News Analysis: Upfront's Shrinking Dollars Hurt Cable

USA Network's Burn Notice

Many big cable entertainment networks look to be in the same position as broadcast networks this upfront: lower prices and less upfront volume.

Industry estimates say many entertainment networks are selling 10% to 15% less upfront commercial time versus a year ago -- on par with broadcast networks.

But new media analysts estimates say total cable industry upfront revenue should remain around the $7.2 billion range of a year ago. In contrast, broadcast networks' upfront take is estimated to drop 15% or more to around $7.4 billion.

Cable has maintained its overall results because of some rising cable network categories, like cable news networks. Fox News Channel, for example, has seen a sharp rise in ratings points. Others, like MSNBC, CNN and Headline News, have shown viewership gains as well.

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One media agency executive believes the cable news networks will sell less on a percentage basis in the upfront versus a year ago. Just like the entertainment networks, they will end up booking more advertising revenue, because of growing rating points.

But all this isn't good news. That oversupply in a weakening market means that some cable news shows will be harder-hit that other cable programming -- perhaps 6% lower in cost-per-thousand viewer [CPM] prices than a year ago.

Top-tier entertainment networks will have a different story. For example, top-rated USA Network is presumed to have pulled in about the same total upfront volume versus a year ago.

This results from the widespread industry knowledge that USA is priced somewhat cheaper than other general-interest entertainment nets, such as TNT and TBS. USA Network has also seen growing ratings. All this means light CPM decreases for the network -- anywhere from 1% to 2%.

Turner's networks could be down 10% in upfront sales volume -- more of the industry benchmark, according to media executives, with CPM pricing down 2% to 4%. Time Warner chairman Jeff Bewkes has already confirmed that TW's cable networks have sold less this upfront, hopeful that the scatter market will pull in higher pricing.

Other niche networks, such as E!, VH1 and MTV Networks, are said to be harder-hit this upfront period, with prices declining 5% to 7% or more. Some of these networks have had challenging times with declining ratings.

Cable network reps would not comment about their upfront activities.

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