Cable may score 10%-12% more upfront


After wrapping up their upfront last week, broadcast networks look like they will score $8.7 billion to $9.5 billion for primetime commercials for next season, an 8.1% increase. Now its cable’s turn and they’re on track to close out the upfront with about $1 billion more than last year.

While negotiations are still going strong, the cable upfront could finish with between $9.1 billion and $9.2 billion — up 10% to 12% over last year.

The dramatic rise in cable ad revenue is somewhat attributable to sports programming, which drove a sizable shift of ad dollars from broadcast networks to cable. According to Kantar Media’s just-released Q1 report, cable TV expenditures surged 31.9%, propelled by the expansion of NCAA Men’s Basketball Tournament coverage onto Turner networks and a consolidation of major college football bowl games at ESPN. Network TV ad spending declined 10.4% due to the absence of Winter Olympics and college bowl games.

Cable nets are charging double-digit rate increases and are generally said to be faring much better than broadcast networks, which collectively took in between $9 billion to $9.1 billion, according a NY Post story, which added that the sharp rise in TV ad spending by Madison Avenue comes as advertisers are sitting on cash hoards after post-recession cutbacks are now ready to spend in order to stimulate sales. Cable is a much cheaper place to do that than broadcast networks, as CPM rates are historically lower than broadcast.

The story claims NBCU is taking in 25% more dollars than last year, with CPMs up in the mid-teens. Discovery Communications could hit the $1 billion mark in ad commitments when upfront negotiations wrap up in a week or two. The group is said to have nabbed between 17% and 22% more money, with Toyota spending big there.

RBR-TVBR observation: The evidence is certainly out there that Pay TV households are on the rise. While the numbers are contested, the Consumer Electronics Association (CEA) found the number of homes that rely on over-the-air signals for TV programming plummeted last year to 8% of all U.S. households with TVs. Another recent report says Pay TV penetration at the end of 2010 reached 90% in North America.  So for the most part, more homes are hooked into cable than ever before and the rates are simply increasing because of it.