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Cable takes hike

Upfront ad market expected to hit $2.8 bil

NEW YORK — Cable is on track to reach $2.8 billion in sales in the ad upfront, $600,000 more than last year’s $2.2 billion, cable network ad sales execs said.

However, disagreements over price increases have heated up in the second week of the cable upfront. Networks such as Discovery Channel, Lifetime and A&E are holding out for price increases around 9%, but media buyers say they won’t pay more than mid-single-digit increases.

“A lot of us are drawing a line in the sand,” one media buyer said.

Another buyer added: “A lot of people will sit on the sidelines and wait for the prices to come down. They’re not going to sell out.”

A&E and Lifetime were said to be seeking more than 9% increases over last year’s prices and Discovery is after hikes in the 8%-9% range.

“A lot of us are trying to hold on to the 7% number,” said a cable network sales exec, referring to how low cable channels might be willing to bend.

Despite the bickering over price increases, cable network sales execs said they are seeing budgets with 25%-30% more money than last year.

If cable does succeed in totaling $2.8 billion this year (the recently completed broadcast upfront was flat at $6 billion), part of the extra $600,000 will come from broadcast budgets, part of it from scatter budgets and the rest from new advertisers entering the market, cable networks sources said.

Weeding bad money

All this additional money in the marketplace has encouraged many networks to “weed out the bad money,” meaning that cable channels are agreeing to smaller price increases for clients who are already at high CPMs rather than getting big price increases from clients at low CPMs.

This practice tends to lower a network’s average price increase, but it can put the network in a good position for next year’s upfront. If CPM increases are lower next year, a network that replaced “bad money” with “good money” will be starting at a higher CPM than a competitor that kept its low-priced clients.

Both buyers and cable salespeople said the upfront has proceeded far more orderly than recent years.

“Late nights this year have meant we’re here until 11 p.m.,” a media buyer said. “Last year we were here until 4 in the morning.”

The cable upfront business will continue through the next couple weeks, and all business is expected to be wrapped up by the July 4 holiday weekend.

One reason for the market taking so long this year is the large volume of business, several buyers said.

“Cable had more upfront plans than they ever did before, and I think it overwhelmed them a little,” a buyer said. “It’s taken them time to get the plans out and then get them ready for negotiation.”