Meet Monk” promotion. And we’re about to do something in June with [Cable News Network] and Anderson Cooper. We have about — I don’t know — somewhere between 20 and 30 of our 37 divisions participating.

MCN: And what do you see as the industry’s greatest challenge at this point in time?

FISCHER: The greatest challenge is what we were talking about a moment ago, is [deciphering] how people are watching television today. [It’s] incredibly valuable data. There are clients that we talk to about our advanced-advertising capability who agree to [deals], but at the end of the day, the only concern they have is mining the data, to make it available to them. Networks aren’t going to like what the data says. You know the broadcasters aren’t going to like it.

But the advertisers are going to like it a lot, because they can make more intelligent decisions about how they use the television medium. We have the key that unlocks this information, and so to answer your question, the greatest challenge is how that key unlocks the information and how that information gets disseminated.

MCN: Is the key going to unlock the door anytime soon?

FISCHER: I’m an optimist so I would say it’s not going to take years, but I think that old habits die hard.

MCN: Okay. What haven’t I asked you that you think is interesting about what you’re doing these days?

FISCHER: What’s most interesting to me is the human currency and where we’re getting our people from. The fact that I started off by telling you that we were able to attract the general sales manager from the No. 4 billing station in New York — that kind of speaks volumes to how far the industry has come.

The fact that Bob McCauley left [the Fox duopoly KCOP-TV and KTTV-TV in Los Angeles] — and was generally considered to be the top sales manager in Los Angeles — that he would come to Adlink, and be as successful as he has been at Adlink, I think is a testament to how far the industry has come. [And it shows] how much those kinds of people believe that [although] we’ve come so far so quickly, that there’s still so much room for growth.

I think that’s critical. That’s the fun part of my job, frankly, is identifying who those people are and actively recruiting them, and I will do that myself. I’ll do it for my corporate staff and I’ll help the people in the field do it as well.

MCN: Has your staff increased over the last couple of years at all?

FISCHER: My corporate staff has increased ever so lightly. We’re kind of lean and mean here at Time Warner Cable, and I kind of like it that way. It keeps me close to the business and it keeps my lieutenants close to the business. As it’s contemplated that we’ll get bigger — and I hope we do — that may become increasingly more difficult. But from where I sit right now, I want to stay close to the business, as close as I can get.

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