Handicapping the Cable Upfront

A roundup of the winners and losers

Cable networks have griped for years that it’s past time they achieved parity in ad rates with broadcasters—and at some conglomerates (namely, NBCU), cable outshines broadcast. But despite cable’s sturm und drang about showing the big boys who’s boss, it all hinges on CBS’ CPM gains, says Pivotal analyst Brian Wieser, formerly lead forecaster for Interpublic. “The negotiation for the cable players is relative to that number,” he explains. “If you believe you deserve a premium, it’s a premium to that number.” Following are upfront week highlights among cable’s key players.

NBCUniversal Cable is a dual-pronged operation. On the NBC Cable Entertainment side, chairman Bonnie Hammer oversees perennial success story USA (which is ramping up new unscripted content like The Choir) and E!, which launched a major rebrand that’s less Kardashian-centric. SNL Kagan predicts a slight bump of about $81 million for USA—but we’ll see what new NBCU cable sales president Linda Yaccarino, the Turner vet known to drive a hard bargain, has to say about that. Syfy is stepping out on a limb with expensive new video game-scripted hybrid Defiance, a project that will either create a whole new genre or become a campfire story used to scare the wits out of adventurous development executives. On the Entertainment and Digital Networks side, headed by chairman Lauren Zalaznick, Bravo continues to leverage its Housewives franchise, while Oxygen still flails. The network is stuck with The Glee Project, a competition show offering as a grand prize a spot on ratings- challenged Fox dramedy Glee, as it pushes hopeful franchise starts such as Girlfriend Confidential in a bid to create new anchor shows.

News Corporation 
News Corp doesn't have a huge linear cable portfolio in the U.S., but its two biggest cable holdings, FX (part of Fox Networks, which includes FUEL and the National Geographic suite of networks) and Fox News Channel, punch well above their weight class.  FNC will likely see gains of about 7.6 percent in ad revenue—small for an election year, but then again, Fox’s mammoth ratings don’t fluctuate with the news cycle as wildly as its competitors’ do. FX is on track to gain 12 percent in ad dollars on the strength of new content—namely, the Charlie Sheen vehicle Anger Management, which the network is promoting without having shown a single scrap of footage (though it fared well with test audiences).

Kenny Mayne of ESPN’s Wider World of Sports was the most entertaining part of the network’s upfront presentation and delivered one of the week’s most memorable lines: “It’s through the support of viewers like you that we manage to keep our programming on the air. That and seven dollars a cable subscriber.” The figure is actually $4.69, far and away the highest sub fee in cable. But the point remains: ESPN doesn’t rely as heavily on ad dollars as other players. Disney’s other big ad-supported property, ABC Family, gets the ratings, yet SNL Kagan predicts modest ad growth of about 4 percent this year.

Poor Turner. It’s been less than competitive lately for perennial top 10 networks TBS and TNT—especially the former, which was off 11 percent in prime-time 18-49 ratings for 2011 (TNT was down 3 percent). This, as rivals like History and FX continued to climb. TBS rebounded early this year, but TNT did not and is now pinning its hopes on Dallas, a sequel to the classic nighttime soap, and still more police procedurals. TBS has several new series queued up for fall, and not a moment too soon. Viewers can watch marathon after marathon of The Big Bang Theory for only so long before flipping over to USA for first-run off-net Modern Family episodes. Clearly, the network has fingers crossed that one of the newbies sticks firmly enough to anchor other series. An important development: TBS is this close to letting Conan O’Brien run the asylum. The TBS host produces one new series for 2013 (Deon Cole’s Black Box) and has another two in development. But the jewel in Turner’s crown, at least in prime time, is Adult Swim. The network (which, incidentally, throws utterly surreal upfront parties, leading otherwise fearless cable TV reporters to suffer nightmares about giant rabbits) was among the top 10 networks in adults 18-34 and 18-49 last year, well above its 2010 performance. What changed its fortunes? Patton Oswalt, perhaps? Still more projects are in the pipeline, none buzzier than a pilot order for a cartoon from Seth Grahame-Smith, author of Pride and Prejudice and Zombies, and Dan Harmon, creator of NBC’s Community.

