After the 2000 cable upfront rode the economy to volume and cost-per-thousand increases in a quick buying bazaar, last year marked a resurgent buyer's market as the haggling dragged on and decreases were pervasive.
"There was some irrational exuberance," Brad Simmons, Unilever's U.S. VP-media services, noted at a recent industry event. "A lot of that was sorted out. There was a correction."
So where do we go from here? Six months after Sept. 11-as Americans largely went back to living their lives and tuning in to prime-time TV-brought some confidence that the ad market chill was thawing.
But there's the possibility that the uptick was artificial as some networks (likely broadcast and cable) benefited from broadcast networks ABC and Fox having little, if any, inventory to sell since their lackluster ratings forced them to fill slots with advertiser make-goods. Viacom's VH-1 has suffered from underdelivery like ABC and Fox, and had to offer make-goods, limiting the inventory it could sell.
GENERAL MARKET IMPROVING
The recent uptick is not artificial, says Viacom President-Chief Operating Officer Mel Karmazin, speaking in a recent call with analysts: "We believe the overall environment today is up ... That would tend to indicate the [issue] isn't just the current problem that [ABC parent Walt Disney Co.] and to some degree [News Corp.'s] Fox have in prime time. I believe there's a general improvement in business. I think the general market is getting better as well."
Mr. Karmazin's comments help drive home the point that all pre-upfront commentary and soothsaying must be viewed with the understanding that one's side of the table usually looks like the rosy one.
Bill McGowan, exec VP-general manager U.S. ad sales and global integrated partnerships at Discovery Networks who annually predicts the upfront market, offered his take on the 2002 season: Cable's dollar haul would increase 12.5% to $4.5 billion.
Optimistic, but possible-however, Mr. McGowan's auguring seemed to include a bit of home cooking when he suggested the broadcast networks would be flat at $7 billion.
WORST BEHIND THEM
"As usual a bit aggressive," Bruce Lefkowitz, a former deputy of Mr. McGowan and now exec VP-advertising sales for Fox Cable Networks, says of the annual forecast.
Still, most sellers are confident the worst is past, and they're poised to reclaim increases in dollars and pricing.
But buyers say, "Hold on": Budgets from marketers may be the same as last year if not down again, and though there have been signs the economy is picking up, some cloudiness has resurfaced.
"This economy is on very fragile underpinnings," says Bob Riordan, the newly named senior VP-managing director of national broadcast at Havas Advertising's buying unit MPG, New York.
Mr. Lefkowitz says the vast swings of the recent past are a thing of the past. The full-speed playground swing has given way to a desktop pendulum. "This year will be a return to normalcy," he says. "Last year was atypically bad, the year before was atypically good."
He says he feels the cable dollar haul will grow 7%-8% to about $4.3 billion, while CPMs will grow anywhere from 3%-6%.
Last year, cable on average, saw CPMs plummet 18% or more, he says.
Buyers, no doubt, will be angling to keep CPMs flat or watch them drop as much as Mr. Lefkowitz thinks they'll grow.
"I don't know how far apart we're going to be," Mr. Riordan says. "But I would have everyone temper their enthusiasm and be prepared for a market not on solid footing."
There are several factors that could give cable a lift in the upfront. If in the network upfront, ABC and Fox fail to wow buyers with revamped schedules, dollars could trickle to cable. Cable also has seen a run of popular new shows. "The Shield" has posted strong ratings, while giving a much-needed signature show to News Corp.'s FX, which had largely failed to establish an identity and saw its fall 2001 prime-time schedule, including reruns of "Ally McBeal" and "The Practice," stumble. Of course, "The Shield" with its hard-edged content has been hit hard by advertiser defections. Yet FX picked it up for another 13-episode season.
Discovery Communications channel TLC's "Trading Spaces" also has become a hit, the latest adaptation of a British TV show to make it in America. And MTV's "The Osbournes" has been a surprise blockbuster.
" 'The Osbournes,' like the original `Survivor' [on Viacom's CBS}, is more than just a hit show," Mr. Karmazin told analysts. "It really is a phenomenon ... We're doing a good job of selling advertising in that extraordinary show."
On the negative side, cable faces the potential challenge of too much inventory. In a booming market, there's more room for so-called second- and third-tier networks to grab ad dollars. When things are murky, questions abound if there are enough dollars to support the ever-growing mass of cable nets that include a videogame channel and the Tennis Channel, likely in the digital tier among others.
Cable also has apparently missed ad opportunities on the past year's trend called repurposing, where episodes debut on a broadcast network and then only days later re-air on a cable outlet. Programmers like the trend because it offers the promise of more for their development investment. For example, "Charmed" airs on the WB and then on fellow AOL Time Warner holding TNT soon after.
"It's been successful with viewers," Garth Ancier, Turner Broadcasting System's exec VP-programming, said at the same industry event where Mr. Simmons spoke, the Association of National Advertisers' TV forum. "I couldn't say it's been successful with the advertising community."
Finally, cable will have to battle with a mini- resurgence of broadcast networks, an after-effect of Sept. 11. If media buyers believe that trend will only grow, cable could be hurt.
Top 2001 spender: AOL Time Warner at $294.1 million, up 87.6%
Top 2001 media buyer: Initiative Media Worldwide at $1.52 billion, up 3.9%