With about a third of the cable upfront market completed, cable execs aren't getting anything like the high-single-digit CPM increases several of them predicted. Having done most of their deals with the broadcast nets, the media-buying agencies are moving cautiously in cable, feeling out the marketplace and pitting cable networks against each other.
"This is the year the cable guys are fighting it out among themselves," said one major media buyer. Early posturing by the sell side suggested cable would be up $600 million to $800 million in the upfront market; revised estimates from cable sellers foresee a much lower gain of $200 million. And the Street has reduced its outlook for cable-late last week CIBC analyst Mike Gallant slashed his expectation from 8% to 6% to 7%-that could be a $120 million reduction in the potential gain.
"Everyone in cable is furious at ABC," said one senior cable executive. ABC set a CPM increase ceiling at 5% with its buyer-friendly play in the broadcast market.
"Cable nets are trying to get agencies interested in doing business, but broadcast was a key influence," added a senior buying executive. "There's a real possibility the money that people thought would be there for cable might not be there."
Discovery, whose premium pricing is conservatively 20% to 25% higher than cable's general-entertainment networks, has quietly closed a few deals but is at a standoff with many of the major agencies as they wait for CPM decreases. Ratings declines at the flagship network and TLC have resulted in reduced budgets being placed at the network.
"Discovery hasn't been the best partner over the years in terms of asking for higher increases," said one media buyer who hadn't yet closed any deals with the network group. "We see the real possibility of rollbacks."
Discovery President-Ad Sales Joe Abruzzese said his upfront take will be flat or down from last year, but he stops short of commenting on CPM decreases. "We're getting a fair price for our product," he said.
The networks closest to finishing upfront sales are USA and Sci-Fi. Early protection deals meant USA locked in CPM increases of 4% and Sci-Fi at 4% to 5%, said executives close to the talks. Lifetime, meanwhile, reports it is nearly 60% sold at increases up 2% to 4%, though buyers say the increases are a percentage or two lower than that. FX Network has closed about a quarter of its business at 2% to 3% CPM increases. (Executives at the cable networks declined to comment on CPM pricing.)
MTV COMES DOWN
MTV Networks started out asking for as much as 10% over its CPM last season, but has since come down and wrapped up with a few major agencies. Its more valuable properties such as MTV, VH1 and Comedy Central were snaring 2% to 4% CPM increases, while some other networks such as TV Land and Nick at Nite were taking flat to 2% increases.
Despite talk that Turner was holding the line on 5% CPM increases, it has completed deals with at least three agencies, according to executives, at CPM increases of 3% to 4%. A Turner spokesman declined to discuss specifics.
Scripps Networks, which was mentioned as an early favorite thanks to its niche channels and online properties, has sold to some of its endemic advertisers but other agencies are said to still be on the sidelines. "HGTV and DIY are a must buy for Home Depot, but there's a lot of other inventory there to sell," said one media executive.
The Street has cut its prediction, saying there could be a $120 million drop in potential gain