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Capitalizing On The Growth, Cost Benefits of Cable's Long Tail

2/21/2014

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by Liz Janneman

For decades, the cable industry faced an uphill battle — convincing advertisers and ad agencies alike to “follow the viewers” and allocate their media budget accordingly.  The battle cry from cable networks was to “stop paying more for less," to realign advertising strategies with consumer viewing habits by shifting money from broadcast to cable.

Cable’s battle cry was heard, and the shift of ad dollars to cable gained momentum.  Cable networks could now capitalize on the development of two significant revenue streams and, as a result, the top-tier of those networks made substantial investments in original programming.  

Fast-forward to today: We see incredible original cable show successes, including AMC's "The Walking Dead" and A&E's "Duck Dynasty."  Given the emergence of such hits, top-tier cable networks now can truly position themselves as a legitimate "broadcast replacement."  Interestingly, the early buzz around this year's upfront is the "topping out" of broadcast dollars and the subsequent shift of funds to cable, where overall viewership continues to climb.

But top-tier cable networks’ successes come at a price; one passed along to advertisers. Why? Because the overall cable viewership growth is not being driven by the top 10, 20 or even 25 cable networks.  In fact, the growth in cable is being driven by the bottom 25 networks.  

You read that right. The bottom 25 cable networks are experiencing the most growth.  Yet despite that fact, nearly two-thirds of all cable advertising dollars goes to the top 25 networks.  All of this is happening as the top-tier cable networks shout for pricing parity for those hit shows they consider a true alternative to prime-time broadcast shows.  

It is a plan that they have attempted to implement in past upfronts, and its continuance has already become a point of contention between some top-tier networks and the buying community for the 2013-14 upfront.  A media executive was recently quoted in the press as saying..."That's asking us to pay a lot more for cable and I'm not sure advertisers will tolerate that."

Ironically, the top-tier cable networks' quest to become an alternative to broadcast has led them to face the same challenges broadcasters faced when cable was becoming a real competitor.  How do they convince advertisers to put more money toward diminishing ratings and, in many cases, pay higher CPMs than the marketplace conditions seem to allow?  At what point will advertisers fight back and find relief in the up-and-coming tier of cable networks experiencing tremendous ratings growth? These offer a much more affordable alternative.

I am not discounting the need to reach as large an audience as possible as an essential part of any media plan, but if the top-tier networks seek to push their pricing parity initiative amid a falling ratings trend, advertisers will be placing a disproportionate amount of dollars on a weakening commodity.  

Now is the time to start building the relationships with the sector of the marketplace that is the growth-driver of our business and has the most potential. The added benefit is that many of the emerging networks provide advantages to advertisers, such as reaching a more targeted audience, the ability to work collaboratively to develop customized content for less, and providing efficient CPMs to help offset the dizzying pricing of top-tier networks.  

Advertisers and buyers have now reached a point where they have a choice to make:  Repeat history and continue to pay higher costs for diminishing ratings, or capitalize on the growth and pricing benefits at the cable long tail to build a stronger foundation for their future media strategies. 


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AMC, Hallmark Top Cable Viewer Rises

12/3/2013

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by Wayne Friedman, Friday, November 29, 2013


Although November is a tougher time period for big cable networks to compete, AMC, Hallmark Channel, NFL Network, Lifetime and Bravo made strong viewer improvements.

In prime time, AMC rose 11% to an average 1.79 million viewers -- mostly as a result of its big original shows including “The Walking Dead.”

Hallmark Channel, in ramping up for its annual strong holiday season, tacked on a big 38% in prime-time viewers to 1.78 million viewers. In addition, Hallmark Movie Channel grew a substantial 70% to 322,000 average prime-time viewers. NFL Network, still broadening out its pay TV universe of subscribers -- as well as posting higher-rated Thursday night games -- rose 53% to an average 996,000.  

Other notable gainers among the bigger networks: Nick at Nite rose 13% to 1.16 million viewers; Lifetime inched 6% higher to 1.16 million; and Bravo added 9% to reach 954,000 viewers.

ESPN, in the thick of its big NFL season with “Monday Night Football,” maintained the best prime-time results, pulling in 3.16 million viewers -- up 3% from a year ago.

