Healthy Growth at Regional News Nets
By Alan Breznick -- Broadcasting & Cable, 11/23/2003 7:00:00 PM
Despite a generally poor year for local TV advertising sales, cable's regional news networks think their day in the sun has finally arrived. From Boston to Seattle, the three dozen or so nets are boasting ad-revenue increases of 10%, 20% or more this year, easily outpacing the overall market for local cable ad sales. Even the war in Iraq and the buildup to it haven't put much of a damper on their growth in 2003.
"It's been phenomenal," said Elliott Wiser, vice president and general manager of Bay News 9 in Tampa and vice president of news programming for the Florida group of Advance/Newhouse's Bright House Networks. "We've had terrific growth, more growth than in 2002."
Moreover, the news channels are breaking into such new ad categories as pharmaceuticals, home furnishings and movie studios, attracting more business from existing sponsors and, they say, stealing advertisers away from local broadcasters. Seeking strong revenue hikes again in 2004, some are also boosting rates in key time slots as much as 30%-40%.
"We are working very hard," said Philip Balboni, president and founder of New England Cable News (NECN), one of the granddaddies of the business, with 2.7 million subscribers. "We're working particularly hard on new-business development, bringing in new clients." He estimates that NECN's local ad sales have climbed 10.4% on a year-to-year basis through the first 10 months of the year, rising 19% in October alone.
To be sure, not all the regional news networks are enjoying such robust sales growth. With performance varying widely by market, industry officials say, a few news channels have made the mistake of spending too heavily upfront or setting overly ambitious ad goals.
"Bad news channels can't make money," said one regional news network executive who asked not to be named. "News channels with bad business plans can't make money." He noted the demise of news channels in San Francisco and Orange County, Calif., over the past couple of years.
Overly rapid expansion is a threat as well. Conscious of that, Time Warner Cable, which has launched six regional news channels (Albany and Syracuse, N.Y.; Raleigh and Charlotte, N.C.; Houston and and San Antonio) in the past two years, has shelved its plans for a news channel in Milwaukee. The MSO is the biggest player in regional news, with nine networks across the country plus two others in Florida (Tampa and Orlando) that it started and then turned over to Advance/Newhouse.
"We're generally pleased," said Larry Fischer, president of Time Warner Cable Advertising Sales, who oversees the MSO's stable of news networks and expects 15%-20% growth in overall sales next year. "[But] this is a huge undertaking and an expensive one. It's still quite costly."
Despite such challenges, though, many news networks, such as Tampa Bay's News 9 and NECN, are seeing their ad revenue surge. They're pulling off this feat by crafting sponsorship of packages that rival broadcast stations can't match. For instance, they sell exclusive sponsorships of regular weather, traffic, health and food segments to local, regional and even national advertisers, enabling sponsors to brand those segments as their own.
In Texas, for instance, Time Warner and its national ad-rep firm, National Cable Communications (NCC), have corralled the Texas Beef Council as a segment sponsor. On the news channels in Austin, Houston and San Antonio, the council is backing a series of special holiday beef recipes on the "Floyd the Food Guy" cooking segment.
"A lot of what we do is sponsorships and entitlements," said Deborah Cuffaro, vice president of news and multicultural sales for NCC. "[News channel commercial space] basically was sold more on a spot basis before." With a fresh emphasis on cable news sales, NCC now represents about 20 regional news channels throughout the U.S.
The news networks are also boosting ad sales by pursuing local, regional and national political spots much more aggressively than ever. With the 2004 presidential election season already heating up and plenty of potentially compelling statewide races on tap next year, the regional channels are making the rounds of campaign headquarters and political consulting firms.
"We're really going to get our arms around political next year," Fischer said. "We're doing all the necessary due diligence to determine the key races."
NECN has already sold airtime to two Democratic presidential candidates, Sens. John Kerry of Massachusetts and Joseph Lieberman of Connecticut. With the crucial New Hampshire primary coming up in January, network officials expect to sell time to at least one or two other leading candidates as well.
"Dean will be on, trust me," said Barry O'Brien, NECN's political-advertising consultant, referring to the former Vermont governor considered the Democratic frontrunner. O'Brien, who helped NECN boost its 2002 political-ad billing by 50% over 2000, also expects to garner ads from retired Gen. Wesley Clark and more from Kerry's campaign.
With the Democratic National Convention scheduled for Boston in July and the Republicans slated to gather in New York later in the summer, NECN and its New York Time Warner counterpart, NY1, are aiming to take advantage by selling sponsorships for their heavy convention and other political coverage.
With the help of organizations like NCC, the regional news channels are also chasing after other national advertisers much more than ever before. They emphasize their growing market coverage, improving ratings, upscale audiences and strong community ties.
Take Comcast's CN8, whose recently expanded 6.2 million-home coverage area now extends from north of Boston to south of Baltimore. Although not strictly a news channel, CN8 runs three daily newscasts in most of its markets, along with talk, entertainment and sports shows.
"We broke a lot more business this year," said Jeff Broder, director of network advertising sales for CN8. In all, the regional channel has brought in 15 new national clients in 2003, including Mercedes, Jeep, BMW, Becks, Jenny Craig, Boston Market and Washington Mutual. Broder expects total ad sales to rise around 21% this year, after soaring 62% in 2002.
The regional news networks hope to capture even more national accounts next year because of the genre's increasing visibility. From San Diego to Orlando, there are now 37 cable news channels in the nation, with a total subscriber count of well over 15 million. The lineup of networks includes big ones like Time Warner's NY1 and Cablevision Systems' News 12 in New York, NECN in Boston, and Tribune Co.'s Chicagoland Television News, although nothing yet in such other major cities as Los Angeles, San Francisco and Miami.
"It's really all about focus," said Cuffaro, whose unit has helped boost national ad sales 60% for NCC's clients this year. "A lot of what we've done this year is lay the groundwork for next year."
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