For better or worse, Viacom has set itself up as the youth option on linear television—a format whose followers are getting older by the minute. Nowhere is that fact more pronounced than on Nickelodeon, the king of kids’ networks, where ratings have tumbled and its flagship property SpongeBob SquarePants is older than most of its viewers. That, of course, puts advertisers in a choice position. One buyer says she is thrilled to have some leverage over the cabler. Meanwhile, Comedy Central is attempting to grow new properties, including the underrated Key and Peele, that can eventually stand side-by-side with The Daily Show and The Colbert Report. The network has a knack for picking up off-net rights to underappreciated broadcast shows like Futurama (now back in originals on Comedy Central), and recent acquisition Community seems like a solid bet. MTV continues to push progressively younger-skewing shows, but the offering attracting the most attention looks to be Jersey Shore spinoff Snooki & JWoww. Kagan predicts reasonable gains for the networks this year—about 5.9 percent at MTV and 6.2 percent at Comedy.

AMC Networks 
For the newly public cable outfit, AMC continues to be the mouse that roared. Kagan predicts a major increase in ad revenue at the net ($426.5 million, up 15.9 percent). Its conservative programming development (it green-lit two pilots this year, an unusually large number) seems to be paying off. Recall that Mad Men was the great series nobody watched until its March premiere, when it finally started seeing real ratings (but nowhere near as high as the net’s other ratings juggernaut, The Walking Dead). Comedy-focused IFC just replaced president Evan Shapiro with Jennifer Caserta Priore, so the jury is out on what that net will look like in a few years. Sundance has big plans for Push Girls, a show about beautiful women in wheelchairs. One buyer asked if this reporter had gone to AMC’s upfront. “What presentation? We didn’t get invited,” was our reply. “Oh, I meant the Mad Men premiere party,” said the buyer. Exactly.

A+E Networks
Even in what promises to be a flat upfront market, it’s hard to imagine A+E Networks won’t get some serious traction from History, which continues to gain strength. (In April, five of the 10 most-watched TV shows among all viewers were on the nonfiction network, most notably Pawn Stars.) The jury is out on the group’s much-vaunted relaunch of Lifetime, but Nancy Dubuc—who led History to the front of the pack and now heading the women’s network—will likely give buyers some confi dence. A+E knows this and is not shy about touting it. Abbe Raven, A+E’s CEO, opened this year’s upfront presentation by calling down TLC, truTV, Discovery and TBS for copycatting and relying on off-net content to boost ratings. (“We’ve already heard from Discovery!” crowed one exec at the post-presentation party.) Immediately thereafter, ad sales head Mel Berning told buyers in no uncertain terms that they weren’t going to get off lightly this year. The company pulls in some $3.1 billion per year and is on track to have a more streamlined dual ownership, rather than a triumvirate, when NBCUniversal cashes out its 15.8 percent stake later this year for a needed cash infusion. Big picture: A+E Networks is on track to reap $1.9 billion in ad sales across all 10 of its networks this year.

Discovery Communications
One thing you can always count on during upfront season is that any network in a position to fling some mud will wear out its throwing arm. “For sale: controlling interest in OWN. $10 or best offer,” cracked Conan O’Brien at the Turner upfront presentation. Discovery Communications’ beleaguered Oprah Winfrey cable network has dominated headlines since the moment the venture was announced, but there’s much more to the company than a single joint venture. Whether or not OWN goes down in history as a serious money pit remains to be seen, and yet the company’s formerly minor property Investigation Discovery has seen its ratings skyrocket this year—so much so that Sharon O’Sullivan, head of ID ad sales, will ask for a major CPM boost this year, especially for advertisers seeking a nearly pure female audience (which should also help it move volume). The company’s flagship channel will have the forthcoming North America to drive ratings, which should bode well coming off the success of its most recent BBC co-production, the costly Frozen Planet (which Discovery spent millions of dollars to promote). This, as unscripted programs Bering Sea Gold and Gold Rush overperform among men.

Scripps Networks Interactive
Ad integration is the name of the game for Scripps Networks Interactive, the company behind Food Network, the Cooking Channel, HGTV and Travel. The Knoxville, Tenn.-based group is bullish on tailor-made campaigns and product placement, and a stable of talent including Anthony Bourdain has helped it push those integrations. (Food is one of the most profi table properties in television.) Guarantees are going to be difficult to predict with ratings ping-ponging up and down the Nielsen rankings. (It’s been suggested more than once that new measurement methodology has something to do with that.) In 2011, Food was down in the adults 18-49 dollar demo for three consecutive quarters year on year, with HGTV right behind it. But the former rebounded by the end of 2011 and continued its upward trend in Q1 of this year. April saw Food break into the top 10, while HGTV is flat. And while the company may have trouble goosing CPMs here and there, its unflagging willingness to work advertisers into series should aid inventory movement.