November is a competitive TV month -- with broadcast networks' high-profile programming going head to head with cable networks. Many veteran cable networks have suffered losses.

Second place to ESPN was Disney Channel, at 2.09 million viewers -- off 14% from a year ago. Next was Fox News at 2.03 million, down 21% versus poor comparisons to last year’s heavy political season.

USA Network slipped under the 2 million mark -- at 1.96 million viewers, down 27%. TBS was at 1.76 million, slipping 2%; History was at 1.65 million, down 13%; FX was flat at 1.6 million; TNT at 1.5 million, down 7%; and Discovery landed at 1.41 million, giving back 7%. A&E totaled 1.37 million, down 10%.

HGTV, at 1.14 million, lost 8%; ABC Family at 1.11 million, was off 8%. Syfy was at 1.1 million, declining 5%; TLC was at 1.0 million, down 12%; and Food Network came in at 986,000, dropping 3%.


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New Cable Nets: Tougher Roads And Questionable Staying Power

9/4/2013

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New Cable Nets: Tougher Roads And Questionable Staying Power
by Wayne Friedman, Tuesday, September 3, 2013

The more mature the cable network business becomes, the harder -- and longer -- it takes for new channels to succeed. For example, in August we witnessed unimpressive rating numbers for the start of Fox Sports 1 and Al Jazeera America.

Fox Sports 1, in its first full week on the air (the network debuted August 17), averaged 157,000 prime-time viewers -- compared with top dog ESPN’s 2.3 million.

News network Al Jazeera America, which debuted Aug. 20, had it even tougher, The highest-rated show was Thursdays airing of "Real Money With Ali Velshi," which drew 54,000 viewers. Velshi, coming from CNN, may be the network’s best-known on-air name.

Much of this was expected.  In general, it’s challenging to launch any big TV/entertainment vehicle. For example, how many broadcast network shows in the last few years have launched with a 3.0 rating or more among key 18-49 viewers? Not many.

Al Jazeera reaches fewer than 50 million U.S. TV homes, or less than 50% of the total 116 million TV Homes (according to Nielsen). Right there, the network has a tremendous disadvantage.  Fox Sports 1 has a somewhat better case. Reaching some 90 million homes, or nearly 80% of TV homes.

If we have learned anything recently, it is that new or rebranded cable networks can face months, if not years, of troubles before they can navigate smooth waters.  Media choices are multiplying, and it’s easier for consumers to find other entertainment channels.

Fox Sports 1 and Al Jazeera America would say they are in it for the long haul.

For the all the high-profile attention that went to OWN: Oprah Winfrey Network and its early troubles, it should be noted that OWN launched in January 2011. Early this year, executives at OWN partner Discovery said the network was now profitable. That means its duration to success was over two years. Not bad.

It should also be noted that a lot was riding on Winfrey’s brand name. To many, that equates to all things money-making, and that fact that success didn’t happen immediately raised eyebrows, unfairly or not,

When National Geographic Channel started in 1997, many believed the launch came too late – since Discovery Channel had already been focusing on the same non-fiction and documentary niche for 12 years. Still, better to be in the race than not at all. Today, many would look at Nat Geo’s launch as a belated but correct decision.

Troubled new networks are still in rough waters. Perhaps Fox Business Network, which started in 2007, isn’t where it wants to be.  The same is possibly true for kids' network The Hub, launched in 2010 as a partnership of Discovery and Hasbro.

Traditional cable TV shelf space may not have the really big value it did years ago.  Yet it still can be the media foundation for associated new digital businesses to grow from.  So why not launch one -- if you have the wherewithal and the staying power?

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Media Growth Up, Cable Leads Drive

8/22/2013

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Media Growth Up, Cable Leads Drive
by Wayne Friedman, Wednesday, August 21, 2013

Total media growth is now up nearly 10% through the first six months of the year in terms of advertising revenue -- and up 2% in July -- with national cable TV still commanding the highest share and healthy gains.

The Standard Media Index, which culls data from media agencies amounting to an estimated 60% of total agency spend, says national cable networks grew 5% in ad revenues versus the same time period of a year ago. Looking at just the month of July of this year, cable TV networks posted a 16% hike.

At the same time, broadcast TV networks witnessed a 15% decline -- mostly due to the absence of higher national TV advertising dollars from the London Summer Olympics of a year ago.

