The Price Isn't Right

Cable World,  Feb 10, 2003  

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Byline: JON LAFAYETTE

Winning awards is one thing. Getting premium pricing from ad buyers is another.

While award-winning shows such as Monk and The Shield command some of the highest ad rates on cable, those prices still fall far short of most run-of-the-mill programming on cable.

Overall, cable CPMs have remained about half of those for broadcast over the past five years. In 1998, cable generated a $9.57 CPM in the 18-to-49 adult demographic, compared to $18.02 for broadcasters, according to the Nielsen Monitor-Plus service. In 2002 cable generated a $10.61 CPM, down slightly from the previous year, while broadcasters received a $21.10, down $1.79. But that narrowing of the spread appeared to reverse in the upfront for the 2002-2003 season, when broadcast posted a big gain and cable got modest ones at best.

Ad buyers say they're willing to pay when cable networks produce outstanding shows. "What a buyer is looking for is not only high ratings, but high ratings with original programming that differentiates itself from the movies that air constantly on cable and the reruns that run constantly on cable. We like to reward original programming," said Catherine Warburton-Scott, SVP and associate director for national broadcast at Carat USA.

But take Monk. First-run episodes of the Golden Globe winning Tony Shalhoub who-done-it sold for $4,915 per 30-second spot, which translates into a CPM in the adults 18-to-49 demographic of $6.80, according to Monitor-Plus. By contrast, 30 seconds in Monk generates a $37.89 CPM against the same demographic, or $108,000 a spot, when those same shows rerun on ABC.

It's no mystery why. For one thing, Monk on ABC has greater reach; media buyers prize the broadcast networks' ability to reach a mass audience in a single shot.

Monk's USA CPM is also lower because on ABC, the Monk reruns are packaged in with other programs of much greater reach. While Monk on ABC is middle-of-the-pack in ratings, it's packaged with other shows, and that brings up its CPMs. By contrast, USA packages Monk and its other hit The Dead Zone with lower rated off-net shows and movies.

On top of everything else, USA last year decided to cut its CPMs by more than 10% in order to bring in bigger shares of ad budgets. Shortly after that decision, Monk and The Dead Zone began to click, but with the base lowered, it will take more than one season to get rates up.

Jeff Lucas, head of ad sales for USA parent Universal Television, expects the well-regarded shows to help the network attract higher prices. "Monk and Dead Zone certainly get higher CPMs than the other programming on our network, but they're going to lead us upward. The value of original programming is turning the heads of the buyers," he said. "They're just the beginning. They're just the first two shows out of what's to come."

In the works are such shows as Thought Crimes, Touching Evil and Peacemaker and remakes of old hits Kojak and McCloud. Once USA's schedule is filled with original programming, CPMs should rise closer to the broadcast level, Lucas said.

But reach doesn't explain everything. Take FX's The Shield, starring Golden Globe-winning actor Michael Chiklis. Fox Cable Networks sells ads in The Shield based on three airings per week - an original and two repeats during prime time. The total viewership of the three airings of The Shield's premiere episode this season was 5,444,000 18-to-49-year-olds, which put it just behind NBC's Third Watch and ahead of ABC's Life With Bonnie. The Shield, however, has content issues that the two broadcast shows do not.

Likewise, Lifetime's highest-rated drama, Strong Medicine, attracts an audience similar to the WB's Gilmore Girls-Beginnings, the repackaged early episodes of the show. In this case, the rates and CPMs are in similar ranges, with the WB commanding CPMs of $34.60 for 18-to-49-year-old women viewers, or $36,700 per spot, while Lifetime garners a CPM of $25.34 and gets $20,203 per spot, according to Monitor-Plus.

That figure backs up the contention of Andy Donchin, director, national broadcast, Carat USA, who said the gap between CPMs of the top shows - be they on broadcast or cable - may be shrinking. "I think MTV can be just as expensive, or more expensive, than network. Obviously ESPN for the NFL football and their premium stuff gets pretty high CPMs," Donchin said. "On some of the higher-rated shows, the discount is very small if not at parity, if not greater."

Donchin said that critically acclaimed, high-rated and buzz-generating shows give networks leverage with buyers. "If you look at The Osbournes, not only does it command a high CPM, but you've got to buy a lot of other stuff just to get in that show."

"What we all have to look at is the quality of the property. I don't care how it's delivered," said Mel Berning, president of U.S. broadcast at Mediavest. "I think on the top-tier properties in the last upfront there may have been a small gap. But the top tier of cable, the top tier of network and the top tier of syndication were all within close earshot of each other."

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