AVERAGE CPM INCREASE IS 3%
For the second year in a row, the average CPM increase for cable during the upfront was 3%. That compares to average increases of 12% and 10%, respectively, for broadcasters during the last two years.
Turner rivals said the entertainment networks owned by the Time Warner unit, such as TBS and TNT, sacrificed significant CPM increases to gain share. The charge did not extend to CNN.
"Once again, it's Turner's fault," said one cable network sales executive. "They dived on CPMs to write share."
Turner and USA Networks together account for more than a third of cable's ad revenues. USA also wrote low CPM increases this year, but for different reasons.
"USA had massive underdelivery problems coming into the upfront, and they were forced into a lot of concessions by agencies," said one cable sales manager. "But we think Turner just misread the market."
`GOING THE WRONG WAY'
Two years ago, another cable network executive said, average CPMs for national cable were about 60% of those for national broadcast. But with low CPM increases over the last two years, "cable only indexes 52% to broadcast," said the executive. "We're going the wrong way."
A number of cable executives were especially surprised by Turner's upfront dealmaking in light of the company's major "Media at the Millennium" presentation to agencies earlier this year.
"Here Turner did such a great job with the agencies on the `Millennium' presentation, which emphasized the value of cable vs. low-rated broadcast programming, and then undercut it all with how they behaved in the marketplace," one top rival cable network sales executive said.
Turner denied any culpability for low CPMs.
"Our entertainment networks have gotten CPM increases," said Larry Goodman, president of CNN and a top strategic planning executive for Turner Broadcasting Sales.
"It's a little bit insulting to have guys say Turner just runs into the market willy-nilly looking to soak up share," Mr. Goodman said. "We don't do that with every account and every agency. We do it selectively. And we do it in the context of what's the price, what's the packaging strategy and what's the share strategy. Those differ account by account."
Still, several cable sales executives said Turner approached a number of agencies and advertisers with deals to minimize CPM hikes by spending a bigger share of their budgets on Turner properties.
"What they didn't understand is that they would have gotten the money anyway," said one.
"Wrong," countered a leading ad agency buyer. "With the exception of something like a Nickelodeon, you can really buy around most of cable if they demand high CPMs, and that includes most of what's on Turner. There's just too much inventory on cable."
`COULD HAVE GOTTEN MORE'
Another sales executive at an agency that buys a significant amount of cable, however, agreed with the critics and said, "Turner could have gotten much higher CPMs than they did."
Cable executives aren't complaining about the final $2.3 billion-plus value of the upfront, a significant gain over last year's $1.8 billion market.
Cable ratings continue to climb, but, on a percentage basis, cable's revenue gains are even exceeding its audience gains, noted one cable executive, so its CPMs should rise.