Why Buyers Are Hesitation to Move Their Money to Cable. It's the Fine Print | Adweek
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The 2013-14 Upfront

Is Cable Finally Getting Parity With Broadcast?

Both are changing

TNT’s Lost Angels is spoiling for a fight.

On Monday, top executives at both NBC and Fox upfronts did something you don’t usually see in a network presentation. They admitted they weren’t happy with their product, either. “We had a challenging first quarter, as well as our share of midseason disappointments,” NBC’s Bob Greenblatt said to buyers and clients. “This was not our best year,” said Fox’s Kevin Reilly. Jimmy Kimmel made his network’s diminishing audience into a joke at the ABC presentation: “Every year, Apple products get smaller, and nobody has a problem with that.”

Cable networks have been waiting for this moment. Mel Berning came out swinging at the A+E Networks upfront, scolding broadcasters for charging a “failure tax” and telling ad buyers that the smart money was with his networks’ hits. David Levy, head of ad sales for Turner (who shows buyers his wares during the same week as the broadcast presentations, along with USA), has been pushing for parity with broadcast for years, and now, he told Adweek, “We’re getting there.”

“Sports, kids and news have been at parity for five, six years,” Levy said. “For entertainment, there just hasn’t been enough quality programming, but we’ve really stepped things up in the last four or five years.”

Many across the negotiating table agree. “You can get three spots on cable for the cost of one on broadcast,” said a buyer for an over-the-counter medicine brand (every buyer who spoke to Adweek for this story asked to be quoted anonymously). So why buy broadcast at all? “We don’t.”

A more senior buyer at a different agency put the question in more complicated terms. “The reality is, for certain shows that can deliver broadcast-like ratings or quality, the CPMs can get close to broadcast,” the buyer said. “For Walking Dead, why wouldn’t I give it a very similar CPM?” But if cable wants the same kind of pricing for its originals that broadcast demands, buyers want to see ad packaging change.

“The challenge,” the senior buyer said, “is when you get to prime replacement”—cable shows that air opposite broadcast prime-time series. “You can’t just buy the original; you buy all the repeats, and that dilutes your average rating.” In other words, I may buy an episode of Gritty Cop Show on Awesome Cable Network at 8 p.m. on Wednesday, but ACN requires that I also buy the show’s 2 a.m. reruns ... which means that even though Gritty Cop gets 4 million demo viewers at 8, the 400,000 demo viewers who tune in at 2 a.m. make the show average out to 2.2 million for the buy. ACN might even require that you buy spots on its corporate sibling, Struggling Niche Channel. Not every cable network does this, but those offering prime-time à la carte tend to skew younger and rate lower. On balance, broadcast still offers more reach when you average out all the extra requirements.

Jeff Wachtel, co-president of USA with Chris McCumber, says that duking it out with broadcast isn’t really a line item on his agenda. “It’s not our instinct to do that,” Wachtel said. “Chris and I have the good fortune of being able to emphasize the positives.”

Part of that strategy is corporate—NBC is USA’s sister network—but it also has to do with very different business models, which involve pushing off-network content as aggressively as USA does original programming. “If you take a look at Modern Family, what we can give to an advertiser is that the show is across all seven days,” Wachtel said. “ABC can only give it to you one day a week.” McCumber says there’s little duplication in the show’s broadcast viewership, as well.

Turner has employed a similar strategy with CBS’ hits Two and a Half Men and Big Bang Theory, both of which have helped lead in to originals from which the networks can build slates of in-house content. It’s very important that they serve the network’s original material, too—both Big Bang and Modern Family fetch around $1.5 million per episode in syndication from their adoptive networks, so the payoff for re-airing them needs to be big.

Broadcasters are taking the battle straight to cable. ABC and Fox are airing limited series like Betrayal and Shōgun that will fill space colonized by popular cable series. To put it briefly, cable and broadcast are changing, but at the end of the change, you may not be able to tell the two apart.

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