Cable sluggish after broadcast boom

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The stunning success of this year's broadcast upfront won't necessarily translate into a strong performance by cable networks, as the start of last week's cable upfront market proved sluggish, yielding lower cost-per-thousand rates at some networks.

Despite the CPM drops, however, the overall cable haul is estimated to finish slightly over last year's $4 billion mark, in the $4.2 billion to $4.4 billion range. The considerably slower-moving cable market is expected to last at least into next week.

That follows a booming broadcast upfront where the total dollars were estimated to be in the $8.1 billion range, $1.3 billion more than last year, with all six networks receiving CPM increases. The spending spree was partly driven by advertisers wanting to buy network TV in the upfront rather than risk expensive scatter market prices-not necessarily by an upswing in the ad economy.

"The thing everybody's asking is, `Where's this money coming from and is this money real?' " said one media executive. "The economy is not there, the economy is still faltering."

Media executives point to this year's highly unusual situation of broadcast networks getting CPM increases, while cable is experiencing CPM decreases, especially at general interest cable networks.

The most glaring examples were two Vivendi Universal networks-USA Network and Sci-Fi-where deals were made with CPM drops in the 10% range. Lifetime, jointly owned by Hearst Corp. and Walt Disney Co., also was said by media buyers to have cut deals at decreased CPMs.

After a 2001 upfront where USA, in particular, saw revenue plummet, Vivendi was more than willing to cut costs in exchange for more dollars. One executive estimated that, as a result, its two networks would receive an upfront dollar jump from some $250 million to the $400 million range.

Sales executives at competing networks were livid with Vivendi's strategy since the move emboldened buyers to fight for CPM decreases. (A Vivendi spokesman declined to comment.) Lifetime, the cable prime-time ratings leader, made several deals with mid-single-digit CPM drops without an increase in dollars from last year, executives said. (Lifetime was expected to finish in the negative 2% to plus 2% range; the network declined to comment.)

best efforts

Meanwhile, other so-called top-tier networks were doing the best they could to do business without CPM drops. The Turner Entertainment networks-TNT and TBS-were said to be seeking 4% to 6% CPM increases and media buying executives were balking, though Turner was said to have done a couple deals in the plus range. Turner declined to comment. The Discovery fleet of networks was also asking for CPM increases, with buyers pressing again for rollbacks. Discovery did not immediately return a call seeking comment. Niche networks with highly defined targets could fare better.

Buyers were pushing for cable decreases principally because there is so much inventory available in cable and very few must-buy networks. "We don't see a positive [CPM] in this cable market," said a buyer at a leading agency. Another buyer said money not spent by networks in the broadcast upfront would not flow to cable. "We're not substituting network for cable," the buyer said.

But a cable network executive believes the money allocated but not spent in the network bonanza would trickle down. "I think there's more money than the advertisers are letting on," the executive said. "I think there was money that could not be placed in the network marketplace."

Among the must-buys for some advertisers are niche networks like Walt Disney Co.'s ESPN, which reaches men, and Viacom's MTV, popular among the teen crowd. Both were said to be among the few first-tier networks getting CPM increases.

An executive close to ESPN said it had sold some 40% of its inventory at a 7% to 9% increase. An ESPN spokeswoman declined to comment. MTV increased its CPM by mid-single digits, a person familiar with the matter said, after being down in single digits last year. MTV was selling the second season of TV's most-talked-about show, "The Osbournes" as a package-for $1.4 million an advertiser would get spots on eight first-run episodes and 16 units in repeats. But in order to get that deal, an advertiser was forced to buy an additional $1.4 million worth of other MTV inventory. MTV did not return calls.


Also for sale in the Viacom portfolio was VH1, which has suffered such huge audience underdelivery that it was booked full with make-goods recently and risked not being able to deal in the upfront. But Viacom worked aggressively to clear VH1's slate; the network expects to re-enter the scatter market on a limited basis in the third quarter, a person familiar with the matter said.

Media buyers anticipate syndication may fare a bit better than cable, especially for top 25 shows, because a smaller inventory is available. That market could grow to $1.7 billion from last year's $1.5 billion. Some major syndicators struck deals last week, with shows such as Buena Vista Television's "Live with Regis and Kelly" and King World Media Sales' "The Oprah Winfrey Show" getting CPM jumps.

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