• by David Goetzl  @dgoetzl, March 31, 2009

As executives rely on teleprompters at upfront events, Discovery Communications CEO David Zaslav is known for going off-the-cuff. But the last two years, at least one thing has come out the same: Joe Abruzzese -- "the best salesman in the business."

Zaslav last spring added that he hopes Abruzzese, president of ad sales, will stay at Discovery for as long as he's there. Unlikely -- but Abruzzese will be around for at least a while longer, having just signed a new contract. (The two didn't know each other before Zaslav took over in 2007, but had good mutual friends.)

The affable Abruzzese said he's "having too much fun" to retire. And while the economy has been turbulent, these have been steady -- if not heady -- times at Discovery. Ratings are up at key networks. And in the recent October-December period, as the economy worsened, Discovery posted 6% growth in domestic ad sales. The company also recently went fully public, and is readying for the launch of OWN: The Oprah Winfrey Network.

As Abruzzese prepared to take the stage Thursday to welcome advertisers to this year's New York upfront gathering, he took a few moments to discuss a range of topics with MediaDailyNews -- including the current scatter market and one challenge Discovery does face: invigorating its new Planet Green network.

MDN: You've been through recessions in 1991 and 2001 -- how does this one compare?

Abruzzese: This seems a lot worse because you didn't have the General Motors problem -- the bailouts -- before. It was just a tough economy.

MDN: Word is the scatter market has been strong lately. Have advertisers that exercised second-quarter options attempted to return and purchase inventory at a lower price?

Abruzzese: In one or two cases -- yes, and we've said no to that. But we've seen money come in, and I'm not sure where it's coming from. Maybe it's cancellations from the broadcasters, and the money is now coming to cable because it's less expensive. It's hard for us to know.

MDN: Considering everything going on, you had strong fourth-quarter revenues. Clearly, ratings increases have helped. Are there other factors?

Abruzzese: It definitely helps that our ratings are up. But our brands are strong. And I think some of it has to do with cable in general being much stronger. You can see rating points shifting from broadcast to cable.

In this environment, cable probably plays a bigger role in advertising budgets than ever. I think we're at a really pivotal point in this cable versus broadcast versus syndication environment. If you're an advertiser paying anywhere from 30% to 50% higher CPMs in broadcast and now you can go and buy rating points that are pretty similar on cable for a lot less, that can help us.

MDN: What will be the principal message you hope the ad community will take away from the presentation on Thursday heading into the upfront?

Abruzzese: You'll see all our brands are strong -- that we've shown competitive growth in ratings and the future actually looks brighter because of the new shows we're launching next year.

Clients are buying futures. They're buying September to September. They're buying in some cases 16 months ahead. Where are you going to place your business? Someplace that you feel secure with, where you know the environment is going to be strong.

MDN: If pricing looks to be flat or with slight declines this spring, would you reduce the amount of inventory you sell?

Abruzzese: We're going to come out of this recession at some point, so if we're selling as far out as August 2010, it may make sense to hold back for scatter -- thinking prices will be up.

Here's another piece of the equation: broadcasters typically sell 70% to 80% of their inventory up front, so they could be locked into the call they make this May and June.

Cable in general only sells about 50% of its inventory. We make a lot more money in scatter than we do in upfront, and nine out of the last 10 years, scatter pricing has been higher than the upfront.

You always want to lay a base, and we will lay a base. But if the decision were to come down to would you take more upfront at a low number, or play for scatter, I'd play for scatter.

MDN: In 2007, you made a landmark upfront deal with Starcom based on minute-by-minute ratings as the currency. Have other clients done deals based on that metric?

Abruzzese: About a third of our (upfront) deals are done on minute-by-minute, and it started with Starcom. It makes everyone more accountable.

MDN: You have been in this business for a while. Now, perhaps five large buying groups control the vast majority of the market. How has that changed the dynamic?

Abruzzese: It's changed it quite a bit. Now, once you make a call on the upfront, assume that that's going to be the call for the whole upfront.

It used to be you could make one call at the beginning and sell a third, raise your prices for the next third, and then raise your prices further for the last third. With the few big agencies, it's hard to do that. So you make a call and assume it's going to be that way for the rest of the upfront. If you have a 1% or 2% swing in pricing, that's pretty significant.

MDN: There is some belief that Planet Green hasn't quite had the success the company was hoping for? What do you attribute that to? Are there a finite amount of advertisers who have "green" creative and a desire to spend behind it?

Abruzzese: We've done quite well versus what we had there before (Discovery Home Channel). We've tripled the sales. Unfortunately, we needed a lot more than that (to meet projections).

What I think has happened is in this environment, green is probably not in the forefront. It's more survival for clients, but I think we need to give it some time.

MDN: Where does product placement fit within sales?

Abruzzese: It's part of the upfront, part of scatter and long-term deals -- it's actually what we do every day.

One thing we do is make sure that from a viewer's standpoint it's not invasive -- something that a viewer would say is way over the top. I leave the decisions up to the general managers (of the networks) to protect the brands as best they can.

MDN: How do you attach a value to a product placement deal?

Abruzzese: We don't charge for product placement. It's a reward for the volume we write (with an advertiser).

MDN: Are sales on digital platforms an increasing part of the upfront?

Abruzzese: Digital inventory probably makes up 2% or 3 % of our total sales, not a huge number.

We probably write a third of the business (in the upfront) as part of a package with a digital component. We'd like it to be half. I think we're moving in that direction.

MDN: Discovery is a 50% owner in Oprah.com (as part of the deal to launch OWN)-- will you be selling all the inventory on the site?

Abruzzese: To be determined.

MDN: David Zaslav the last two years has introduced you as "the best salesman in the business" at the upfront. Not a bad endorsement from a boss?

Abruzzese: It's very nice. David's very complimentary, and we work well together.

We outdeliver the market and we've done a really good job with that and David recognizes it. Now, he's also challenging and might say, "Why isn't this higher; why isn't that higher?" So he constantly challenges us in places he thinks we can grow, which is very healthy.