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Execs: Ad Sales on Slow Road to Recovery

Even though ad sales remained sluggish in the second quarter, more MSOs and interconnects are ready to put a disappointing first half of 2001 behind them and sing an old Beatles tune: "I've got to admit it's getting better. It's a little better all the time."

New York Interconnect senior vice president and general manager Eglon Simons said his sales organization's second quarter closed with a nearly 13-percent gain over year-ago levels. For the opening half, the interconnect grew 5 percent in combined national and local sales, he said.

Although the second-quarter results were slightly below plan, sales dipped 20 percent in the overall New York local television-sales market for that same period. So the interconnect was "growing share," Simons said.

Adlink, executive vice president Hank Oster said the Los Angeles interconnect's ad sales dropped 15 percent for the first half, including a 15-percent dip in the second quarter. But he also said broadcasters and other media in the No. 2 DMA suffered even more.

South Florida Cable Advertising general manager Charlie Slaight said the Miami-Fort Lauderdale interconnect was "pacing slightly ahead of last year, with single-digit growth" through the first half.

Rainbow Advertising Sales Corp. executive vice president of regional ad sales Bob Sullivan said Cablevision Systems Corp.'s first-half local sales were held to "single-digit growth — probably 1 or 2 percent." That's an unaccustomed performance after a decade of double-digit surges.

But it's "a moral victory to be up at all" in such a bleak ad-sales market, Sullivan noted.

"The first quarter was much worse than the second, which showed marked signs of life," Sullivan said. That momentum seems to be continuing in the first month of the third quarter, he added.

Rainbow's News 12 Networks division notched a 7-percent gain in the opening half, after rebounding from a tough first quarter to post significant second-quarter growth, he said.

Cox Communications Inc. vice president of ad sales Billy Farina said the MSO's second-quarter ad revenues were about 1.4 percent lower than a year ago, but that it improved on its 5.6 percent underdelivery for the initial quarter. Although the first half lagged behind last year, he said the second quarter was better than the first.

During Charter Communications Inc.'s second-quarter conference call, president Jerald Kent said despite the "obviously weak" national ad-sales market, "local is still hanging in there pretty strong."

Charter's total ad revenues rose 54 percent to $64.5 million in the second quarter and 55 percent to $120.1 million in the half. Some executives were approaching the second half of 2001 with caution.

"It's going to be a tough second half of the year for advertising," warned Charter vice president of local ad sales Wes Hart.

Added Adlink's Oster: "The trend [for Adlink] is on its way up, but the business is still down across the board. We do see a rebound in the second half, but a turnaround isn't likely until 2002."

So far, Oster projects that that third-quarter sakes will be 8 percent to 10 percent ahead of last year, "but still short of target." He does not expect to finish a quarter on target until the final quarter, for which he projects a 10-percent sales uptick.

Comcast Corp. president Brian Roberts recently reported that pro forma advertising revenues grew 9.9 percent in the second quarter. He cited the importance of its interconnects' success in attracting clients in a generally weak sales climate.

The lackluster automotive category contributed a lot to cable executives' first-half woes. Oster said Adlink's automotive business was down 8 percent for the half. At Cox, domestic automotive and media were the only two of its top 10 categories to cut spending, "but they're our No. 1 and 3 categories," Farina said.

There were other sore points as well. Adlink's other big downer categories included media, movies, grocery stores and Internet and technology — sectors in which spending plunged 13 percent, 25 percent, 39 percent and 89 percent respectively, said Oster.

But Oster was enthused about "incredible growth in secondary categories," like fast foods (up 20 percent), beverages (up 44 percent), travel (49 percent) and medical and health services (80 percent).

Import automotive was a bright spot for Cox, Farina said, noting that the MSO's No. 3 category was "dramatically ahead for the quarter, up over 100 percent."

Meanwhile, Charter has been "leaning" on its vendors to increase ad spending, Kent said, and the MSO has been "making inroads with some vendors." Hart said those vendors supply set-top boxes, interactive services and other new products and services that Charter is promoting.