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Hot Market for Business Channels

Cable's business channels are attracting larger audiences because of the credit crisis, but unlike other networks enjoying a surge in viewers, advertisers are hardly lining up. That's because the news is so unsettling and because some financial advertisers themselves—Bear Stearns, Lehman Brothers and Washington Mutual—have collapsed.

“We won't push a [financial services] client there simply because the ratings are higher,” says Carrie Drinkwater, senior VP/director of national broadcast at media buyer MPG. “The environment and relevancy aren't right.”

Drinkwater and others say it is key that ad messages during unnerving drops in the stock market address consumer concerns of the moment—such as demonstrating an institution's solvency and offering safe-haven investment alternatives for troubled times. The standard plan-for-your-retirement financial commercials seem irrelevant or irritating to viewers watching their investment strategies unravel.

Fox Business Network VP of Ad Sales John McCann points out that while some advertisers are sidelined, others not embroiled in bad news have increased spending, including AXA Financial, Lending Tree, Raymond James and Zurich Financial. On some spots, there is now new emphasis on an institution's safe investments. But not all have repackaged their ads. One long-running commercial for a bank seen on CNBC shows an employee perched on the edge of the roof of a high-rise. He's there simply to launch a paper plane with the bank's logo on it, but seeing the spot these days, for just a second or two, it seems he might be contemplating something far more dramatic.

While ad revenue won't rise in lockstep with increasing audience levels, there certainly are more eyeballs watching CNBC, Fox Business Network and Bloomberg. When the Dow Jones Industrial Average plunged 777.68 points Sept. 29, CNBC says average total viewers from 5 a.m. to 7 p.m. reached an all-time high of 726,000. In one of many examples of a CNBC audience spurt, its Business Day experienced a 33% hike in adults 25-54 in September with 106,000 viewers in that demo, versus an 80,000 average in the same month a year ago, when stock prices were at a peak. NBC Universal owns CNBC. Likewise, the fledgling Fox Businesss Network, usually with ratings so small they don't meet Nielsen thresholds, claimed an average of 91,000 viewers on Sept 29 from 1 p.m. to 10 p.m.

Even in more ordinary financial times, business news channels have a small but elite audience and thus can charge premium CPMs. So even with larger audiences, cable finance news ads are priced out of reach for the bulk of advertisers looking for mass audiences at low CPMs.

SNL Kagan estimates that CNBC will generate $627.4 million in 2008 revenue and a sky-high 56% cash flow margin, which is a barometer of core profitability. The researcher estimates that the year-old FBN will generate $70.8 million in revenue in 2008, and the News Corp.-owned startup is still in the red.

In the aftermath of the 2000 dot-com bubble burst, which pulled down the whole stock market, average Americans retreated from Wall Street and viewership in financial news interest waned, too. But several factors point to financial news viewership settling at a higher level when the current travails fade. Financial news is increasingly intertwined with government policy, so coverage is dotted with faces of well-known political leaders and broader implications for Americans. Also, the investor class continues to get larger, as 60% of households own stocks or mutual funds, growing from the low 20s in 1980.

Making a case that TV financial news will still be a big draw even as investors see values of their stocks get smaller, FBN's McCann says, “Our expertise is talking to viewers in good times and bad. Consumers don't want to stick their head in the sand, so we will tell them when to rebalance their portfolios and [about] smart places to put their money.”