WELL-OILED CABLE MACHINE BUILDS FRESH FARE INVENTORY: CABLE TV CALLS SHOTS: WITH ITS EXPANDED ROLE, MORE DEALS IN CONCERT WITH BROADCAST EXPECTED

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Double-digit cost-per-thousand increases are expected on some cable networks during the upfront cable media-buying season, but others will only draw single-digit increases.

Cable continues to benefit from the ratings erosion of broadcast networks by absorbing more viewers. Advertisers also are expected to spend more on cable this season than last year.

ORIGINAL MOVIES

Cable networks are investing in a slew of original movies, new series and first-run films as they strive to improve their offerings and work toward higher ratings and parity with broadcast networks in CPM rates.

Getting close to broadcast CPMs will be tough this year with a hot upfront expected and the broadcasters needing double-digit CPM growth themselves just to remain revenue neutral with last year's upfront.

"There are certain groups of cable networks that have been in very strong demand for the past few years and have escalated their prices . . . they can't expect to continue to rack up huge gains year after year, because what they're offering isn't yet on a par with network TV," says John Muszynski, chief broadcast investment officer at Starcom USA, Chicago.

Cable TV networks will boost CPM rates in the range of 8% to 12%, but there will be wide variations, say agency buyers.

"Cable is stronger than ever, but when you add up all the ratings for the top 10 cable networks, it doesn't equal one broadcast network's total ratings," says Tim Spengler, senior VP-general manager of national broadcast for Western Initiative Media Worldwide, Los Angeles. "It's easy to say cable is getting a bigger share of the pie, but we live in a world defined by numbers and Nielsen ratings."

UP TO 30% WITHOUT CABLE

Cable "has come up in the world, but there are still 20% to 30% of households that don't have cable TV, and you just can't compare it with a top night on network TV," says Chris Geraci, senior VP-group director, national TV buying, for BBDO Worldwide, New York.

Cable TV network executives bristle at such ratings comparisons with broadcast networks: "The numbers are in the eye of the beholder," says Joe Uva, president of entertainment sales and marketing for Turner Broadcasting Sales.

"Cable TV is going to have another record year, offering the best price value in all of national TV, and we'll continue to benefit from viewers moving over from broadcast to cable," he says.

Jockeying between media buyers and cable TV networks over cable's significance in the upfront buying season also is being debated.

"There is only one upfront -- it's all one big marketplace now and cable TV is part of the planning and forecasting of all advertisers and media buyers from the beginning of the season -- with deals happening behind closed doors early," says Don Stump, VP-network sales and marketing for Cabletelevision Advertising Bureau.

END OF BUYING DEALS

Media buyers say most cable deals will happen at the end of the broadcast upfront buying season, as usual, though some deals are expected to be made in tandem with broadcast deals. The majority of the action is expected to take place in mid-to-late May through June.

As larger cable networks' growth rates soften, media buyers say smaller and mid-sized niche-oriented cable networks' growth rates are still sharply on the rise.

BARGAIN SEARCH

Advertisers are still discovering the power of targeting specific audiences through niche network buys, and the relative bargains such networks offer, says Kathy Van Lieshout, assistant media director at Starcom.

"Networks like Animal Planet or HDTV that have very specific audiences and are now reaching critical mass are going to get a lot of attention this year," she says.

Marketers' options continue to expand.

"The cable TV industry is growing and maturing at the speed of light, but even so, sellers have to remember that the total universe of viewers is not increasing," says Brad Adgate, senior VP-corporate research director with Horizon Media, New York. "Instead, cable continues to win over viewers from broadcast but within cable there's starting to be a lot of shifting, as small and mid-sized networks emerge."

NOT YET EATING OWN

But Mr. Uva points out that in dollar terms, "cable has not yet started to eat its own. We're still in a growth mode and there's wide variation on pricing. The more specialized and unusual a network is, the higher the CPM. The more commoditized, the lower the CPM will be, and the growth rate is still coming from dollars that would have gone to broadcast."

Money is expected to pour into the cable market this year from new and emerging services and industries, Mr. Stump says.

"All the services on the Internet, from search engines to selling portals like Amazon.com, are putting money into cable advertising. In the long-distance market, wireless phones and dial-around long-distance providers are going to be huge for cable this year," the executive says.

23% BOOST

Marketers in the top 10 cable advertising categories increased their investments in cable TV an average of 23.1% in 1998 over the previous year (see chart on Page S-16), according to CAB.

COMBO BUYS

Media buyers say they're steering advertisers toward a combination of major cable TV networks with broad coverage for mass reach and fast-growing new niche networks to reach specialized audiences.

Mr. Adgate says he is studying "the lifestyle channels, networks offering documentary and cultural programming, and the home and garden types of channels, where there's still lots of growth.

Several networks are touting their ability to target certain gender and age groups as selling lures again this year.

A&E's History Channel, viewed as a strong contender in this year's upfront marketplace by several media buyers, boasts of its dominance with men in prime-time viewing hours through programs including "History Undercover," and its "Wrath of God" nature and weather event series.

'That's a positioning that's very attractive to advertisers," says Arlene Manos, senior VP-advertising sales.

MEN WATCH, TOO

Food Network trumpets the fact that its research shows its audience is composed of 48% men in prime time, although it's traditionally considered a magnet for women, says Heidi Diamond, senior VP-marketing and business development.

One of Food Network's highest-trafficked time periods is around 4 p.m. each Monday, when people tune in to plan their menus for the week, including tapping the network's Web site (foodtv.com) for recipes and ingredients, she says.

DEMO STRONG

VH1 claims to have cable TV's highest concentration of adults between the ages of 18 and 49, a compelling lure for certain advertisers targeting "that magical demo" of adults not-too-young and not-too-old, says Mark McIntire, VP-advertising sales and marketing.

Targeting families -- an emerging trend for several networks and programming blocks on major cable networks -- is proving to be a significant bargaining chip this year.

"We offer warm and wholesome programming, and advertisers love it . . . we're expecting very strong demand from certain sectors this year," says Rick Sirvaitis, president-advertising sales for Fox Family Worldwide.

RATE HIKE NOT AUTOMATIC

A bigger menu of original programming is an important factor for larger cable networks seeking to increase their CPMs, but media buyers warn that such investments don't always translate into higher rates.

"Everything in network TV is original and they're investing a lot more money on a percentage basis than cable is," says Mr. Geraci. "If cable can prove to advertisers that they're spending a visibly higher amount on programming, it warrants some increase in pricing, but there's a lot of [cable TV original programming] out there that doesn't really result in great ratings," he says.

Nevertheless, cable TV networks will use original programming increases as a major cornerstone of their pitches to buyers during the upfront season.

Another cable strategy is to get higher ratings by airing theatrical movies before broadcast networks.

Films hitting the small screen first on Turner cable networks include "The English Patient" to air in November; "Contact" and "Wag the Dog" will air next year.

BRANDING ROLE

Branding also is playing an increasingly important role for cable TV networks in getting the attention of viewers and media buyers, to differentiate individual networks from the growing array of choices on viewers' TV dials.

Networks from Comedy Central to TNN are boosting brand marketing efforts by maintaining a strong presence with on-screen and off-screen promotions and integrated marketing efforts.

Cable is "an important part of the puzzle as we go into the upfront season, but

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