Mel Berning was carefully rearranging his silverware on the table at a French restaurant in midtown Manhattan last week when he deliberately and specifically broke down the various factors at play in the looming upfront. “This is the problem this year,” he said. “We’re sort of a year ahead of ourselves because there isn’t measurement yet to draw equivalencies between online and linear.”
Rumors have been going around that this upfront season will be leaner than last year’s—buyers spent big in the spring and the scatter market that followed was soft. In the meantime, digital companies like AOL, Yahoo and YouTube are holding upfront-style presentations in an attempt to woo TV dollars away from cable and broadcast. “Do you think that’s a bargaining chip [for the buyers]?” Berning wondered aloud.
Berning, who on May 4 was promoted to president from evp of ad sales for A+E Networks, is dealing with a rebrand at Lifetime and a slew of new programming at all the networks—History, notably, will have a “dramatic retelling” of the story of Bonnie & Clyde in Q1 next year with Sony Pictures Television. He thinks price gains will be in “high single digits,” which is lower than 2011, but still an increase.
Barclays Capital analyst Anthony DiClemente said those estimates check out. “The market is very healthy,” he said. “The upfront typically keys off of scatter pricing, and those prices have been pretty firm. The year-over-year comparison gets tougher because last year was a healthy year and 2010 was not as healthy, but that’s just math.”
As for its position in the market, A+E Networks is a comparatively compact outfit in terms of its holdings: 10 cable networks, three of them fully distributed major players (A&E, Lifetime, History), and sundry digital and international outliers. It is projected to pull in, according to sources including SNL Kagan, $3.1 billion this year. Berning holds a key role in maintaining and growing those revenue figures. An industry source put ad revenue for A+E Networks this coming year at $1.9 billion; in 2004, it was roughly a quarter of that. “He very much sets strategy in terms of our selling proposition, how we’re going to go after strategic partnerships in the business,” said A+E Networks president and CEO Abbe Raven.
A handful of programming franchises on the A+E Networks properties are solid performers. Shows like History’s Pawn Stars and Swamp People and A&E’s Storage Wars steadily rank in the top 10 on cable among 18-49 year olds.
With the A+E Networks upfront presentation set for this week and the deal making soon to follow, it’s vital for someone like Berning to be able to predict performance. If you’re overconfident, you can end up having to give away inventory to make up for promising too much; if you’re too conservative, you can get stuck with a low CPM for years, and it won’t matter how good your ratings are. Unscripted programming has a lot of advantages for advertisers—it’s much easier to work L’Oréal into Project Runway than it is to put Dodge into upcoming crime drama Longmire. Berning and his team have done both.
A+E Networks' next challenge will be the Lifetime rebrand. The women’s network is its most recent acquisition and is now under the leadership of Nancy Dubuc, who forever rid History of its “Hitler network” trappings (most of the military history material has been moved to its smaller sister channels) and catapulted it into the top tier of networks in the 18-49 “dollar demo.” Dubuc has her work cut out for her with Lifetime, which is just now turning around a ratings slump. In first quarter, viewers were up 28 percent among women 18-49 in prime time. In fourth-quarter 2011, they were down 7 percent and in third quarter slid 19 percent.
But under her helm the network is reprogramming. Steel Magnolias is getting a remake with Queen Latifah starring, and one of Dubuc’s first big series, The Client List, has maintained solid ratings in its first few episodes. For 2013, there’s also Parallel Lives in the works, starring Mary J. Blige, about Coretta Scott King and Dr. Betty Shabazz, widows of Martin Luther King Jr. and Malcolm X, respectively. “I think that after a couple of years it’s going to be a very different network,” said Berning. One goal is to get the median age of its audience (presently about 49) down. Berning sees the network’s big unscripted success story, Dance Moms, as an indicator of how to do that (the show skews as young as 26 some nights).
Meanwhile, Berning is still considering the best tactical approach to digital. While principal competitor Discovery continues to move content onto Netflix, Berning remains bullish on the TV Everywhere model. “We’ll work with the MSOs,” he said. “I think that’s the place for us to focus.”
DiClemente agreed. “As long as you’ve got that dual-revenue stream and you’re investing wisely, I think A+E [Networks] will continue to grow.”