Maalox Moments

The volatile state of advertising sales was "at center of the plate" during two feeding frenzies last week-the annual Cabletelevision Advertising Bureau conference and a breakfast sponsored days later by the International Radio & Television Society Foundation Inc.

Were Zagat's to review those two repasts, both would have earned a "reach for the Maalox" rating, given the undigestable stew of opinions offered on the state of advertising sales.

Conflicting reports about advertisers now reneging on upfront buys made last spring-mostly on the broadcast side, but spilling over to a lesser extent into the cable-network arena-contrasted sharply with reports that opportunistic spending in the cable-scatter market was on the upswing this first quarter. Remember: In down times, scatter buyers are often the bottom fishers who come in at the last minute, looking for bargains.

And Merrill Lynch Inc.'s Jessica Reif Cohen, who spoke at the IRTS breakfast, clearly didn't like the smell of the fish. Commenting on General Motors Corp.'s pullback from its upfront television buys made last spring, she said, "It's unprecedented. It's scary."

In analyzing the ad spending trends this first quarter, Cohen had already notched down her estimates and was predicting a weak upfront market for 2001.

She wasn't alone. Sanford C. Bernstein analyst Tom Wolzien concurred: "This quarter continues to be pretty ugly."

Those reviews from Cohen and Bernstein matter. Unlike ad agency executives, who downplay the strength of the market to negotiate cheaper prices-or the cable and broadcast networks, which hype the marketplace to get higher prices-Cohen and Wolzien are protecting their clients' flanks in companies, which, to one degree or another, rely heavily on advertising expenditures for their revenue, earnings and growth.

Addressing CAB attendees, Viacom Inc. president Mel Karmazin acknowledged there are some "rough bumps" right now, but predicted the year would end with a 12.5 percent increase in network cable ad sales.

He had an arsenal of ammunition to back up that figure. Karmazin, the ultimate salesman, said that deregulation would lead to more ad spending from financial services, telecommunications, pharmaceutical firms and companies who are trying to brand their corporate name changes.

That view of the landscape contrasted sharply from earlier comments USA Networks Inc. chairman Barry Diller made about the advertising outlook. In a conference call, he said the outlook "ain't great. I see nothing there.that would tell you that it's going to get strong anytime soon.

"Advertising, I think, is not going to be robust.(but) I don't think it's a disaster," Diller predicted.

His view pretty much coincides with what media buyers see unfolding in the marketplace. They acknowledge an uptick in cable's first-quarter scatter market, compared to the past fourth quarter, when the defections from the dot-com sector left a bad taste in every seller's mouth.

But the reality that is no one can predict or bank on this year's upcoming upfront. Instead, all eyes are focused on the scatter market and 2001's unsavory new wrinkle: the renegers from last year's upfront market who, by exercising their options, have created a bit of a glut in the marketplace, making more inventory suddenly available.

The key here is, what price will those suddenly available units fetch? In a healthy marketplace, scatter buys-opportunistic buys made on a second's notice-are usually more pricey than time bought at the upfront.

Most cable-network executives say that the first-quarter scatter market is improving. But what they're not talking about is the prices they are getting.

For now, it seems like just about the only thing anyone agrees upon, with regard to this kettle of fish called the advertising-sales arena, is that the vertically integrated companies that package their units will leave the negotiating table with their plates full.

What about the others? Well, they had better come up with some new recipes for luring advertisers, who suddenly have a larger menu from which to select.