• by Wayne Friedman , October 4, 2006

Cable and some broadcast networks are seeing surprisingly significant upticks in fourth-quarter scatter ad activity.

They are reporting nice price increases--15 percent to 20 percent gains in pricing versus upfront deals made just a couple of months ago, according to media executives. The Hallmark Channel is seeing meteoric rises.

"We are up 35 percent to 40 percent in CPMs," says Bill Abbott, executive vice president of advertising sales for the Hallmark Channel. "We are pacing 25 percent higher in revenues versus fourth quarter a year ago."

"Scatter is strong--no matter what metric you look at," says Bruce Lefkowitz, executive vice president of advertising sales for Fox Cable Entertainment. "It's getting booked closer to air date, and that tells me it is strong."

To be fair, cable ad executives say new fourth-quarter scatter deal increases didn't come from incumbent cable net deals made in the upfront. Fourth-quarter scatter pricing is higher--on average--than deals made during the upfront buying market over the summer.

Still, 35 percent gains over average upfront pricing is eye-opening. "That would be some spectacular increases," says a media-buying executive. "This may be for a few clients, but this activity might not be for the market as a whole."

Abbott says other cable networks are gaining big numbers, too. Some media buyers, however, are cautious. "Other cable networks say they are also doing spectacularly well, but I'm not too sure," says a media-buying executive. "I haven't been shut out of any inventory I wanted."

Programming inventory on TNT, as well as early morning CBS programming, has also been tight. NBC, USA Network, FX, and National Geographic have also seen some positive numbers in the fourth quarter versus the same period a year ago, say execs. Despite its slow rating start, the CW also says it is pacing well ahead of WB revenues in the fourth quarter 2005.

Media buyers and sellers expected that some TV advertisers were holding back money during the upfront sales process to buy in the scatter market. But many expected advertisers would be placing "holdback" money in digital TV programming deals, or in midseason special integrated TV/Internet programming efforts. While that has occurred, overall digital dollars are small; bigger media budgets are still spent on traditional TV. "People need to get their money down," says Abbott. "This money was always planned for TV. TV is still the best way to get their message across."

"Media agencies played the cable networks really well in the upfront market," adds another veteran cable ad executive. "But now, they need to spend money."

"I'm not surprised that the market would be strong, but I hadn't expected it to be this strong," says Abbott. He notes that retailers are buying heavily, and that's always a good sign that the TV ad market is picking up. That said, he notes that pharmaceutical, packaged-goods, and even the much-troubled auto advertisers have been active in buying. "It's across the board," he says.

Cable network sellers say this response is not surprising, given that cable's overall ratings were up about 5 percent versus 2005. Ad sales volume was probably down versus the upfront of last year.

Still, another media buying executive is surprised at these reports. "I'm amazed that some networks are doing this good so early in the fourth quarter. Didn't they just finish doing their upfront deals?"