E.W. Scripps Co., the owner of HGTV, has confirmed that some number of commercials meant to air nationally on HGTV were in fact aired in time slots already promised to cable system operators for local ads. That meant some "national" ads were blocked out -- without the national advertisers ever knowing it.
How many spots and how many advertisers were affected is still not known. While this may never meet legal definitions of fraud, Scripps said it has set aside a $2.5 million fund to compensate advertisers for "possible underdelivery of audience." And it suggested the practice may stretch back as far as 1997.
Scripps deserves credit for acting quickly to try to control the damage, but it's hard to see how make-goods and apologies -- alone -- are going to be enough. Advertisers and agencies can audit media buys, but trust and confidence are still essential ingredients in the ad marketplace. Both have been badly shaken. If this practice indeed goes back to 1997, why wasn't it detected before? Had not cable industry veteran Reese Schonfeld blown the whistle -- in a lawsuit filed by his company against Scripps (the two are co-owners with others of cable's Television Food Network) -- how long would it have continued with no one, including top management at Scripps, the wiser?
What's particularly chilling is Mr. Schonfeld's description, in an affadavit filed with the suit, of how matter-of-fact and open HGTV's ad-traffic staff were about it being "common practice" to run national ads in time slots subject to local preemption. It's no surprise ad buyers are now wondering just how common this "common practice" is in cable.
To answer the question, an audit of cable-industry procedures seems appropriate. That's a project best conducted jointly through the Cabletelevision Advertising Bureau and the American Association of Advertising Agencies. It could begin with HGTV and extend to the industry as a whole -- with results made public. It's