Mixed predictions

Revenue projections range from a 6% decline to 5.5% increase

Why This Matters

Larry Goodman, CNN

Larry Goodman, CNN

Cable News Network plans to make lemonade out of lemons.

It's true that network cable took a hit during last year's upfront market. And then the terrorist attacks Sept. 11 put a crippling damper on advertising in an already troubled economy.

But TV coverage of the war provided an upside for CNN, attracting a younger audience to the 24-hour news channel, and President of Sales and Marketing Larry Goodman plans to capitalize on that in 2002.

"The overall profile of the news viewer has changed significantly," he said. "Young people have found a story that is compelling and powerful and close to home for them."

That has opened up a new range of sponsors for CNN, according to Goodman. "I want to go to the Gap," he said. "I want to go to Levis. I want to go to J.C. Penney. It broadens out the possibilities and client relationships we can cultivate."

He hopes the activity he saw in the fourth-quarter scatter market signals a rebound soon, and he predicts that travel advertising will bounce. If the economy doesn't pick up, though, he expects retail ads to be weak in 2002.

"This year will not be a boom year," he said, "but it will not be anywhere near as bad as 2001."

Many, though not all, ad prognosticators predict that 2002 will be a growth year for network cable, following one of its worst upfront markets ever.

Two of Madison Avenue's key forecasters, Universal McCann and Zenith Optimedia Group, estimate that ad revenue will post single-digit gains, 5.5% and 4%, respectively, this year. And the Cabletelevision Advertising Bureau (CAB) projects that it will rise to $10.67 billion, from $10.56 billion last year.

Universal McCann Senior Vice President/Director of Forecasting Robert Coen expects network cable to outpace its rivals and enjoy relatively good demand. "Cable hasn't been declining as bad as the other media," he said. "And it has a price value."

Conceding that network cable "took a big hit" last year, Zenith CEO Rich Hamilton sees it attracting more ad spending this year. "Cable does provide a niche, upscale opportunity that is stronger than broadcast, due to the cost- efficiency of targeting."

But not everyone is so optimistic. Several Wall Street brokerages, including Merrill Lynch, as well as the Jack Myers Report
are forecasting that network-cable ad revenue will decline this year. Myers
predicts a 6% decrease.

Last year's upfront market was a disaster for cable, which did about $4 billion, a drop of $300 million from an estimated $4.3 billion the prior year.This year's upfront "will be a buyers' market for sure," said Tim Spengler, executive vice president/director of national broadcast for Initiative Media. "There's less dollar investment and more supply, and it brings the prices down."

The CAB is disagrees. "During tough economic times," said President Joe Ostrow, "when you have to stretch your dollar, cable is a better vehicle."

This fall, the CAB projects, for the first time, cable will pass broadcast in terms of audience share "on a continuing prime time basis," according to Ostrow, and that "will have a significant impact on the psychology of the buyer."

Turner Entertainment Group Sales and Marketing President Mark Lazarus was heartened by the strong fourth-quarter scatter market his networks enjoyed, saying it bodes well for this year.

Bravo Senior Vice President of Advertising Sales Hanna Gryncwajgand Comedy Central Senior Vice President of National SalesHank Close expectautomotive and entertainment, such as films, to be strong categories.

"Once 0% percent financing is done, automotive still has to spend," Close explained. "They have to move metal."

Universal McCann+5.5%
Jack Myers Report-6.0%
UBS Warburg-5.0%
Merrill Lynch-6.0%