In another indication that the advertising economy is turning upward after its long recession, cable television networks are taking in more advertising dollars ahead of the 2002-03 season than had been expected even a month ago.
Though the preseason negotiations between the cable networks and advertisers - known as the upfront market - are still unfinished, industry analysts are now estimating that when the dickering is done in the next week or two the final total of purchased commercial time could reach as much as $4.8 billion. That would represent an increase of 20 percent from the $4 billion sold in the depressed cable upfront market of last year. And it would tie the record set before the start of the 2000-01 season.
The more robust demand for commercial time on cable networks, from marketers seeking to peddle wares including cars, movies and mortgage loans, represents a trifecta for the television industry. The broadcast TV networks set a sales record in their upfront market, which concluded last month, at more than $8 billion, compared with about $7 billion for 2001-02. And the demand for commercial time in syndicated series also exceeded recent forecasts, totaling an estimated $2 billion.
Although the cable upfront market proceeded more slowly than had been expected, and the rising tide is not lifting all the boats, the anticipated end result is being welcomed by the industry.
"We're certainly above last year, which wasn't too difficult to achieve, and an increase of 20 percent is a real possibility," said Joseph W. Ostrow, president and chief executive at the Cabletelevision Advertising Bureau in New York.
"The ratings story" is a big reason for the increased demand, he added. In June, for the first time, cable networks carrying commercials - that is, excluding premium-priced movie channels like HBO and Showtime - were watched by more than 50 percent of American households in prime time.
High ratings for original movies and series like Sunday's William H. Macy film "Door to Door" on TNT helped fuel increased ad sales there and at TBS, said Mark Lazarus, president for Turner Entertainment sales and marketing in Atlanta and New York, part of AOL Time Warner. The gains, he said, came in categories like fast-food restaurants, films and telecommunications.
"It's pleasantly surprising," he added, "but logical."
Rival general entertainment channels like FX also benefited from advertiser ardor.
"Advertisers moved a little more cautiously in cable after the speed and strength of the broadcast upfront and the syndicated upfront, but we are in double-digit volume gains," said Bruce Lefkowitz, executive vice president for entertainment advertising sales at the Fox Cable Networks Group in New York, part of the News Corporation, who handles ad sales for FX as well as the National Geographic Channel.
Marketers are buying commercial time during "The Shield," Mr. Lefkowitz said, a series on FX that some advertisers shunned during the 2001-02 season because of its frank content, as well as during "Lucky," a dark sitcom to be introduced by FX in the second quarter of 2003.
A Fox sibling, Fox News Channel, is also reporting strong gains.
"I keep knocking wood because I've done this for a while, but we're about 80 percent done and our dollar volume has almost doubled," said Paul Rittenberg, senior vice president for advertising sales at Fox News in New York.
Among the ad categories contributing to the gains, Mr. Rittenberg listed automobiles and financial services.
"They're still a little nervous," Mr. Rittenberg said of the brokerage firms and mutual funds, "but they do a lot of spending not because the market is good but to say `You can trust us.' "
Greg D'Alba, a counterpart to Mr. Rittenberg at CNN, the AOL Time Warner cable news network, said that he was seeing gains in "our blue-chip business" like automobiles and financial services, including banks and mortgage lenders, along with computer hardware and telecommunications.
Some companies have cut back ad spending, said Mr. D'Alba, who is executive vice president for sales at CNN in New York, but those losses are being compensated by increased budgets from other advertisers.
Other cable networks that are selling commercial time beyond projected levels, in addition to the general entertainment and news channels, are niche networks that are aimed at more specialized audiences. Those include MTV and VH1, part of Viacom; Comedy Central, owned by Viacom and AOL Time Warner; and the Food Network and HGTV, owned by E. W. Scripps.
"The targeted networks are enjoying high-single-digit and double-digit volume increases," said Joe Mandese, editor of Media Buyer's Daily in New York, a newsletter published by Primedia.
Some networks did well by lowering their rates and gaining market share, agency executives said. They included Lifetime, owned by the Walt Disney Company and the Hearst Corporation, and USA Network, part of Vivendi Universal. Networks that lagged their peers, the executives said, included A&E, owned by Disney, Hearst and General Electric; and Discovery Channel, part of Discovery Communications.
For all the growth in demand for commercials on cable, questions loom for the coming season. The major one is also being asked of the broadcast networks: How much of the sales increase is attributable to more money coming into the market and how much is just being shifted from the money spent during the season, in what is known as the scatter market?
"It's too soon to tell," said Mr. Lefkowitz of Fox Cable. "Some advertisers moved their scatter dollars into the upfront, but that's not to say they also weren't putting more into the upfront, too."
"And as the season goes on and the economy picks up," he added, "we should get advertisers that didn't commit at all in the upfront."
Stuart Elliott, The New York Times. July 17, 2002
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