So what if cable networks are writing record upfront business? Discovery's President of Ad Sales Joe Abruzzese wants more. Even with all the money flowing in, he still says, "Cable has not gotten its fair share of money or pricing."
Abruzzese is hardly the first cable executive to stump for parity with broadcasters, but the former CBS ad-sales chief is cable advertising's newest advocate. Speaking at last week's National Cable Telecommunications Association convention in Chicago, he boasted about cable's spoils so far in this year's hard-charging upfront market: 20% increases in volume, single-digit to low-teen gains on costs per thousands (CPMs).
Abruzzese's Discovery networks, along with big players like Turner, Universal Television Group (with USA Network and Sci Fi) and MTV Networks have wrapped up the bulk of their deals. Middling cable nets and smaller networks are still working, with upfront dealings expected to stretch into July.
So far, cable networks have booked an estimated $5.7 billion to $6 billion in upfront sales, up from about $4.8 billion last year.
Even so, the CPM gap with broadcasters is still growing. Media analyst Jack Myers says broadcast CPMs jumped 15% this year, compared with 8% for cable.
Joe Uva, president and CEO of media buyer OMD, says advertisers' rush to broadcast in this upfront hurt cable's chances to narrow pricing.
"It was a runaway train this year," he said at NCTA. "Advertisers wanted to stay in broadcast, and they got burned in scatter. Paying 10%-15% increases in the upfront is easier to swallow than a higher amount in scatter."
And cable networks, with their ever-growing pool of ad inventory to sell, do their share to keep prices down too, Uva said. Many advertisers, he says, "continue to look at cable as an efficiency medium."
Discovery's Abruzzese agrees that cable's over-supply holds back more CPM gains. "What will drive cable up is sell-out and perishability."
Some in-demand cable programming sells well. Uva pointed to near parity between cable and broadcast on CPM for National Basketball Association and National Football League coverage.
There are plenty of other new cable shows arriving for summer, typically cable's season to make a run at slumbering broadcasters. Sure, broadcasters are offering fresh reality shows, but Abruzzese calls that just a "stopgap."
He says the momentum is swinging to cable now. "One day, the summer viewers [on broadcast] are going to go down and not return. That is when you're going to see a big sea change." Maybe then, pricing will follow.
