The Rising Tide

April 20, 2009

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For some TV viewers, particularly those on the younger side of the 18-34 continuum, it might be hard to remember a time when the majority of the freshest, hottest, most buzzworthy original TV shows were not coming out of the cable networks. It really hasn’t been very long, after all, that cable shows have dominated the headlines after awards shows such as the Golden Globes and the Emmys. In fact, cable executives themselves will admit, it’s only been a handful of years since the likes of TNT, USA and AMC have become the alphabet networks that TV viewers are really looking to for appointment television.

“I’d say it’s been a five-year phenomenon,” says Steve Koonin, president of Turner Entertainment Networks.

That phenomenon is now heading into what could be one of the toughest upfront seasons in memory. With the recession hitting advertisers—particularly automakers and pharmaceuticals—like a bad hangover, cable networks large and small are going to find out just how important it is to have a wide array of original programming.

Most cable sales executives are extremely cautious when discussing this year’s version of the upfront dance. With the economic ripple effects spreading out to virtually all ad categories and media segments, it’s hard to say whether cable can maintain its recent track record at upfront time.

Ad-supported cable networks scored bigtime during last year’s upfront. The networks’ combined take, according to the Cabletelevision Advertising Bureau, was $7.65 billion, an increase of 9.3 percent over the $7 billion the industry took in the year before that.

But keeping that momentum going this year could be a serious challenge, even for a hard-charger like Turner’s Steve Koonin.

He was the guy who, along with Turner Broadcasting Sales president David Levy, decided last year that the time was right to stage Turner’s upfront presentation during broadcast week, a move so audacious that its dramatic effect eclipsed that of the storylines on the new programming.

“I was frothing at the mouth to tell our story to the media buyers who came during broadcast week,” Koonin recalls. “For some of them, it was the first time we had a chance to lay out our whole story. And a couple major clients bought us for the first time as a result of that.”

Levy, who also is president of Turner Sports, recalls the 2008 upfront fondly, albeit with less frothing than Koonin.

“There was no trepidation on our part back then,” he says. “We felt that the programming was right and that we were a strong alternative to broadcast. There used to be a real reason to differentiate between broadcast and cable. But nowadays, the difference in terms of distribution is virtually nil.”

Levy says the strategy of infringing on broadcast’s upfront turf turned out to be a good one, with the company commanding CPM gains in the high single digits. And that success can mean only one thing: Turner will do it again. The company will introduce its 2009 lineup to advertisers during broadcast week on May 20, the same day as CBS’s presentation.

“We’ve had robust ratings growth and we’re investing back into our programming,” Levy says. “And if I’m an advertiser, I want to be part of that.”

Specifically, advertisers will be able to be a part of highly regarded returning series such as The Closer, which heads into its fifth season this summer; Saving Grace, which will begin Season 3; and Raising the Bar and Leverage, both of which will debut their sophomore campaigns. Additionally, Turner will premiere several new shows, most notably the debut in 2010 of Men of a Certain Age, which will feature the return to series television of industry heavyweights Ray Romano, Andre Braugher and Scott Bakula.

On the TBS side, the company this summer will have the third-season debut of The Bill Engvall Show as well as fresh episodes of Tyler Perry’s Meet the Browns. And over at truTV, the network that once was called Court TV, Turner is using a high-testosterone mix of original programming to take the network’s target demographic from a 50-plusyear-old woman to an 18-49-year-old male.

“We’re transforming truTV from a swan to a bull,” Koonin says.

While Turner has used a broad and deep array of original programming to attract audiences and advertisers, cable network AMC has used a different strategy. AMC’s total output of original scripted series totals a decidedly measly two. The impressive part is what two series we’re talking about: Mad Men and Breaking Bad. Mad Men, the show set at an advertising agency in the 1960s, was a huge hit virtually from the premiere’s opening credits and became, arguably, the hottest show of 2007-2008. Last year, the show pulled in six Emmys, including the Emmy for Outstanding Drama Series, the first basic-cable series to win that honor, and a total of three Golden Globes in 2007 and 2008.

For the Emmy-winning Breaking Bad, the series about a high-school chemistry teacher who opens up a meth lab after learning he has terminal cancer, AMC in March created five original “minisodes” that played out at the network’s Web portal.

“Our brand as a network is all about quality over quantity, and that’s worked out very well for us,” says Bill Rosolie, executive vp/ad sales at AMC. “I’m sure there will come a time when every one of our originals is not a huge success. But we definitely aren’t at that point yet.”

