WHAT COMCAST'S DISNEY BID SAYS ABOUT COMMERCIAL TV
The Traditional Business Model Is Not So Dead
COMCAST MAKES MEGA-BILLION BID FOR DISNEY
Deal Would Create Second-Largest Media Company
“Right now our advertising business is over $1 billion a year, and our plan is to double that in the next four or five years,” said Stephen Burke, executive vice president of Comcast Corp. and president of Comcast Cable. The company draws the bulk of its $17.5 billion in revenue from subscription fees, but is poised to expand digital services and has just launched a spot-cable service that could sharply raise ad revenue.
“While we’ve been in the advertising business for a long time, it is taking a more central role inside our company than ever before,” Mr. Burke said last week.
Mr. Burke is one of the principal architects behind Spotlight, a Comcast ad sales unit that pools together 55 "interconnects" across the country in order to compete with national broadcast spot sellers. Interconnects are a way of linking local cable systems so a national advertiser can easily buy across several markets. Comcast spent $15 million to build Spotlight, setting up sales offices in almost every state, and hiring 50 staffers, including the unit’s president, Charlie Thurston, formerly president-CEO of Los Angeles interconnect Adlink.
”Madison Avenue is the heartbeat of national advertising,” Mr. Thurston said. ”We wanted to be in a position to work with the leading advertising agencies and advertisers and help them define what the future of cable advertising will be.”
Mr. Burke and Mr. Thurston contend that Comcast’s advantage on Madison Ave. over traditional advertising media such as local broadcast lies in its embrace of new technologies and products. They believe that time-shifted TV viewing using digital video recorders will expand rapidly, and said they plan to harness that force rather than fight it.
“It’s about giving our subscribers, our customers what they want to watch when they want to watch it,” Mr. Burke said.
Video on demand
Comcast has invested heavily in development of video on demand and digital video recorders, and new, proprietary technologies such as Adtag and Adcopy, which automatically change tags (contact phone numbers, addresses, etc.) and copy in spots depending on the demographic and geographic region in which they air.
“We’ve got a new model, it’s just a matter now of fine-tuning it,” Mr. Thurston said. “We are taking the spot TV model and turbo-charging it.”
But a spokesman at the Television Advertising Bureau, an association that represents local broadcasters, said Comcast and other cable operators are blinded by their new technologies. “They don’t really know who’s watching their shows. We offer addressability by programs. Advertisers know what kind of person watches certain programs.”
In addition to the spot sales operation, Comcast also earned $312 million in net revenue last year from ad sales at its cable networks E!, Style, the Golf Channel, Outdoor Living Network and G4.