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Entertainment Cable Networks Poised for Strong Upfront

The money is back, and there's more to come next season. That's the refrain from both buyers and sellers quizzed on prospects for the 2011 upfront marketplace.

That bodes well for all the parties in the TV space. And general entertainment cable networks such as TNT, USA, FX and AMC are particularly well-positioned heading into the upfront, according to both buyers and sellers. They cite several contributing factors beyond the overall advertising recovery, including: a scatter market that remains robust, with price increases exceeding 20% in many cases; continuing investment in original cable programming that is clicking with viewers; and the possibility of a shortened or NFL season, which would free up billions in ad dollars, a good chunk of which could end up in cable network coffers.

"Historically, the year following the year after a recession has rebounded with an exceptionally strong upfront," says Dave Cassaro, president, cable advertising sales, NBCUniversal, the Comcast subsidiary that owns USA, Bravo and SyFy, among other cable networks. "While we haven't seen budgets yet, we're very optimistic that it is going to be a gangbusters upfront."

David Levy, president, sales, distribution and sports, Turner Broadcasting System, is a little more circumspect when talking about this year's marketplace, but he agrees key indicators suggest "that it should be a strong upfront." Levy notes that scatter price hikes for the last three quarters have remained in the 20 to 30 percent range, with "minimal" cancellations. Meanwhile, with the broadcast networks' decline in overall viewing again this season, advertisers, in a bid to get all their money down, will continue to increase their cable budgets, Levy asserts.

Just how strong will the market be for the general entertainment nets? Most say it's too early to tell, although Cassaro predicts that "without question, it will be better than last year," when cable ad sales reached $8 billion (per the CAB) with price hikes of approximately 10 percent. Volume last year was way up-nearly 20 percent, representing dollars flowing back to the market after the recession of 2009.

Buyers agreed that cable entertainment channels have a good story to tell heading into the upfront market this spring.
Maureen Bosetti, executive VP/national broadcast director at Optimedia, says that while the top entertainment cable networks are in "pretty good position," some of the networks are facing problems similar to the broadcast nets. "USA has some issues," Bosetti says, including "aging shows" and ratings that are "a little bit off" this past year. But USA continues to invest in originals, and buying time on the network is "efficient, so they should have a good upfront," she adds. Bosetti also applauded Turner's moves this year to get both Conan O'Brien and a piece of the NCAA men's basketball tournament. "They are well-positioned, too," she says of TNT and TBS.

Gary Carr, senior VP/executive director of national broadcast for TargetCast, says he wouldn't be surprised to see 5 or 6 percent more money placed on entertainment cable networks during this year's upfront, which would translate to price increases in the 10-to-11 percent range.

Carr says entertainment nets are clearly helping their cause with significant investments in original programming. "I'm blown away by the quality of programs being produced," he says. "I'm not saying they're all Emmy-winning shows, but they're watchable."

Cable, says Carr, "has really come a long way. The market has been great-the money has come back from where it was three years ago. People are spending more hours watching TV, and total cable ratings are up."

What's particularly good for advertisers, says Carr, is to see the growing number of cable networks producing programs that are resonating with viewers. "Look at History and Pawn Stars," he says. "That's a top 10 cable show. And TV Land is up 30 percent with originals like Hot in Cleveland and Retired at 35. People are watching this stuff." Which means that if A-tier entertainment channels try to bump their rates too high in this upfront, "we have other places to go to put our money," Carr notes.

The NFL lockout may be a wildcard for entertainment networks in this year's upfront, says Don Seaman, VP/director of communications analysis at MPG. "The uncertainty of the NFL could have a major impact on how some advertisers look at cable, and there may be more aggressive spending there," Seaman says.

Cassaro of NBCU agrees. The NFL's uncertain labor situation "will put more pressure on the supply of rating points out there," he says, noting estimates that as much as $500 million a month in NFL ad dollars may need to find alternative program venues, if the league's players and owners don't resolve their issues.