Editorial: Smart money's going to cable

Published on .

The old reality: TV advertisers needed to buy network. The new reality: TV advertisers need to buy cable. In approaching the broadcast upfront, a good starting point for advertisers is to assume cable offers the better deal.

Advertisers are figuring this out. The early word is that marketers could shift 5% of broadcast budgets this year to cable and other alternatives.

Ad-supported cable has pulled a 41 share this season for prime-time viewers, up from a 20 share a decade ago, according to Nielsen Media Research. Over the same period, broadcast networks' share fell to 47 from 64.

The quality gap that favored networks and their big production budgets has disappeared. Cable is the home for innovative, edgy content often as good or better than what airs on broadcast.

For viewers, the difference between broadcast and cable is largely meaningless; ABC, USA and MTV are clicks on the clicker.

For media companies, cable/broadcast distinctions are shrinking. They make money either way. Viacom's revenue from MTV Networks this year will exceed CBS network revenue, predicts Schwab SoundView's Jordan Rohan. The NBC/Vivendi Universal Entertainment merger will unite NBC with cable's USA Network. Cable operator Comcast is trying to buy ABC parent Walt Disney Co.

For advertisers, there is a difference: Cable costs less. The cost per thousand cable viewers is far below broadcast network CPMs.

TV prices are set by supply and demand. Networks have commanded higher prices for shrinking ratings because they deliver a massive audience. Fox's "American Idol" was the top-ranked network show for a recent week, with 27 million viewers by Nielsen's count. Cable's top-ranked ad-supported show that week, Spike TV's "WWE Raw Zone," drew 5.7 million people.

Advertisers seeking broad reach may need a heavy dose of broadcast. But for many, cable delivers better value. There is an alternative to the broadcast network affront. It's called cable.

In this article:
Most Popular