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CAB Eyes Cable Upfront Haul at $9.29 Billion

Record sales gives TNT, USA, et al., advantage over broadcast

Brian Cranston, Breaking Bad. Moises De Pena/AMC via Getty Images

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After a frenzied selling season that saw top-tier cable network groups writing price increases of as much as 15 percent, the final tally for the 2011-12 upfront is in. At the risk of trafficking in a vast form of understatement, business was a-boomin’.

According to calculations made by the Cabletelevision Advertising Bureau, ad-supported cable nets took in $9.29 billion in upfront commitments, making this the most lucrative sell-off in history.

The CAB figure represents a 16 percent improvement from last year’s haul of $8 billion. The additional $1.29 billion in sales was powered by cable’s investment in high-end, original adult programming (Breaking Bad, Sons of Anarchy) and clients’ dissatisfaction with what’s available at the broadcast networks.

Naturally, the inherent efficiencies of cable also have gone a long way toward stealing share from the broadcast nets. On a CPM basis, prime-time inventory on a top 20 cable network costs about one-third as much as that on the broadcast nets.

The $9.29 billion raked in during the summer sales period represents a 38 percent gain since the “correction-year” 2009-10 upfront. In the midst of a crippling recession, national cable nets that year took in $6.73 billion in prime-time upfront dollars.

“The U.S. advertisers’ mandate spending for more cable in the past two upfront markets . . . is a market-wide testimonial to the product-selling power of cable’s video brands,” said CAB president and CEO Sean Cunningham. “It’s clear that cable brands are the lead media choice in the marketers’ quest for sales growth, new customers and deeper connections to consumers.”

In a year when cable notched an aggregate price increase of around 11 percent versus the year-ago period, top-rated cable nets like TNT, Discovery Channel, FX, and USA Network led the pack. According to RBC Capital Markets estimates, USA secured 15 percent CPM increases, while rival TNT upped its going rate by 13 percent.

Media buyers suggested that FX and Discovery Channel put up the biggest price increases, with both nets landing CPM hikes in excess of 20 percent.

On the other side of the fence, broadcasters took in some $9.2 billion in upfront sales, bettering their year-ago haul by 8 percent. CBS enjoyed the most lucrative sell-off, bringing in $2.7 billion in prime-time commitments, on an average CPM increase of 14 percent.

 

The combined $18.5 billion broadcast and cable market matched analysts’ early expectations. Back in April, Anthony DiClemente of Barclays Capital had the broadcast upfront dead to rights, predicting a $9.23 billion bounty.

While sales execs snapped up a record chunk of marketing dough, investments were tempered by the outlook for the upcoming season. RBC noted that the broadcast nets generally guaranteed 2011-12 ratings declines of around 5 percent, while cable networks guaranteed gains of between 2 percent and 3 percent. This jibes with the ongoing decline in broadcast deliveries and moderate year-over-year viewership increases among the top 20 cable nets.

According to Nielsen, only Univision saw growth in the 18-49 demo, improving 8 percent versus the 2009-10 TV season. Univision last week wrapped up its upfront business, booking $1.75 billion in advance commitments.

When Spanish-language media and an estimated $2.4 billion in syndication dollars are thrown into the kitty, the total upfront take for the 2011-12 season adds up to around $23.2 billion.