Drastic decline seen in cable upfront

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As the broadcast networks tied up the upfront last week with the total haul coming in at an estimated $6.8 billion-$1.1 billion less than 2000 with accompanying cost-per-thousand drops-attention shifts to the cable and syndication marketplaces where more severe decreases are expected.

Costs per thousand viewers on cable and syndication could drop by at least low- to mid-double digit percentages for less-desirable programming. The overall dollar upfront haul for cable is expected to be off 20% to $3.8 billion. Syndication's upfront could be hurt even more, dropping 30% to $1.8 billion.

Syndication is expected to falter because even top-tier syndicated programming such as "Friends," "The Drew Carey Show" and "Seinfeld" have seen ratings disappear. Media buyers "are out for blood," said one veteran syndication media seller. "They didn't get the big, big decreases on the network."

OPPORTUNITY TO REDIRECT MONEY

Media buyers believe that since syndication pricing is closer to network pricing, advertisers can cut their budgets and redirect money to broadcast or cable networks.

The upfront market refers to time bought before the fall-to-spring TV season. Broadcast networks typically sell 75%-80% of annual commercial inventory upfront; syndication's reliance on upfront is generally a little higher than that, and cable networks' reliance a bit lower.

Reasons for advertising spending declines include drops in, or disappearances altogether of, corporate budgets. For example, AT&T Corp., a company in flux, will not reach out and touch anyone in the cable upfront, and has opted instead to gamble on the scatter market, an industry executive said. A call to AT&T late June 29 was not returned by press time. Scatter refers to time bought during the TV season closer to the air date of particular shows.

AT&T spent $93 million on cable last calendar year, according to Taylor Nelson Sofres' CMR.

A cable network executive said one automaker's proposed budget with the network fell 50% from last year's actual budget, though added that other car companies are flat and one is up. Of course, proposed budgets are largely a negotiating tactic.

Some cable deals have already been made, where top-tier networks such as Lifetime, USA Network and A&E Network are conceding to CPM drops in exchange for more total dollars. WPP Group's the Media Edge, which also represents AT&T, is particularly aggressive in its willingness to offer more dollars in exchange for better pricing for other clients, an industry executive said. It remains uncertain what decreases will result if clients are unwilling to put more dollars on the table.

A network executive said, "No one's sure what's bottom."

DEMAND FOR DROPS

Clients are demanding agencies deliver significant CPM drops, media buyers said. Buyers expressed confidence they will deliver. Wide-reaching general cable networks such as USA and AOL Time Warner properties TNT and TBS could struggle because they are similar to the broadcast networks, which executives say already grabbed much of the upfront dollars available.

So-called second-tier cable networks, those with distribution in fewer than 60 million homes, could suffer mightily. Some media executives said they could trim their cable network list from 20 to 10. A saving grace for a network with smaller distribution would be if it has a loyal, highly targeted audience that specific advertisers need to reach; HGTV and the Food Network have been in that class before, though they have seen distribution increases.

Viacom's cable networks will be closely watched following President-Chief Operating Officer Mel Karmazin's tough stance at CBS during the broadcast upfront, where he initially balked at making deals with CPM decreases.

"What is Mel now going to do with the Viacom cable networks?" said Jerry Solomon, former top media executive at SFM Corp. and Busch Media Group.

Viacom cable networks include MTV, VH-1, BET and TNN, a bigger player in the upfront than before with the addition of World Wrestling Federation Entertainment programming.

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