Insertion Choices: By Demos and Distribution

They can't count on networks adding more local avails, so
MSOs and interconnects continue to rely on digital ad insertion as the primary way to sell
more inventory locally.

Thanks to the now-widespread use of insertion technology,
operators and interconnects periodically expand the number of networks on their insertable

Where operators once added such networks willy-nilly, they
now spend much more time weighing various criteria before making their selections.

The New York Interconnect, which added six networks last
year, grew by another four earlier this year for a total of 20 insertable networks, which
vice president and general manager Eglon Simons said has accelerated its sales pace well
into the first half.

To keep that momentum going, Simons said, the interconnect
is now considering an additional four-network uptick, which would bring it to 24 networks
by either the end of this year or early in 2000.

In deciding which networks to add for insertion, Simons and
David Kline -- president of Rainbow Advertising Sales Corp., which runs the interconnect
-- said they first analyze the demographic profile of prospective networks' viewers and
the advertisers they might bring to the table.

"We find networks that target audiences we don't
already have aboard. That's probably our No. 1 criterion," Kline said. "Then we
see how universally distributed the network is in the market."

In addition to demographics and carriage, the "Big
Apple" interconnect might be swayed by the amount of local inventory, Kline added,
"if it's between similar networks that serve similar demos."

MediaOne Group Inc. vice president of ad sales Ed Dunbar
agreed. "Some of the factors you'd take into consideration are distribution across a
given market: How broad is the distribution? And what's the target [audience] of the
network? Is it complementary to, say, [existing] sports programming, or does it reach a
unique niche?"

Last year's pickups at the New York Interconnect -- Comedy
Central, Black Entertainment Television, E! Entertainment Television, ESPN2, MSNBC and VH1
-- were heavily Gen X-skewed, Simons pointed out. The latest batch, skewing older,
consisted of TBS Superstation, The History Channel, The Weather Channel and The Learning
Channel, he added.

As for which programming services are being eyed for the
next round of insertable adds, Simons cited Sci-Fi Channel, Home & Garden Television,
Food Network and Bravo as "strong contenders."

MediaOne has in recent months begun inserting on Bravo,
Food, TV Land, Sci-Fi, Speedvision and TWC in several additional markets, Dunbar said.
That's helped the MSO to enjoy what he described as "terrific" growth in
year-to-date sales.

But MediaOne has virtually peaked in terms of expanding its
insertion capabilities in markets like Boston and Atlanta, where the operator already
inserts on more than 30 networks, he pointed out.

Not surprisingly, many of these same networks -- heavily
targeted to young-adult and upscale demographics -- enjoyed the greatest overall growth
last year.

According to Paul Kagan Associates Inc. data for the first
half of 1998, MSNBC and Nickelodeon notched the greatest insertion upticks, soaring 240
percent and 54 percent, respectively, to 17 million and 47 million insertable subscribers,

They were followed by CNBC and HGTV (up 8 million
subscribers each); and History, E! and Cartoon Network (up 7 million-plus apiece).

At MTV Networks, vice president of affiliate ad sales Jason
Malamud said affiliates most often pick their insertable networks for a few key reasons.
One is "to cover their bases for where their audience is."

Malamud said Nick's first-half-1998 upsurge was due to
"affiliates playing catch-up, realizing that they were missing the boat because Nick
reaches families, and not just kids."

Another reason, he said, was strong ratings growth and the
ensuing "buzz" about a network. Citing VH1 as an example, he said, that
network's insertable-subscriber count grew 12 percent in the first half of 1998 -- the
same as MTV: Music Television.

"TV Land is another beneficiary of buzz," Malamud
added, noting that the fledgling service's insertable tally soared 54 percent in that same
span, albeit from a much smaller base. TV Land's growth also could be due to
"affiliates seeking more inventory," he said, noting that it offers a "very
attractive" three minutes of local avails per hour.

Comedy Central officials, noting that the network's
insertable count jumped by 11 million during 1998, said this was another example of buzz
paying off.

Yet another criterion is that operators "seek networks
to help them open doors with new clients," Malamud said, adding that HGTV and Food
are good examples of that.

Kagan hasn't yet released second-half-1998 data, but
Malamud had rough estimates for his networks. VH1's insertable-subscriber count rose about
17 percent in the latest six months, while TV Land's jumped 26 percent, again from a
smaller base, he said, adding that MTV and Nick were essentially flat.

Beyond demos and distribution, Simons said, another
important consideration is "the ability [of networks] to brand and market

Executives elsewhere -- ranging from Time Warner Cable
Adcast in Charlotte, N.C., to Bay Cable Advertising in San Francisco/Oakland, Calif. --
also cited the importance of affiliate-marketing support as a factor in their choices.

Marketing support from the networks is certainly key to
Adlink, the Los Angeles interconnect, where marketing director Vicki Lins said all of its
national business last year included marketing or promotional tie-in components.

The expansion of insertable networks -- with FX, Cartoon,
MSNBC and TLC lifting its count to 24 -- alone contributed $6.5 million to its total ad
volume last year. Adlink president Charlie Thurston -- who added six more networks in
April, for a total of 30 -- said the plan is to bring on still more this fall and to
"build out eventually to 40 networks."

Adlink's latest add-ons -- Bravo, Animal Planet, TBS,
Sci-Fi, History and HGTV -- should fuel its pursuit of a $100 million sales goal by
year-end, Thurston added.

At Cox Communications Inc., vice president of ad sales
Billy Farina wouldn't get into which networks have been added most by its systems in the
past six months or so and the reasons behind their selections. Those decisions, he said,
are made by the individual systems, some of which now insert on as many as 40 networks.

Insertion on AT&T Broadband & Internet Services
systems averages 16 to 18 networks deep, while Adelphia Communications Corp. sells on up
to 14 networks on its systems, and Comcast Corp.'s Comcast Cable Communications on at
least 24 networks.

During the first half of 1999, Bravo stands to be among the
biggest gainers, having cleared systems and interconnects reaching 9 million homes through

Gregg Hill, Bravo Networks' executive vice president of
affiliate sales and marketing, projected that the upscale film-and-arts network would
approach 15 million insertable subscribers by year's end.

Just since April, Lins said, Bravo has brought in such
upscale clients as DaimlerChrysler's Mercedes-Benz unit and Ford Motor Co.'s
Lincoln-Mercury division.

At Cable Advertising of Metro Atlanta, general-sales
manager Jeffrey Ervin is banking on similar success. "We know upscale avails deliver
revenue," he said. "We often sell out of inventory for Discovery [Channel],
A&E [Network] and CNBC."

Kids-and-family fare also attracted substantial interest,
with Fox Family Channel putting its first-half-1999 insertable-subscriber uptick at 4.3