Cable-Hungry Advertisers Push Upfront Toward $6B

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The strong demand for network TV time is spilling over to cable, where several networks are reporting sharp increases in upfront spending.

According to buyers and sellers, total upfront spending could jump to between $5.7 billion and $6 billion, up 20%-25% from 2002.

But much of the gain is coming from selling more time. In fact, the huge cable inventory is keeping a check on prices. Cable prices are up, but nowhere near the mid- and high-teen percentage increases that the broadcast networks' reaped.

Many buyers were saying that the price gap between cable and broadcast is probably widening.

"It's going to be a lot tougher for the cable guys," says Bob Riordan, senior vice president, national broadcast, MPG. "There are too many gross rating points in cable so you can buy around anybody." He predicts mid-single-digit price hikes, on average, for the cable upfront.

"Clients are buying cable not to replace broadcast dollars but to offset" the huge broadcast rate hikes, said Jeff Lucas, president of ad sales for USA Network and Sci Fi. "Top-tier cable is becoming a good companion to broadcast."

Universal Television (USA, Sci Fi and Trio networks) NBC Cable (MSNBC, CNBC, Bravo), Turner (TNT and TBS) and Discovery had all sold sizeable chunks of their upfront inventory by the end of last week.

The Universal networks seemed to be the farthest along, with 75% of Sci Fi and USA upfront inventory sold. Volume and pricing are both up, said Lucas.

The NBC cable properties were sold in tandem with the NBC network. Between 65% and 70% of their upfront inventory was gone by last Thursday. A senior-level NBC executive reported that spending on CNBC, MSNBC and Bravo was up 28%, 14% and 24%, respectively.

David Levy, president of ad sales for the Turner entertainment and sports networks, reported that TBS and TNT had sold between 35% and 40% of their upfront inventory.

Joe Abruzzese, president of ad sales for the Discovery Networks, said his team had moved about one-third of the networks' upfront inventory. There has been huge demand for TLC, he noted.

He also predicted, based on ad budgets already in, that Discovery would increase its upfront ad total this year by 50% to about $600 million.

Levy said most advertisers had boosted their spending on his networks by "at least 10%." And it appeared that many of the same categories that were driving the strong broadcast-network upfront were spending aggressively on cable as well: notably pharmaceuticals, autos, movies and home entertainment.

Levy wouldn't talk specifically about pricing, other than to say it was "up."

Abruzzese said his prices were up, too, though not as high as what the broadcast networks commanded. "I think we'll beat them on volume increase but not pricing."

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