• by Joe Mandese , August 6, 2003

At a time when national cable advertising sales are growing at double-digit rates, the local cable ad marketplace continues to languish, according to a MediaPost analysis of data released by the Big 7 cable TV operators. As a group, aggregate advertising sales declined 5% during the first half of 2003 versus the first half of 2002.

This comes in stark contrast to the ultra hot national TV marketplace, where network cable and broadcast TV ad sales have been expanding well into the double-digit rates. It also compares poorly with local broadcast TV, which has seen modest growth so far this year.

The Television Bureau of Advertising expects to release its first half 2003 estimates in about a week, but through the first quarter of 2003, local broadcast TV ad sales were up 0.3%, suggesting that local cable TV has actually lost share of the local TV advertising marketplace to broadcast.

That's a surprising development given the relatively small base of the local cable ad business and the relatively maturity of local broadcast TV. Last year, U.S. advertisers spent 16.4 billion on local TV ad buys.

Both broadcast and cable have lost some local advertising steam coming off a relatively strong year in 2002, which was fueled by record local political ad dollars.

The picture appears to be worse for the local market portion of local TV advertising sales, which is lagging the national spot sales for both cable systems and broadcasters.

Through the first half of 2003, national spot cable ad sales are expected to rise between 20% and 24%, according to estimates from national cable spot sales rep firm National Cable Communications. Through the first six months of 2003, national spot ad sales on broadcast TV stations in the markets tracked by Nielsen Monitor-Plus are up 4.0%.

But the strong national spot activity apparently has not been enough to make up for weak retail sales were most cable operators generate the lion's share of their advertising revenues.

However, some operators appear to be outperforming the sector. Cable giant Comcast Corp., which has been building an aggressive local cable ad sales team, took in $521 million in local cable ad sales during the first half of 2003, an 8% increase over the first half of 2002.

Smaller systems including Insight Communications (+12%) and Mediacom (+11%) also experienced strong gains, while Cablevision was flat and Charter Communications declined by 5%.

But the real laggard in the local cable ad space is the once dominant AOL Time Warner, which lost nearly a $100 million in first-half revenues, roughly a third of its first-half 2002 advertising base.

First Half Local Cable Advertising Sales (In Millions)

2003      2002    Change 
AOL Time Warner    $220.0    $324.0    -31% 
Cablevision         $40.0     $40.0      NC 
Comcast            $521.0    $481.0     +8% 
Charter            $124.0
$130.0     -5% 
Cox                $178.8    $177.6     +1% 
Insight             $27.7     $24.8    +12% 
Mediacom            $19.9     $18.0    +11% 
Total            $1,131.4  $1,195.4
-5% 

Source: MediaPost compilation of data from company reports.