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Kids-Upfront Market Looks Strong

Early indicators point to more revenue 2/16/2007 07:00:00 PM Eastern

Although negotiations won’t start for weeks, several signs point to a robust kids-upfront market this year.

The kids market dragged into the summer last year, and network executives are eager to avoid that scenario. With few kids movies and videogames, kids networks’ 2006-07 upfront take was a bit softer than the year before—about $900 million.

This year looks better. Movie studios plan more child-targeted fare, and the gaming category is strong after new consoles sold well in 2006. Despite hype that kids’ attention is increasingly fragmented, their TV-viewing levels were actually up slightly in 2006 from 2005 (0.5 of a ratings point, or 7%, for kids 6-11, according to Nielsen Media Research).

As always, advertisers are clamoring for a limited number of slots in the three key periods on kids’ networks: the weeks before Christmas, Easter and the start of school. For that reason, other advertising opportunities, such as on digital platforms, are more important than ever.

Still, although networks say the majority of their big deals now have a digital component, the real money will be in traditional TV for a while. “Linear television is still the most important part of our portfolio,” says John O’Hara, Cartoon Network senior VP/general sales manager, ad sales and marketing,.

Cartoon Network estimates that just about 10% of its overall ad revenue will come from digital platforms. Nickelodeon, despite having introduced a social-networking site and a revamped broadband channel this year, sells digital inventory in just more than half of its deals.

“Those marketers that really are working with us in a deep way digitally are spending 5%-10% of their money on digital properties,” says Jim Perry, executive VP, 360 Brand Sales, Nickelodeon and MTVN Kids and Family Group.

Complicated digital deals could make for sluggish upfront dealings, though. To avoid that, both media-buying firms and TV networks are streamlining their sales infrastructures. Disney/ABC this year consolidated ad sales for all its kids divisions, including broadcast and cable TV, Internet and mobile products.

“The question is, will people buy online on its own or in the traditional TV upfront,” says Tricia Wilbur, executive VP, Disney Media Advertising Sales and Marketing Group.

Digital products are particularly important to Disney, whose flagship Disney Channel is not ad-supported. No matter, the channel is coming off a phenomenal year, jumping 29% year-to-year in the ratings during 2006, while Nickelodeon fell 3%.

Nick vs. Disney

Nick is still the kids-networkleader (686,000 viewers 6-11 total day in 2006 versus Disney’s 546,000 and Cartoon’s 450,000), but Disney is the closest second it has been in at least six years.

Despite the optimistic signs, some complicating factors threaten to slow and diminish this year’s advertising sales for some players. Networks are having to create ever more innovative digital products to please both advertisers and tech-savvy young folks. At the same time, they’re in a heated ratings war on linear TV.

Washington Watching

Moreover, all the networks face increasing pressure from Washington on how they market to kids. In addition to ever-present regulations on food advertising, the government recently introduced rules on cross-promoting TV and online ad-supported content.

Networks say that they and their advertisers necessarily create programming with regulations in mind and that the new rules won’t affect overall ad sales. Many food marketers, for example, have created more healthy products and can advertise those instead of junk food.

“It’s a new regulatory world, and it’s a complicated world,” says Marjorie Kaplan, president/general manager of Discovery Kids Media/Animal Planet Media. “But it’s the reality of the landscape right now.”

Given the increasingly sophisticated marketplace, deals will continue to get done year-round. Says Dan Barnathan, president of ad sales for programmer 4Kids Entertainment, “There will be an upfront market because there are people who really need to get into the peak periods, but the days of it happening in a week or two are nonexistent.”

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