And he’s right. Rosolie points out that both AMC’s shows involve societal taboos. Mad Men, for instance, contains tons of smoking and sexism, both a part of the fabric at an ad agency circa 1960. And Breaking Bad contains…er, revolves around…a good man who has turned to drug production. Despite all of that, Rosolie says, the network has not received a single complaint from consumer watchdog groups.

“That’s a direct reflection of the quality of content,” he believes. “I would say that three years ago AMC didn’t really have a brand.  Now the quality of our brand defines every element of what we do. I think the viewers realize that, and I think advertisers realize that.”

Rosolie and company hope advertisers realize that this upfront season as well, when the network will be touting its next original scripted drama: The Prisoner. The remake of the odd-but-classic 1960s show will feature Ian McKellen as Two and Jim Caviezel as Six.

Reflecting on AMC’s meteoric rise as an original programmer, even Rosolie seems a little awed. “If you had told any of our management team five years ago that we’d be here at this point, I don’t think any one of us would have believed you.”

The executives over at Bravo might be feeling the same thing. The NBC Universal network has made a beeline to the top of the cable heap with a finely crafted formula for what will work in unscripted reality fare. The network got its first hit with Inside the Actors Studio, which premiered in 1994, and then really hit the big time in 2003 with the premiere of Queer Eye for the Straight Guy, the reality show that proved to be a popular crossover favorite.

More recently, Bravo got an even larger share of the water-cooler conversation with Project Runway, the Heidi Klum-hosted fashion/ design competition show that the series producer, the Weinstein Company, has decided to move to Lifetime.

But Bravo hasn’t let that defection stand in its way. The cable channel now has two hot series—Real Housewives and Top Chef, which recently completed its best season with an average of more than 3 million total viewers per episode.

“We have a very specific filter and a whole load of [research] criteria to make sure that we will hit our target audience with all these shows,” says Frances Berwick, Bravo’s executive vp/general manager. “That’s very much our area of expertise.”

Bravo’s business model includes strategically franchising its series, as has been the case with Real Housewives, which began in Orange County before adding Atlanta and New York as subsequent destinations. The formula also calls for generous product placement, when applicable.

“We absolutely use our shows to grow the franchise; there’s definitely an art and a science to doing that,” Berwick says. “And this genre allows you to do a lot of partnerships with advertisers. We can structure it in a variety of ways and get their products into our shows where it makes sense.”

As for this year’s upfront season, Berwick claims “it’s kind of unmitigated excitement” at the network right now. About three-quarters of Bravo’s current programming lineup are originals, and about 50 percent of those, Berwick says, will be returning next season.  She also says the network’s original hours will increase about 15 percent.

“We have some great shows in the pipeline,” she adds. “We feel that there’s an ever-increasing audience out there for unscripted content.”

WE tv also uses the art and science of unscripted to great effect. The channel has carved out a niche for itself around wedding programming with shows such as Bridezillas, My Fair Wedding and Platinum Wedding. It has also achieved a healthy level of success with its Secret Lives of Women, a show in which real women reveal their deepest, darkest and often strangest secrets.

Add it all up, and you’ve got the perfect recipe for a vicarious thrill ride. It’s also that sometimes gritty veracity that appeals to advertisers who are targeting women in the 18-49-year-old bracket, according to Steve Cheskin, senior vp/programming at WE tv.

“Most of our on-air talent is very passionate about the programming in which they are featured,” he says. “We don’t go to Central Casting. We don’t get judgmental with our programming. We basically let these people go out there and tell their own stories. And I
think that makes a big difference for our brand and for our advertisers.”

WE, which also televises the Troy Dunnhosted series The Locator, may be looking to use its originals to broaden its appeal to the opposite sex. In August, the network plans to premiere Most Popular, a weekly prime-time game show hosted by British comedian Graham Norton. It will be WE’s first foray into the game-show genre.

“We’ve never done anything like this before,” says Cheskin. “We loved the concept and we love Graham. But it’s a risky thing for us. But we feel that now is the time to go out there and try it.”

Another cable network that caters to women, the Lifetime and Lifetime Movie Network sisters, offers advertisers a twofer of sorts—original series such as Army Wives and Rita Rocks on Lifetime and a slate of original movies on Lifetime Movie Network.

Army Wives has turned out to be Lifetime’s most successful show in the network’s 25-year history. The series, ad-supported cable’s top drama among women 18-49, got a major show of support from the network in late February, when Lifetime took the unusual step of renewing it for a fourth season even before the third-season debut in June.