For the first half of the year, spot TV is 2% higher (an 8.1% share), syndicated TV is flat (a 2.2% share), and local cable 9% is higher (a 1.9% share).

Overall, all of U.S. TV is 4% higher in ad revenues, with a 60.1% for the first half of 2013. SMI also says that overall media spending in July was up 2%.

Digital media continues to drive upward -- adding 13% in July and 23% for the first six months of the year. It commands a 24% share of media -- second only to national TV cable networks, which have a 25.8% share. Broadcast TV has a 21.3% share -- in third place overall from January to July 2013.

Other media show continued strong results for the first six months of the year: magazine revenues grew 15% (a 5.5% share); Radio was 7% improved (a 4.8% share); out-of-home was 12% higher (a 3.8% share); and newspapers grew 15% (a 1.5% share).
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People Sure are Watching a lot of Cable

8/22/2013

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Viewership rises to an all-time high 17.4 hours
By Toni Fitzgerald

This summer people are watching more ad-supported cable than ever before.

A new study from Turner Networks, analyzing data from Nielsen, finds that the average viewer has watched 17.4 hours of cable per week from late May to early August, up from 17 last year and the biggest share ever for cable.

Broadcast, by contrast, fell to 6.2 after 6.8 last summer, when numbers were inflated by NBC’s highly rated coverage of the Summer Olympics.

Viewers spent an additional 9.4 hours per week on “other” television viewership, such as non-commercial cable networks like Disney Channel, Spanish-language TV and pay cable networks.

Total TV viewing per week was 33 hours, 30.2 of them consumed live, while 2.9 hours were on tape delay.

The report concludes that more than half of all TV viewing this summer was of cable networks, compared to just under one-fifth for broadcast.

Some of this is simply the natural progression that’s been seen over recent years. Cable has been adding more channels, giving people more choices, and it’s only natural that many people would flock to cable to see what is being offered.

Too, cable tends to air its big-buzz shows during summer, such as AMC’s “Breaking Bad,” A&E’s “Duck Dynasty” and TNT’s “Rizzoli and Isles,” while broadcast’s biggest-buzz shows are almost exclusively reserved for the regular season.

It’s not really a surprise that viewers, finding the fifth repeat of “NCIS” on broadcast that week, would switch over to cable to see what’s new.

What may be a surprise is just how much TV is still being watched live, at a time when DVR usage is getting a lot of buzz.

Ninety-two percent of all viewership this summer has been live, with just 8 percent of programs watched on tape delay.

That percentage should increase sharply come fall, when broadcasters begin airing their highly anticipated new and returning shows.

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As Cable And Satellite Slip, IPTV Soars

8/16/2013

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More Americans are ditching cable and satellite TV, and the “cord-cutting” trend is benefiting IPTV, which is capturing a larger share of the market, according to a new report from research outfit HIS.
 
In the second quarter of 2013, U.S. pay TV providers shed 352,000 subscribers, according to IHS, due mostly to a loss of 588,000 cable subscribers and 162,000 satellite subscribers.

The cable figure is roughly equal with the 598,000 subs lost in the second quarter of 2012, while the satellite figure is a steep rise over 62,000 the year before.
 
IPTV providers -- including AT&T Uverse and Verizon Fios, among others -- saw a net addition of 398,000 subscribers in the second quarter, up from 304,000 the year before. IPTV’s market share increased to 11%, mostly at the expense of satellite, which declined to 34%, while cable remained steady at 55% of the market.
 
IHS attributed satellite’s losses to the lack of high-speed Internet and triple-play bundling options. Of course, cable has issues of its own, as illustrated by the high-profile dispute between CBS and Time Warner over carriage fees, which has angered viewers.
 
Perhaps more serious, as these figures indicate, the overall pay TV marketplace is contracting, with a net loss of 146,000 subscribers during the first half of the year. For the full year, IHS predicts the total number of U.S. pay TV subscribers will decline from 100.89 million in 2012 to 100.77 million in 2013. That suggests future growth for relatively new entrants like IPTV will increasingly come at the expense of the incumbents, cable and satellite.

Read more: http://www.mediapost.com/publications/article/206814/as-cable-and-satellite-slip-iptv-soars.html?edition=63442#ixzz2c9uhdw7u

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