Cable Execs Bullish on Upfront

Fox Cable’s LaTorre, Discovery’s Abruzzese, Turner’s Levy see big things brewing for cable

Cable’s top advertising executives are more
bullish than Wall Street about how the upfront
is shaping up. In a recent report, analyst David
Bank of RBC Capital Markets predicted that media
budgets will be up just 2%, with spending in
the broadcast upfront dropping about 2% and cable
spending increasing 4%-5%. Last year, cable
upfront volume rose 5% to $9.8 billion, according
to the Cabletelevision Advertising Bureau.

UBS analyst John Janedis sees money moving
from broadcast to cable. “Marketers continue to
look for efficiencies and cheaper CPMs, particularly
with CPM deflation across some media,” Janedis
said in a recent report. “As we approach the upfront,
we expect incremental
share to shift to cable relative
to broadcast, particularly
smaller cable nets with
strong audience trends.”

Executives on the sales
side see bigger things
brewing for cable. Lou
LaTorre, president for
ad sales at Fox Cable
Networks Group, sees the
cable upfront crossing $10
billion for the first time,
topping out at $10.3 billion
or $10.4 billion. He also expects cable volume to
rise 5%-7%, adding that it could do better if GDP
growth improves. By contrast, he sees broadcast
down 2% in terms of traditional TV ads, but up 2%
with “fluid” digital inventory counted. “It’s a healthy
market. Pricing’s been strong all year,” LaTorre said.

That would be a good jump, though not enough
to push cable prices to parity with broadcast. That
would require a tidal wave, according to Joe Abruzzese,
Discovery’s president for ad sales. “If broadcast
went from $8 billion to $6 billion and cable
went from $9 billion to $11 billion, if there was a $2
billion swing from broadcast to cable, cable would
be forced to raise their rates because it wouldn’t fit
the inventory,” he said. “Broadcast would look at it
and say, ‘There’s not enough money. I need to get
more sold out and lower the price.’”

Abruzzese says that scenario is unlikely to happen
this year. “If that was going to happen, I would
have gotten some phone calls already. I would
have gotten pressed with some early deals.”

Looking ahead, Abruzzese says things are only
getting stronger. “We’re having a [very strong]
second quarter. Lots of volume. We’re getting very
sold out,” he said.

David Levy, president of
ad sales, distribution and
sports at Turner Broadcasting,
also anticipates
a strong upfront. “I’m
seeing double-digit scatter
pricing in the second
quarter. I saw it in the
first quarter as well. I see
no cancellation options,”
Levy said. In fact, he added,
“It’s been a long time
since I felt this confident
about an upfront.”

Digital will be a factor, but Levy doesn’t see it
stealing money from TV. “A lot of the brands we
have here at Turner—CNN, Funny Or Die, Bleacher
Report—are certainly going to play a role in this
upfront, and I think TV Everywhere is really starting
to take shape and move in the right direction,” he
said. That means more content being viewed on
different devices and more opportunities for marketers
to advertise on that content.

“When dynamic ad insertion is universal, budgets
will gravitate to it because it will then accommodate
the creative and timeline flexibility most
clients need,” added Fox Cable’s LaTorre.