In addition to Army Wives, Lifetime appears to have another popular show with Rita Rocks, the net’s first comedy in about 10 years. The series, which stars Nicole Sullivan, was just given a new 20-episode order that will constitute its sophomore season. Lifetime also will be adding a second season of DietTribe to its menu as well as new offerings Cook Yourself Thin, which launches in the spring, and Drop Dead Diva, set to premiere this summer.

On the made-for-TV-movie front, Lifetime Movie Network has been able to attract A-list talent to headline films such as Sigourney Weaver in Prayers for Bobby, Shirley MacLaine in Coco Chanel and Dermot Mulroney and Emily Watson in The Memory Keeper’s Daughter.

Debbie Richman, executive vp/ad sales for Lifetime Networks, forecasts a challenging upfront due to the economy, but an upfront, nonetheless, that will bear out her networks’
performance claims.

“In a marketplace like this, it’s also important to have a gold standard brand and the secret weapon that we have is Lifetime Movie Network, which outperforms scores of more established channels,” she says. “No doubt this will be an extraordinary year, but history has shown that tough times can spur real innovation and creativity. We are fully prepared and excited to bring our clients new and better partnerships in the coming year.”

And that, as cable prepares for the 2009 upfront, appears to be what it’s all about … better partnerships. And at this point in cable’s evolution, the networks who are making quality plays on the original programming front are, more than ever, feeling like advertisers are ready to hear that message.

“On any given night on any given day, it really is about quality programming on cable,” says Turner’s Levy. “There are a lot of strong brands out there now and there’s strong reach. Advertisers have been investing more and more in cable for the past 10 years. And they’ve become accustomed to the fact that they’re going to see good ROI, not only with TNT and TBS, but with most of the top cable networks.”

AMC’s Rosolie agrees.

“I think this could be a watershed year for cable,” he says. “The broadcast audience is eroding, but their prices have gone up. If you’re an advertiser, all of a sudden you start thinking, ‘Why should I keep broadcast and cable separate? Why don’t I just have a TV
budget?’ And, I’ll tell you, if that happens, it will be huge for the cable industry.”


A Silver Lining
Numbers don’t lie. And they can’t give a sad story a happily-ever-after ending.  With that in mind, consider the year-end 2008 advertising numbers released by Nielsen. At press time, the numbers were preliminary. But there’s not much hope that the final tallies will be a whole lot better.

Total advertising in 2008 came in at $136.8 billion, 2.6 percent lower than the previous year. With the global economy in tatters in the fourth quarter, the 10 largest U.S. advertisers finished the year down 15 percent. Procter & Gamble sliced its ad spend 19 percent.

Chrysler was down 31 percent. And pharmaceuticals had nothing but bad medicine—that category was off 18 percent.

And the dour news was not picky:  broadcast TV, newspapers, magazines ... even the Internet ... saw diminishments.  But there was one bright spot. 

Cable advertising, with a take of $26.6 billion, actually was up 7.8 percent in 2008, Nielsen reported. And Hispanic cable TV showed an even greater difference:  It rose 9.6 percent last year. 

Here’s Nielsen’s list of percent changes,
2008-2007, by media category:
Hispanic Cable TV . . . . . . . . . . . . . . . 9.6%
Cable TV . . . . . . . . . . . . . . . . . . . . . . . . 7.8%
Spot TV Top 100 . . . . . . . . . . . . . . . . -0.3%
Syndication TV . . . . . . . . . . . . . . . . . -0.8%
Nat. Sunday Supplements . . . . . . . -1.9%
Hispanic Broadcast TV . . . . . . . . . . -2.4%
Network Radio . . . . . . . . . . . . . . . . . . -3.3%
Broadcast Network TV . . . . . . . . . . -3.5%
Local Magazines . . . . . . . . . . . . . . . . -3.7%
Spot Radio . . . . . . . . . . . . . . . . . . . . . . 4.0%
Spot TV 101-210 . . . . . . . . . . . . . . . . . -4.6%
Outdoor . . . . . . . . . . . . . . . . . . . . . . . . -5.0%
FSI Coupon . . . . . . . . . . . . . . . . . . . . . .-5.2%
Internet . . . . . . . . . . . . . . . . . . . . . . . . -6.4%
National Magazines . . . . . . . . . . . . . -7.6%
National Newspaper . . . . . . . . . . . . -9.6%
Business-to-Business . . . . . . . . . . . -9.7%
Local Newspaper . . . . . . . . . . . . . . . -10.2%
Local Sunday Supplements . . . . . -11.0%
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . -2.6%
Source: Nielsen