Cable networks revving up

Turner channels pace upfront sales frenzy

Cable networks are reporting double-digit ad rate gains in this year’s upfront advertising sales frenzy, which heated up for cablers last week as broadcasters concluded the bulk of their business. Industry insiders estimate that strong sales will result in growth near 5% over cable’s haul of $7.3 billion haul last year.

Stung by an expensive market for last-minute ad buys in the spring — the so-called scatter market — advertisers have returned to the upfront to lock in lower prices for the coming season.

Turner Broadcasting nets TNT, TBS and Court TV are leading the market with rate increases of 11%-12%, with several other networks falling in close behind.

Offsetting the healthy rate increases, however, are a decrease in inventory as the industry makes the switch from program to commercial ratings as the basis for ad guarantees.

Cable network audiences drop an average of 10% during the commercial creaks, according to a new study by media buying firm Magna Global, so even with healthy CPM increases, the sales volume is just slightly up or, for some networks, flat or down from last year.

Turner was about 50% finished writing deals on Friday. A&E was also about halfway done selling ad inventory at rate increases of 6%-9%.

Lifetime is expected to wrap up its upfront today and Tuesday, with rate increases of 7%-11%.

Cable news nets such as CNN and Fox News — not usually big upfront players — are doing more business than usual as buyers expect the market to tighten when the flood of political advertising hits early next year.

NBC Universal, Discovery and Nickelodeon have inked major deals, but Nick aside, the MTV Networks family of cablers has taken a more cautious approach amid the market shift to commercial ratings.

This year the vast majority of deals are being cut on “Live Plus Three” commercial ratings, meaning Madison Avenue is paying for viewers that watch the ads live and within three days of the initial airing via digital video recorders.

The switch to commercial ratings has caused some difficult translations for young-skewing nets, such as MTV, VH1 and E! Entertainment Television, whose auds are more likely to skip out during commercial breaks and zap through ads during DVR viewing.

MTV Networks circulated a letter to buying agencies — a “guideline” for doing business — that included a caveat that it must be allowed to revise ratings guarantees during the course of the year.

“They have a pretty unique audience, so they are able to take a stand,” said an exec at a competing network. “In the young demo marketplace, it’s tough to buy around Viacom.”

The syndication market has had a relatively smooth transition to commercial ratings because viewer retention during commercials is the highest in the business.

During gameshows, for example, 99% of auds watch the ads; talk and court shows retain 98%.

Syndication sales execs are predicting a 2%-5% increases over last year’s $2.4 billion total.

Howard Levy, head of advertising sales for Disney-ABC Domestic TV, said many advertisers make syndication part of their buying mix because people tend to watch syndie shows live, on the premise that if you start taping shows that run five times a week, you’ll fall hopelessly behind.

“Daytime was particularly robust in this upfront,” said Levy, citing Disney-ABC’s syndie hits “Live With Regis and Kelly” and “Who Wants to Be a Millionaire.”

Bo Argentino, head of ad sales for NBC Universal Domestic TV, said, “We’re very close to being done.”

NBC U’s pacesetter in the upfront is “Access Hollywood,” which is chalking up increases in the high single digits.

Most of the returning syndie shows are down in the Nielsen ratings year to year. As a result of these declines, advertisers’ dollars are buying more time for the same money that they spent last year.

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