'It's ugly': Cable upfront deadlocks

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After a rip-roaring start, the cable TV upfront is stalled as networks hold out for the price increases similar to those raked in by their broadcast brethren.

"The market has slowed to a virtual crawl," said Bill Abbott, senior VP-advertising sales for the Hallmark Channel. "It's so weird. There has been a staring contest between buyers and sellers."

"It's like the Spurs-Nets series," said Bruce Lefkowitz, exec VP-advertising sales for News Corp.'s Fox Cable Networks. "It's ugly. It's competitive. It's dragging on. But it'll be over soon."

The larger cable networks, such as Vivendi Universal's USA Cable, Discovery Networks, and AOL Time Warner's TNT and TBS, completed their upfront sales activity some weeks ago. But some other established cable networks, such as Lifetime Television, E! Networks, Comedy Central, HGTV and Court TV are unyielding in their demand for 12% to 15% cost per thousand price hikes, according to media buying executives.

"We got this far, and we aren't turning around," said Lynn Picard, exec VP-advertising sales for Lifetime, who said the network wants increases in the midteens.

Big media-buying agencies, after being hammered in the broadcast and syndication upfront, aren't giving in. Cable price increases are "nowhere near where the network market is," said Rino Scanzoni, president-national broadcast for WPP Group's Mediaedge:cia.

"The upfront is kind of like high school," said Mr. Lefkowitz. "The broadcast market is like the senior class, and they are kicking the ass out of the juniors and sophomores."

The cable network upfront is still on track to reap 20% more revenue than last year, reaching $5.5 billion, according to media sellers and buyers. But much of the total is going to established networks selling more inventory or to upstart cable networks.

USA Cable and AOL Time Warner's TNT and TBS are said to have inked deals in the 8% to 11% increase range. Newer networks fall below that range, and some media agencies, such as OMD USA, New York, are said to have cut some cable deals in the 4% to 7% increase range. OMD executives did not return calls for comment.

No rush

Media buyers are in no rush because, due to proliferating cable networks and increased carriage, there is 10% more supply of cable ratings points overall, which has a softening effect on prices. The oversupply plays out against a shrinking supply of broadcast network rating points-about 4% to 5% per year.

As a result, networks such as E! and Lifetime still have a way to go. Dave Cassaro, senior exec VP at E! Networks, said the network was about 50% sold, but added that deal-making toward the end of the week was picking up. He would not identify how much of his inventory he was selling in the upfront. Lifetime's Ms. Picard said 70% of her upfront inventory was sold.

About half the inventory of Hallmark Channel, a midsize outlet with 55 million subscribers, has been sold, according to Mr. Abbott, although he wouldn't discuss pricing or how much of his inventory was allotted for upfront sales.

Court TV executives did not return calls by press time.

`slowed down'

"Things have slowed down," said Steve Gigliotti, exec VP-advertising sales and emerging networks for Scripps Networks, which owns HGTV, Food Network, Fine Living and DIY. "We are not battling with the advertising agencies-we are in discussions. [Ad dollar] registrations are really up for our networks. We are about 70% done [with the upfront]."

Larry Divney, president of Comedy Central, declined to discuss his network's pricing or inventory, but said the market is behaving as it traditionally does. "This is a very normal cable pace," he said. "Last year we were doing deals through the summer. Here it is in June, and we're halfway done."

contributing: richard linnett

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