Turner exec fighting broadcast's ad rates
David Levy readying campaign to shrink cable's CPM gapNEW YORK -- Turner exec David Levy is lobbying media buyers to join him in calling for a repeal of what he calls "TV's legacy tax," shorthand for the pricey cost-per-thousand rates that broadcasters command even as their audience delivery shrinks.
The president of Turner Entertainment ad sales and marketing and Turner Sports is prepping a campaign to eliminate the breach that separates the broadcast and cable upfront markets, and in so doing, narrow the CPM gap. (On average, primetime inventory on a cable network costs about one-third as much as on broadcast on a CPM basis.)
"Advertisers who buy broadcast TV have been paying too much for too long," Levy said. "The networks keep getting rewarded for how well they did five, 10 years ago, and that doesn't hold water anymore. Smart agencies already realize this."
With about six weeks to go before Turner invades upfront week, Levy is tilting against the disparity between broadcast's ratings share and the amount of ad revenue the nets command in primetime. Season-to-date, according to Nielsen data, broadcast accounts for just 40% of primetime viewership, yet the nets have cornered 69% of the ad dollars. Among adults 18-49, the Big Four are down 7% through March 22, while ad-supported cable has grown 4%.
Levy illustrated the disconnect between what clients pay and what they get in return.
According to Turner's analysis of Nielsen AdViews data, in fourth quarter 1997, NBC commanded a $35.39 CPM for "Seinfeld" in its final season. Six years later, NBC landed a $38.85 CPM for the critically acclaimed (but little-watched) procedural "Boomtown."
And just last fall, the network secured a $51.06 CPM for "Lipstick Jungle," which averaged 4.18 million viewers in its final 13 episodes. (ABC and Fox posted similar increases in the same time frame.) While NBC was able to lock in that enviable CPM for "Jungle," Levy can only go as high as a $29 CPM for TNT's "The Closer," which remains the highest-rated series on cable and averaged 7.81 million viewers in its fourth-season run.
Levy argues that the only way to level the playing field is by eliminating the siloed TV approach in favor of a more fluid marketplace that blends top-tier cable into the broadcast upfront mix.
"If you increase supply, the price goes down, and one way to achieve an increase in supply is to add cable to your broadcast bucket," Levy said. "I can't force or predict how agencies and clients will buy, but I do know that advertisers expect a return on their dollars, and they are not getting that return from broadcast television."
One buyer, Donna Speciale, president of investment and activation at MediaVest, thinks Turner may be on to something, inasmuch as getting the message out during the traditional upfront week puts cable in front of a greater swath of potential clients.
"I think the clients wouldn't mind if the top-tier nets moved in, although I'm not sure who decides who makes the cut," Speciale said.
Still, there are those who detect a note of incongruity in Levy's pitch.
"Cable offers a nice complement to broadcast. But the fact that Turner's making the argument about bringing pricing down is a little ironic," one national TV buyer said. "They've already priced themselves pretty high with their originals."
Although Levy argued he's simply getting compensated for performance, the disparity between "The Closer's" CPM and the going rate for other cable hits is analogous to the broadcast-cable divide. For example, USA Network commands a $14.67 CPM for "Monk" and FX boasts a $14.35 CPM for "Damages" -- about half of "The Closer's."
Another TV buyer noted that for all of cable's hot shows, network by network, original programming is still scarce.
"If cable wants to sell like broadcast, they need to act like it," the buyer said. "USA is probably the only one that can support their schedule. If you have to pull out of one of their shows, they can put you in another original. Anywhere else, you may be stuck in movies."