Cable on the go

Cable confident heading into summer, fall seasons

Despite widespread uncertainty about the national economy and its effect on ad spending, cable television executives feel confident their networks and their industry are in a strong position heading into the summer and fall programming seasons.

Turner Chief Research Officer Jack Wakshlag calls 2007 a "transformational" year for cable, pointing to a list of ratings highlights: the industry's highest ever ratings for a movie (Disney's "High School Musical 2"), for a post-season baseball telecast, for a pro football telecast, for a basic-cable drama series (TNT's "The Closer") and the best total prime-time viewer delivery for a network, as USA Network averaged 2.7 million viewers for the year.

Now, in the midst of upfront presentations for the 2008-09 season, cable executives point to a host of factors that are on their side in the continuing effort to build viewership and ad revenues:

•Viewers continue to migrate to cable networks. Since 2001, when cable's share of prime-time household viewing surpassed that of the four broadcast networks for the first time, cable's advantage has grown rapidly. According to Turner's analysis of Nielsen Media Research data, in 2007 cable claimed a 62.3 percent share of prime-time household viewing compared to 34.9 percent for the four broadcast networks.

The viewership numbers are strong across the board. For instance, fueled by the intense presidential campaign, the past year has seen record ratings for cable news outlets, including CNN and MSNBC.

While all consumer groups have migrated to cable, two of the fastest-growing sets of cable viewers are adults 18 to 24 and 18 to 34—precisely those demographic groups that are most tuned in to entertainment on other screens.

"The next generation of cable consumers are lining up in force. I find that gratifying," says Cabletelevision Advertising Bureau President-CEO Sean Cunningham. At the same time, the broadcast networks' audiences are aging; a Turner analysis of Nielsen data shows the median age of the four broadcast networks' 2007 viewers was 49 compared to 46 for TNT and 38 for TBS, for instance.

•The industry is in the midst of an unprecedented investment in original programming by virtually every cable outlet, but in particular by the country's largest general-entertainment networks. CAB's Mr. Cunningham pegs the industry's investment in original programming at $20 billion. That's paid off in eyeballs; cable's most-watched drama series, TNT's "The Closer," for instance, scored an average of 8 million viewers in its third season.

•Cable networks, although not unaffected, have suffered less than the broadcast networks in the wake of the three-month strike by the Writers Guild of America. USA Network, for instance, had to delay the season premieres of "Monk" and "Psych" by a month; FX could only complete seven episodes of "The Riches" before its March premiere.

But those are relatively minor problems compared to the double-digit ratings drops posted this season by the broadcast networks as the strike wore on, and the admitted holes the strike will create in the broadcast programming schedule this fall.

•Many cable networks already boast a year-round development schedule that takes advantage of Americans' continuing interest in watching more television. In addition to offering a portfolio of strong series during the summer, from USA's "Monk" to AMC's award-winning "Mad Men" and new offerings such as A&E's "The Cleaner," cable networks increasingly are programming series premieres in the fall and winter. "We program 52 weeks a year," says FX President John Landgraf.

The increase in quality programming may be one reason behind a continued growth in the amount of television Americans are watching. Turner research pegs the average hours of TV viewed per person per week at 33.5 hours, up from 31.1 hours in 2002-03. Cable's share of viewing is 15.6 hours, up 18 percent over that same time frame, while the broadcast networks are down 16 percent.

•Cable has built strong brands at a time when viewers are offered more entertainment options than ever before. "There is a stickiness to cable content," says Mr. Cunningham of the CAB. "It's not just the program stickiness of 20 years ago—now it's great cable brands that keep viewers passionately engaged."

•Cable networks have moved aggressively to build client brands by offering multiplatform deals, product integration and "branded entertainment" that seek to keep viewers engaged with sponsor messages wherever they go. Says Greg D'Alba, chief operating officer of CNN Advertising Sales & Marketing, "The real media company winners this year will be those that have fully integrated their content and have the ability to reach more consumers on these technology platforms."

"The business still operates on a day-to-day basis on the 30-second unit," says Mel Berning, exec VP-ad sales for A&E Networks. "But we have found a lot of ways to improve on that model. In almost every big upfront deal we do, we look at how we can come up with something to help our clients' products stand out."

In some cases, that has meant single-sponsorship, as in Enterprise Rent-A-Car Co.'s commitment to all 10 episodes of History's World War II series "Battle 360." For other advertisers, that might mean product integration; in the new A&E series "The Cleaner," for instance, "The characters drive cars and trucks; they talk on cool cell phones; they eat in restaurants," Mr. Berning says. "Those sorts of integration opportunities would be organic to the program."

Nothing indicates cable's confidence more than Turner's move to schedule a corporate upfront presentation on May 14—at the same time as the broadcast networks' upfront events.

"Turner has been great in getting out in front of the broadcast networks, scheduling their upfront at the same time and fighting for fair and equal value for cable, which, frankly, we deserve," says Bill Abbott, exec VP-ad sales for the Hallmark Channel. "As an industry, our ratings are growing while broadcast continues to decline.

"Look at where cable is—the tremendous quality and the tremendous investment each network is making in their product. Throw in the fact that broadcast television is suffering this year, and I think cable is poised to experience significant CPM and share growth in this upfront."

A&E's Mr. Berning says, "At A&E and History, we are headed into the upfront with great ratings momentum. And cable in general has delivered a dependable, predictable and growing audience for advertisers, versus the experience advertisers have had in broadcast TV, where there has been significant audience erosion, and big effects from the writers' strike and the increased penetration of DVRs these past two seasons. Cable is looking terrific by comparison. And then when you include the amount of original programming we are putting on, more and more budgets are being allocated to cable."

Although the recent scatter market has seen exceptionally high prices, executives don't necessarily anticipate a huge increase in upfront buys as a defensive move on the part of advertisers. "Nine of the past 10 years the scatter market has been more expensive than the upfront," says Debbie Richman, who moved from OMD in March to take the post of exec VP-ad sales at Lifetime Networks. "Some money could shift into the upfront because of that. But do I expect the upfront to be up and booming? No. Do I expect it to be dramatically down? No."

Still, she says, "I think cable is in a great place. We are in a time of questionable recession, and that is on everyone's mind. But cable ratings are growing. We have programming that does as well as some broadcast programming, and it is still a more efficient medium. From a cable perspective, we are excited about the coming upfront."