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Can Cable Upfront Top $10B In 2012?

Following a strong upfront market in which cable captured as many ad dollars as the major broadcast networks, one senior sales executive thinks cable can do even better next year.

"I really believe that next year's upfront marketplace for cable will exceed $10 billion," says David Cassaro, president for ad sales at NBCU Cable, told B&C Thursday.

The upfront marketplace is nearly wrapped up. Broadcast networks took in about $9.1 billion in advertising commitments for next year's primetime shows, with prices on a cost-per-thousand viewers basis up from 9% to 15%.

Volume on the cable networks has been estimated to be about $9.4 billion, catching up to broadcast and passing it for the first time. Some sellers reported volume up as much as 25%. Prices vary from network to network depending on their ratings strength and volume of original programming, but increase ranged from about 8% to the mid to high teens.

While some analysts have noted that networks sold additional commercial inventory during the upfront to lock in pricing and revenue before the economy gets worse, Cassaro thinks the market will remain strong, despite short term concerns about consumer confidence, gas prices, unemployment and the effects of earthquakes and tsunamis in Japan

"We believe, as many do, that corporate profits are a leading and important indicator, probably the most important indicator, of future ad spend," he says. "So we think we're going to see strength in the television marketplace. We're going to see strength in scatter on top of this upfront and I think that we'll even move very positively into next year's upfront while as the economy slowly continues to recover."

Advertisers are turning to cable because the offer better value than other television options and because they are investing in the kind of original programming sponsors love.

Cassaro notes that while marketing and advertising are easy to cut when profits are under pressure. "But when profits are up and you're looking to expand your business, you're going to spend more money in advertising," he says. "And guess what the first stop in advertising and marketing is? Right. Television. And guess what the best value in television is? National cable."

Last week, Scripps Networks Interactive said it was nearly done with its upfront, and took in advertising commitments worth nearly $1 billion. "With strength from general market advertisers and our networks' endemics, this has been the best upfront in our company's history, Steve Gigliotti, president, national ad sales and marketing at Scripps Networks Interactive told Multichannel News.

NBCU Cable also had a record setting year.

"Demand from advertisers supported some of the highest year-on-year price increases in the market," Cassaro said.

Buyers said NBCU's USA was getting price increases in the mid to high teen percent range. The big volume was also benefitting NBCU's smaller channels.

Cassaro added that more marketers were also buying digital components to compliment their television packages. "By adding digital and all the extensions including social, what you're doing is turbo charging your television advertising with these other media extensions," he said.