Cable to parallel broadcast this upfront?


As most have predicted, cable is rocking the upfront this year. While upfront negotiations with the cable nets are still set to continue until the end of the month, according to a WSJ story ad deals for the biggest cable channels are almost wrapped up, and rates have risen between 9% and 16% from last year. The story also estimated cable’s total volume of ad commitments for the coming season have grown by about 15% from last year, which would bring total cable ad spend to between $9.1 billion and $9.3 billion—reaching the milestone of nearly matching the broadcast industry’s tally.

Last year, cable’s upfront scored about $8 billion in commitments, about 93% of the value of the broadcast networks’ upfront take, according to Barclays Capital.

“There are two drivers that have helped bring cable to parity with broadcast,” says Anthony DiClemente at Barclays Capital. “One is the shift of viewers from broadcast to cable, which boosts cable ratings and inventory available for sale, and then also the narrowing of the pricing gap between broadcast and cable inventory.”

While broadcast networks have watched their audience slip, cable channels have seen their viewership grow in recent years. During the past TV season through June 12 about 4% fewer people watched primetime shows on the four most-watched broadcast networks than in the previous year’s season, according to The Nielsen Company. Broadcast networks saw primetime rates rise by about 9% on the low end, for NBC, and by 13% to 15% on the high end for CBS. The primetime audience for ad-supported cable networks, meanwhile, increased by more than 4% from the previous season.

People close to the negotiations say that prices to lock in commercial time on Time Warner’s TNT and TBS networks are up by about 12% or 13% from last year, while Viacom’s MTV Networks (Comedy Central, VH1, and MTV) has seen rates increase by 10% or more. Ad volume at MTV Networks also are up by “double digits,” said the story. NBCU/Comcast’s USA scored rate increases of roughly 13% to 16%, also according to the story. The network averaged more than 3M primetime viewers over the past TV season, the most of all cable nets, according to Nielsen.

Female-oriented networks are in high demand among advertisers, with Bravo, E!, and Oxygen, owned by Comcast/NBCU, imposing increases from 11% to 14%. Discovery’s top networks, including TLC, have scored rate increases of 10% to 12% from last year.

RBR-TVBR observation: As we mentioned in a previous story, the evidence is certainly out there that Pay TV households are on the rise. More homes are hooked into cable and satellite than ever before and the rates are simply increasing because of the larger audience. Cable offers so much niche programming these days that the sum of all of those audiences is starting to match broadcast, and will certainly surpass it. Remember—broadcast only has a handful of networks. Cable nets – and their carriage – just keeps growing.