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Cartoon Network Looks Solid Heading Into Upfront

Like an enormous boulder careening down a hill and chasing
after an animated bad guy, Cartoon Network is now on a roll. For the first
three weeks of March, it has been the highest-rated network on TV among boys
2-11, 6-11 and 9-14 in the 7-9 p.m. time slot: a.k.a. kids' primetime. It has
also recorded double-digit viewership gains among all kids in the key demos in
both prime and total day, with year-to-year gains between 280,000 and 810,000.

Meanwhile, its Adult Swim 9 p.m. to 6 a.m. block during
the third week of March topped basic cable's rankings for total day
delivery of young adults and young men in the 18-24, 18-34 and 18-49 demos.

Cartoon Network will be holding its upfront presentation on
March 28 in New York and the timing couldn't be better.

John O'Hara, executive VP of ad sales and marketing for
Cartoon Network and Adult Swim, and Joe Hogan, executive VP for Cartoon
Network, Adult Swim and truTV sales, spoke about the kids ad marketplace and
where Cartoon Network and Adult Swim fit in.

How would you describe the state of the kids ad marketplace right now?
John O'Hara
Right now, we are in the pre-Easter selling period and there is a lot of
advertiser demand, so our sellout levels are high now. And from a ratings
standpoint, we are on a roll with a lot of momentum. We are having our best
quarter in a while. Our ratings are up in all the boys demos and they are
being driven by the original shows we created, like Adventure Time, The Regular
, The Mad Show and Level Up. The kids market has always had
it challenges, but right now for us, we are doing well.

Why has Cartoon Network chosen to focus more on boys than girls?
: Our
mandate is to program to all kids but our focus is more on boys. At the same
time, we don't want to turn away girls and our audience is not as boy-focused
as some might think. Our audience breakdown is about 60% boys and 40% girls. We
are historically more of an action adventure animation network so that might
appeal more to boys but we get a lot of girls watching also.

What are the Cartoon Network goals for this year's upfront selling

Joe Hogan
: In our
upfront presentation [on March 28], we're going to ask advertisers to take a
close look at their dollar investments in the kids space, to examine their
allotments by network and to see if, based on ratings and other factors right
now, if they want to adjust their budgets.

O'Hara: Our ad
sales really extends well beyond the upfront. We really are doing business year
round now, not just during the upfront selling period. We already have a lot of
deals done for next season. We've sold a significant portion of our inventory
through multi-year deals and licensing agreements that are done on a year
around basis.

How is pricing right now for kids ad inventory?
: There is
only so much supply, and right now there is good demand for our inventory, so
our scatter pricing is up over what advertisers paid in the last upfront.

Hogan: We have
good momentum right now. We are seeing a lot more attention being paid to our
programming offerings.

Where do you see room for ad growth?
: We see a
lot of movement in the toy category. The larger companies are always there, but
there a lot of smaller toy companies that surface for a while and leave and
others replace them. We are always looking for new advertisers outside the
traditional kids landscape. We were able to do that by doing things like
starting our Hall of Game Awards.

: There is
still a lot of potential in the retail category, particularly around
back-to-school time. Kids seem to be getting to be more influential in making
buying decisions. Another potential growth area is in gaming advertising.

What type of opportunities is offered to advertisers?
O'Hara: Virtually every deal we do is an integrated deal that
involves not just television but multiscreens, and all of them have promotional
components. We're also getting movies studios to do longer-form trailers.

Disney Junior has just gone on the air as a 24/7 kids network, adding
to the competition. And while it is not ad-supported, it is
still going to siphon away viewers from other kids networks, including Cartoon.
How do you view their entry into the kids marketplace?

: It does
speak to the fact that the kids business is filled with challenges and competition.
But kids is still a strong business and new networks continuing to enter the
marketplace speaks volumes to the importance of reaching kids. Advertisers will
always need to reach kids. It's an important space that will continue to be
important to marketers.

: And we
haven't seen any decline in the number of advertisers looking to talk with us
and invest with us.

How is your Adult Swim block doing?
: It's now
10 years old and hitting its stride. Adult Swim has become a real
powerhouse for us. We started out targeting the 18-34 demo but have been
growing our ad base with advertisers looking to reach adults 18-49 and even the
lower end of the 25-54 demo. Adult Swim has a long list of advertiser
categories for us, including movie studios, QSRs, automotive, retail, gaming.
But even though it's an adult block, we do not take alcohol ads of any kind.