Cablers Like the Upfront View

New York— Despite jitters about the looming war and a still-ailing economy, cable ad-sales officials are predicting a strong upfront market this year, though media buyers say it's too early to call.

The upfront, the annual Madison Avenue bazaar in which advertisers secure schedules for the next TV season, is always full of posturing, with sellers always optimistic about volume growth and price increases. Some cable executives and analysts are saying that the currently strong scatter market foreshadows a robust upfront.

"Going into the upfront market, there's a lot of steam, there's a lot of push behind it," Merrill Lynch analyst Jessica Reif Cohen said during a recent International Radio & Television Society breakfast in New York.

But there are also naysayers who fear a prolonged and difficult war in Iraq could make consumers more skittish, pre-empt commercials for long periods and put a general kibosh on ad spending.

Last week, during a panel at the Association of National Advertisers' Television Ad Forum in New York, McCann-Erickson Worldwide director of broadcast negotiations Donna Wolfe said it's still very early for upfront predictions.

To make the point, she asked how many buyers in the audience had even decided whether they would exercise their third-quarter upfront options, due in a few weeks. Only two raised their hands.

Wolfe also derided negotiating in the press, and published reports that forecasted a $9 billion broadcast upfront with cost-per-thousand increases of 15 percent to 20 percent.

Last year's cable upfront sales hit roughly $4.5 billion, up $500 million from the prior year, according to the Cabletelevision Advertising Bureau. Cable ad-sales officials are bullish on the upcoming upfront.

"I haven't seen a market this strong in two years," said Michael Sakin, Game Show Network's senior vice president of ad sales. "Second-quarter scatter started in January and is still full-steam ahead, with 20 to 25 percent CPM increases.

"This kind of momentum makes us feel the market is in great shape."

Cars and films

For the Universal Television Group — which includes USA Network, Sci Fi Channel and Trio —automakers and movie studios were big spenders last year, president of ad sales Jeff Lucas said.

He expects those same clients to be the major drivers of this upfront, since they can't be flexible, but must lock in ads for specific dates to coincide with new-model launches and film releases.

"The upfront is going to be extremely strong," Lucas said.

Last year, USA's upfront strategy was widely perceived as volume-driven. Observers said the general-entertainment channel locked in schedules at the expense of CPM gains.

Driving auto sales this year are the launches of 20 to 26 new car models, according to Steve Gigliotti, senior vice president of ad sales for Scripps Networks.

"That's probably a 30 percent increase over last year," he said. "Not promoting them is not an option."

Reif Cohen acknowledged that because of current uncertainties regarding war and the economy, it is a "complete dichotomy" that this year's upfront marketplace is expected to be a strong one.

Bruce Lefkowitz, executive vice president of Fox Cable Entertainment ad sales, said that if the war is "a protracted affair … and it doesn't go well, or God forbid, there are terrorist attacks on U.S. soil, you'll have people become more cautious" in terms of spending.

But if war breaks out and only lasts a few weeks, it could strengthen the upfront market by ending the current uncertainty that surrounds it. That could create a "domino effect" and get ad-spending rolling, said Hallmark Channel executive vice president of ad sales Bill Abbott.

War or not, Cable News Network sales and marketing president Larry Goodman is upbeat about the upfront.

"Brands that were out of advertising now want to get back in," he said. "There is a clear correlation of sales to share. You can't be out of it and win.

"That recognition was brought home to the brands who stayed out in 2001 or part of 2002, and their competitors came back in."

Share tussles

New advertisers, like wireless companies and pharmaceuticals, are fighting to gain market share, Lefkowitz pointed out. "There's the emergence of real category wars that had not existed before," he said.

For this upfront, Turner Broadcasting System Inc. will present research it commissioned to try to convince advertisers to shift their money from broadcast to cable.

The research, according to Goodman, will discuss how advertisers are in some cases paying $1 million to $4 million "per reach point" on broadcast. Turner will argue that for less money, advertisers could accomplish the same reach objectives with cable.

Cable's growing array of marquee series —The Shield
on FX, Monk
on USA, The Osbournes
on MTV: Music Television — now offers ad agencies an adequate platform to shift their money from broadcast, according to Lefkowitz.

"One brave ad agency will make a major shift of money and say 'no mas' to the broadcasters," he said. "I genuinely believe that day is coming."

Lefkowitz should be encouraged then by the comments Carat North America CEO David Verklin made on the broadcast upfront at the ANA's forum.

"[The upfront pricing] will not be plus-20 percent if my company has anything to do with it," he said.

If the network TV upfront does show 20 percent gains, he said, Carat would have to reconsider using broadcast as a major medium.