• by Wayne Friedman , April 15, 2009

David Levy, president of Turner Broadcasting Sales and Turner Sports, is a big advocate for TV -- broadcast and cable. But TV needs an adjustment -- especially in this economy.

Just weeks before the big upfront process begins, Levy -- who fronts one of the biggest cable network groups -- suggests that media buyers take a different approach to the upfront.

"Why don't we balance the budget -- balance the way advertising dollars are spent on television?" Levy asks.

Is this the upfront where that will happen? Levy says he doesn't know. "I can't control that. The marketplace controls itself. Cable continues to close the gap with broadcast -- in ratings, distribution, scripted original programming, broad appeal and reach. If all those things are happening," he says, "it's the time to balance the budget."

The big gap Levy is talking about is price -- the cost-per-thousand viewers price differences in which some broadcast network dramas may grab upwards of a $40 to $50 CPM on 18-49 demographics, which can be two to three times what original cable dramas command. By way of comparison, the best-priced original cable dramas may get to a $22 to $25 CPM level for the same 18-49 demo.

That said, media-buying executives do note that cable programming -- specifically original programming -- has been getting annual CPM increases of 5% to 10% over the last few years. They argue that the gap is closing.

However, they add, there isn't much likelihood that marketers will suddenly pay 50% increases just to get cable networks that come closer to broadcast nets.

Levy understands this, but adds that the erosion factor on broadcast television is steepening, rapidly changing the overall TV supply-and-demand situation. Over the last five years, he notes, broadcast ratings have eroded 30%.

"We could estimate maybe another 10% next year, which include [NBC's Jay] Leno being at 10 p.m., and [losses] from digital transition," he says. "That would mean supply is shrinking." As a result, he says broadcast network pricing should not change that much next year in terms of growth. Media-buying executives have voiced concern that cable programmers have a different supply issue. With cable growth at around 4% this current year, there should be softer pricing.

"If I were only growing in acquired [programming] series, maybe that would be an argument," says Levy. "But I'm growing with new and original scripted programming that honestly has a different CPM value."

With cable ratings expanding and broadcast ratings shrinking, Levy says it's time that big broad-reaching cable networks -- such as TNT, TBS, USA Networks, and A&E Networks -- should be considered alongside the bigger pool of supply of broadcast TV ratings points.

"You give an advertiser a bigger supply to choose from, and maybe some will be a little more cost-efficient. That may cause pricing to come down in other places."