HGTV is said to have allowed local cable systems to pre-empt HGTV programming-including national commercials accompanying the programming-without telling national advertisers. That has drawn the ire of a committee of the American Association of Advertising Agencies in a scathing April 5 letter to the network.
FAR FROM OVER
In 1999, HGTV, owned by E.W. Scripps, conceded that local cable systems substituted local spots for some national commercials. At that time, Scripps took a $2.5 million cut in revenue for make-goods for advertisers because of possible underdelivery of audience levels.
But the latest 4A's missive indicates the incident is far from over. "Unfortunately, the actions of HGTV... suggest that the network still does not deliver what it sells," said the letter, signed by Jon Mandel, chairman of the 4A's National TV and Radio Committee. Mr. Mandel, who is also co-managing director and chief negotiating officer of Grey Global Group's MediaCom, New York, recently ended his tenure on that committee.
Mr. Mandel wrote, "No one who was in the Committee meeting was aware that HGTV allows local systems to pre-empt programs and advertising." Mr. Mandel's letter was sent in response to a March 8 missive he received from Steven Gigliotti, senior VP-ad sales for Scripps Networks. That letter-a copy of which was also obtained by Electronic Media-explains an incident that had been brought to the attention of Mr. Mandel and Mr. Gigliotti.
In the fourth quarter, a buyer, Karen Shuster, bought a schedule of spots on HGTV. Mr. Gigliotti's letter asserts, "While watching on a local cable system, Ms. Shuster found, to her dismay, that during one half-hour time period the MSO in her city inserted a locally originated program over HGTV." The cable system Ms. Shuster was watching was Cox Cable in Providence, R.I.
The HGTV letter said that several years ago, to increase distribution, HGTV allowed cable systems to insert "locally produced half-hour programs over our network during three specific half hours." Currently, the letter stated, only two [unnamed] MSOs have that privilege, and talks are under way to halt the practice by year's end.
Furthermore, the letter said, "When the local advertising sales issue arose in fall 1999, we undertook a massive audit of not only our local ad sale inserts, but also of the number of cable systems inserting on us. ... We determined that, even if all viewers served by an inserting cable system lost all three of the national time periods each day, each week, the maximum impact on a post-buy analysis would be between 1 and 2%."
In his response, Mr. Mandel wrote, "HGTV does not know if the pre-empted programs are in markets that overdelivered the national average or underdelivered. ... You can not even know what the actual delivery of any schedule was."
STEPS TO ADDRESS ISSUE
Executives close to HGTV said it has been working with Nielsen Media Research and is close to implementing a method to measure HGTV programming and account for local pre-emptions.
In response to the letter, Mr. Gigliotti said, "We are convinced that these issues involved a very, very small percentage of audience in four non-prime-time half hours. ... HGTV always takes the concerns of our advertisers very seriously and we have already, as I said, taken steps to address these concerns."
Mr. Chunovic is senior editor and Mr. Ross is editor of Electronic Media.