Cable Upfront Haul Passes the $10 Billion Mark

Another record take, although growth is slowing

While the national cable TV networks continue to siphon off upfront dollars from the broadcasters, the days of torrid double-digit volume increases appear to be a thing of the past.

According to calculations made by the Cabletelevision Advertising Bureau, ad-supported cable networks generated a record $10.2 billion in 2013-14 upfront commitments, marking a 4 percent uptick versus the year-ago period. And while that’s hardly what anyone would characterize as chump change, it is the smallest year-to-year increase in five years. (The recession-wracked 2009-10 cable bazaar was down 11 percent from a then-record $7.6 billion; that same year, the Big Four broadcasters saw upfront dollars plummet 22 percent to $6.88 billion.)

Last year’s cable haul was up 5 percent to $9.8 billion, a “normalized” result that paled in comparison to the 16 percent increase in the 2011-12 upfront and a plus-19 percent result in 2010-11.

Cable upfront sales have been on the rise for the last four years, as commitments have increased 52 percent since the last downturn. Ad-supported cable nets have out-earned the English-language broadcasters three years running; this summer, ABC, CBS, NBC, Fox and the CW stitched together an estimated $9.15 billion in upfront sales.

The competitive balance between the two sectors has been shaken up by the sheer amount of quality programming now available on cable as well as the inherent efficiencies of the business. On a CPM basis, prime-time inventory on a top 20 cable net costs about one-third as much as that on the broadcast nets. (Obviously, outliers like TV’s top-rated scripted series, The Walking Dead, and ESPN’s Monday Night Football, don’t conform to the tertiary trend.)

CAB president and CEO Sean Cunningham attributes cable’s strong showing to a combination of factors, although the synthesis of TV and on-demand/streaming sales seems to have helped move the needle this year. Over the course of the summer bazaar, cable nets locked in approximately a half-billion dollars in online video revenue.

“Throughout our meetings with agencies and advertisers we handed off a ton of proof-points about our brands, our record-breaking original programs, our role as dominant content over five screens (including social TV), and the incredibly high amount of consumer hours spent monthly with ad-supported cable brands—some 94 hours-per-month on TV and the Internet combined,” Cunningham said. 

The CAB report was issued much later than usual, reflecting the Eeyore-slow pace in which the upfront negotiations were carried out. For example, NBCUniversal didn’t close out its final deal until July 30, or nearly a month after the unofficial July 4 deadline normally observed by broadcasters and top-tier cable nets. Meanwhile, the always deliberate Scripps Networks Interactive didn’t wrap its upfront business until early August.

As ever, the usual caveat about upfront totals applies to this survey. Given that advertisers reserve the right to pull out of a percentage of their advance commitments, the upfront totals are perhaps best interpreted as directional markers rather than absolutes.

That said, the TV market as a whole is expected to heat up again over the course of the next few years. According to PricewaterhouseCoopers projections, TV ad sales in 2017 are expected to add up to some $81.6 billion—up 28 percent from last year’s tally ($63.8 billion).