NEW YORK — Cable TV is mad as hell and plotting to do something about the ad-revenue thrashing it takes every year from local TV stations.
The dollar disparity between broadcast and cable is way out of line, say cable operators, when measured against the number of viewers that each pulls in.
In 2001, the 9,924 U.S. cable systems could manage only $3.65 billion in local ad sales compared with the $21.48 billion harvested by commercial TV stations as a category, according to Universal McCann’s Robert J. Coen.
The executive who regards this discrepancy with the alarm of a Dick Cheney invoking dire warnings about Saddam Hussein’s chemical weapons is Charlie Thurston, president of advertising sales for Comcast Cable. Comcast’s goal, he says, is to make it just as easy for ad agencies to buy cable spots in local markets as it is with broadcast TVstations.
Thurston is the logical choice to engineer the cable-vs.-broadcast TV operation because Comcast, with 8.5 million subscribers, is about to absorb AT&T Broadband, which will add 13.5 million customers. Assuming the merger gets its final blessing from Washington regulators later this year, Comcast/AT&T will emerge as the biggest cable operator in TV history, almost double the size of second-place Time Warner Cable.
The phrase that constantly recurs in a conversation with Thurston is “one-stop shopping.” That permits an advertiser to buy all the cable systems in a given Nielsen market through one invoice instead of schlepping to as many as 80 systems in an area as vast as Los Angeles.
Spearheaded by Thurston, these one-stop-shopping enterprises (or interconnects, in cable jargon) have spread to 54 out of the top 100 markets, including 21 of the top 25. In January 2000, only 10 of the top 100 were interconnected.
But as cable operators beef up their forces, they’re also preparing for resistance.
Chris Rohrs, president of the TV Bureau of Advertising, which represents broadcasters, charges that cable systems are setting up the equivalent of a shell game. While the systems ballyhoo the power of a targeted cable network, like MTV and its teenage audience, they end up bundling MTV with 31 other disparate channels to pocket bigger dollars from the ad agencies.
But Jim Heneghan, corporate VP of ad sales for Charter Communications, the fourth-largest cable operator in the U.S., says the interconnects also offer advertisers what he calls “genre packages” of networks.
Each bundle is meant to appeal to definable audiences. For example, a Charter interconnect gathers ESPN, ESPN2, Fox Sports and the Golf Channel in one grouping, selling spots across all four to clients seeking adult males.
That’s fine, says Rohrs, but these niche-network deals will fetch far fewer ad dollars for the cable systems, making it harder for them to narrow the revenue gap with the TV stations.
Thurston, however, is counting on interconnects in the top 30 markets to give cable its first truly competitive crack at the lucrative national-spot business.
About 75% of national spots get sold in the top 30 markets, Heneghan says. But while TV stations pocketed $9.2 billion in national spot ads in 2001, cable might as well have stayed at home, managing to scrape up only about $440 million.
Of course, all of cable’s best-laid plans could go for naught if the economy tumbles back into recession.
But at least the interconnects will remain in place, chopping down some of the barriers that have made cable a second-class citizen in the scramble for Madison Avenue largess.