Syndication scores, outpaces cable CPMs

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Cable and syndication are riding the coattails of the vigorous $9.3 billion broadcast network upfront ad market-with both cable and syndication revenue expected to rise an astounding 20%. More remarkably, syndication is outpacing cable in all-important cost-per-thousand price increases.

That means cable should garner $5.3 billion while syndication is expected to sell $2.2 billion, according to an informal survey of media agency executives. Last year, cable snagged $4.4 billion, and syndication sold $1.7 billion.

Top syndication shows are getting even better price increases (cost-per-thousand viewers) than cable, according to executives. Sony Pictures Television's "Seinfeld;" Warner Bros. Domestic Television Distribution's "Friends" and "Will & Grace;" and King World Productions "Everybody Loves Raymond," have snared 15% to 18% increases to $20 to $22 CPMs for adults 18-49 viewers. Buyers also paid higher prices for first-run syndication programs as well, such as Paramount Domestic Television's "Entertainment Tonight" and King World's "Dr. Phil."

Cable networks such as USA Cable, Discovery Networks, A&E Networks, TNT and TBS, have so far posted somewhat lower increases, between 8% and 11%. MTV has scored 11% to 13% increases. ESPN has posted about an 8% gain and is 65% sold out of its upfront inventory, including ABC Sports.

One more difference: As of last week, syndication was virtually sold out, especially top-tier shows. But cable still has plenty inventory to sell, according to executives, with only 50% of the inventory on major cable networks being sold, on average. Some cable networks are either holding out for stronger pricing or, due to their smaller size, waiting in line to do deals with agencies.

money shift

"We are approaching this upfront fairly methodically and deliberately," said Mark Rosenthal, president-chief operating officer of Viacom's MTV Networks, who claims to have sold 50% of his upfront inventory with double-digit CPM increases.

While both cable and syndication are seeing improved businesses, advertisers apparently shifted some money to cable from broadcast. "They used [cable] as a substitute for broadcast," said David Levy, president-entertainment sales and marketing and sports at Turner Broadcasting Sales, who said his inventory is also half sold out with double-digit price increases. The shift of money from broadcast to cable and syndication, however, was not as dramatic as many expected.

"We haven't seen that," said Steve Grubbs, CEO of PHD USA, New York. "I thought there might be more shifting but I'm not sure that's the case. Spending is up across the board on national TV. We know some of it was from scatter." Scatter money is the part of the budget advertisers hold back to spend once the TV season has begun.

Said one veteran syndication advertising sales executive, concerning the upfront: "It's very good, excellent. ... We are getting 30% more money than last year."

Lynn Picard, exec VP-advertising sales of Lifetime Television, wouldn't discuss this year's pricing but said, "This was the year for cable to get the equivalent increases to network." This year broadcast networks posted anywhere from 14% to 18% CPM increases. Executives say Lifetime posted slight CPM decreases last year.

"This really wasn't an upfront market," said Joe Uva, CEO of Omnicom Group's OMD, who was not happy with the high prices. "This was a back end market. Because that's where all the agencies and clients took it from the networks, in the back end."

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