Only days after the broadcast networks received an unexpected $8.1 billion windfall in the upfront, Lucas told The Wall Street Journal that he would gladly slash prices for the right deal. Lucas seemed to be saying the hell with waiting for any trickle-down effect where the broadcast bonanza might materialize in cable. So he dropped CPMs (or cost-per-thousand viewers) by at least 10% on USA and sister network Sci Fi in a dogged pursuit of bringing in a hefty revenue intake over last year's abysmal upfront at USA Networks.
Such bold, early and deep price-cutting had the group of executives in that meeting talking about "Lucasing the market"-definition: needlessly offering deals favorable to buyers on a silver platter. "Lucas has become a verb," says one of the executives.
They weren't the only ones smarting from Lucas' upfront maneuvers. Practically across the board, Lucas' competitors at general entertainment cable networks remain perplexed and incensed by his so-called share strategy. They believe the market ultimately was stronger than Lucas calculated. (Estimates place the cable upfront at $4.4 million, up 10% over last year. Broadcast rose 20%.)
"The speed at which it was done, the depth at which it was done before there was any understanding of where the marketplace might or might not be, particularly after the network upfront had decent positives [in CPMs], was certainly surprising," says one top sales executive. "Rookie mistake" grouses another, referring to Lucas' joining Universal Television Group (part of Vivendi) from NBC Olympic sales in March. "Shocked and appalled," is how a third reacted.
Here's more: "It was such an extreme position and had no relation to the supply-and-demand ratios," says Mark Lazarus, president of Turner Entertainment Sales. "USA going so early and so deeply discounting in a positive market set false expectations in the buyer community, so it stalled the market," says Sue Danaher, who heads TNN sales.
Not surprisingly, buyers didn't mind being Lucas-ed. "Coming on the heels of the broadcast upfront it was certainly a welcome situation to start the cable-network negotiations from," says Optimedia's Bob Flood. "The greatest leverage of all is the ability to walk away from a deal, and given the number of general entertainment networks out there, that certainly works to the buying community's advantage."
Both Lazarus and Danaher said despite USA's strategy their networks were ultimately able to get the pricing they wanted.
If Viacom's Mel Karmazin was the most talked-about figure in the 2001 upfront by boldly stating that he would hold back CBS inventory if he didn't get the pricing he wanted, Lucas took the spotlight this year. Karmazin's gamble paid off in the scatter market. Lucas appears to have accomplished his principal goal of a heavy dollar haul. Estimates peg USA and Sci Fi's upfront take $150 million more than 2001. "The intention was to do my job and that was bring in the money," Lucas says.
The 41-year-old-who gets rave reviews for his affability from just about everyone, including those who blast his upfront handiwork-calmly deflects the criticism. "I'm not popular with a lot of the other cable networks, though it's not a popularity contest," he says. "The people who are good at what they do understand what I was doing."
USA sold only 38% of its inventory last year. Lucas wanted to bring that back to the 70% range and needed sheer dollars for USA to continue to develop new original programming. (Lucas also had to repair USA's image in the buying community, where it had a reputation of under-delivering on ratings and customer service.)
"I'm not Jeff Lucas," says one competitor. "I don't know his marketplace, his whole scenario or how ugly it might have been. But on the flip side, I think he went too early."
"I was hired to do a job and I'll continue to do it," says Lucas. He'll continue to Lucas.