Cable's Upfront Posture: Beat the Drum Loudly

Cable networks are wrapping their New York upfront presentations on an upbeat. Cable is widening its viewership gap over broadcast, so cable execs think that they have a good chance to turn even more advertisers their way this year.

Buyers shied away from broadcast's high rates last year. Even before the Big Four networks finished announcing their fall schedules, advertisers had shifted $600 million to cable. That gave cable an upfront total of about $9 billion, a 15% increase from 2003.

Early market assessments put upfront advertising commitments to national broadcast, cable and syndication at $18.5 billion-$18.7 billion, up 4%-5% from the $17.8 billion generated last year. Out of the expected gain of up to $900 million, according to industry sources, cable networks could scoop up more than $600 million if buyers again balk at high broadcast pricing.

But pre-upfront predictions are just that. The market moves in mysterious ways.

Cable brags that, in first quarter 2005, its networks had more viewers than the broadcast networks. But six broadcast networks still command about half the audience pie, and a hundred or more cable networks divide the other half. And buyers recognize that.

“It's good positioning, but it's positioning,” says Doug Seay, senior VP at media buyer Starcom, about cable's upfront chest-beating. “It's like pre-trial publicity: It's a great way to influence public opinion of your case, even though it has no bearing on what will happen in the courtroom.”

Still, cable likes where it is at the moment, despite breakout broadcast hits like ABC's Lost and Desperate Housewives and another strong showing from Fox's American Idol.

Some major cable networks, notably TBS and A&E, have seen steady ratings growth while lowering their median age. TBS says, in first quarter 2005 its median prime time viewing age dropped from 40 to 37, younger than viewers of ABC, CBS, NBC and Fox.

Cost-Per-Thousand Gap

Cable is also now wielding strong original programming of its own, with top talent in front of and behind the camera. That should impress advertisers, since the broad entertainment-programming category is the one great big space where cable lags broadcast in cost per thousand (CPM).

“Sports and animation are at parity, and entertainment is inching ever closer,” says David Levy, president of sales for Turner Entertainment. “It takes time, but cable truly is a substitute for broadcast.”

Levy argues that clients will not lose in reach or frequency by putting ad dollars into Turner's TNT or TBS.

To Starcom's Seay, cable's argument resonates more in theory than in the reality. In short, buyers are subjective.

“Cable's saying you shouldn't put so much money on the networks because ratings are going down is like saying you shouldn't drive a big SUV because it drives the cost of oil up,” says Seay. “The actions of the marketplace determine the reality of how the dollars fall, right or wrong.”

But cable execs insist viewers and talent don't differentiate between broadcast and cable. “For actors and actresses, there aren't a lot of movies on broadcast, but top talent can go to cable. It's a win for us, it's a win for our viewers, it's a win for everybody,” says Rick Haskins, executive VP/GM, Lifetime Entertainment Services.

“Toe to toe with the Networks”

Cable is going “toe to toe with the networks in terms of quality of original programming,” agrees Sci Fi/USA President Bonnie Hammer, adding that cable's “open-mindedness” helps attract big names.

Cable programming is still a sliver of what broadcast networks program nightly. Sci Fi, for example, is financially bound to creating two nights of original series right now, but Hammer wants more going forward.

Broadcast networks may seem indistinct, but cable works hard to give their channels a distinctive image. Turner's TBS and TNT have smartly rebranded under Executive VP/COO Steve Koonin.

Says John Rash, VP at Campbell Mithun, “Continual defining and refining of brands is impressive, necessary and welcome in an ever-fragmented media environment.”