Upfront TV market seen as 'watershed' for cable

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Major ad agency media buyers are saying that between $200 million and $500 million in ad spending may shift from the major broadcast networks to cable TV networks in this year's upfront marketplace.

Cable's portion of last year's $8.7 billion upfront was about $2.4 billion.


Media buyers point to a number of factors that could cause this seismic shift: a softness in the second-quarter marketplace, the continuing erosion of broadcast network viewing and the increasing use of "optimizer" tools by agencies.

"If $300 million or more moves to cable, this could be the watershed year cable's been hoping for the past few years," said one agency buyer, who asked that his name not be used.

Buyers estimate the four broadcast networks are looking for $250 million to $300 million in the so-called scatter market in the second quarter, "and I just don't see that money out there," one buyer said.

Scatter is the ad inventory the networks sell on a day-to-day basis; in upfront sales, which take place in late spring, advertisers buy time for the entire new TV season.


By participating in the upfront marketplace, advertisers are betting they'll get cheaper rates than they can buy later on a scatter basis. Upfront buys, unlike most scatter purchases, carry ratings guarantees.

Agency executives said the second quarter is so soft that buys can be made well under upfront prices for some shows. Also, the networks are so eager to sell remaining inventory they're giving ratings guarantees with scatter purchases, a situation that hasn't occurred for a number of years.


Since the second quarter leads into the upfront, "it definitely has a psychological if not real effect on what advertisers do," said one buyer. "If an advertiser sees that scatter buys are going cheaper than last year's upfront buys, he thinks twice about spending so much in the upfront."

Buyers said CBS is pretty well sold out for the second quarter because it's still giving Olympics advertisers make-goods to compensate for shortfalls in ratings during Olympic programming. Fox, doing relatively well in its targeted demographic of younger viewers, also is said to be in good shape.

"NBC's attitude is give us your entire budget and let's see if we can squeeze you into the `Seinfeld' finale," said another buyer. "If you give them enough money, they can say they sold you `Seinfeld' at $1.8 million or so, while you can tell your client you got it for much less."

Larry Hoffner, president, NBC Sales, was traveling and could not be reached at press time.


ABC is canvassing agencies for any spot or cable dollars, and trying to convert that money into spending on the network, buyers said.

"That's absolutely true," said Marvin Goldsmith, ABC's president-sales and marketing. "I make no apologies for trying to keep our demand up."

Cable network executives said some agencies already are talking quietly to them.

TeleVest, New York, which buys time for Procter & Gamble Co., will likely be the biggest spender on broadcast, cable and syndication during the upfront, and the shop is said to be in discussions with some cable networks, having appointments lined up with syndicators over the next few weeks.


TeleVest has multiple-year deals with most cable networks that usually allow it to add or subtract monies from various clients; it now has to incorporate P&G cable money within that arrangement.

TeleVest declined comment.

"P&G has led the optimizer movement, and I think they'll shift even more money to cable and syndication this year," said one rival agency manager.

P&G spent $242 million on cable TV in 1997, according to Competitive Media Reporting.

Copyright March 1998, Crain Communications Inc.

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