Cable TV Is Feeling Jolly About Advertising-Dollar And Viewership Boom
THE ``ho, ho, ho'' coming from boardrooms of United States cable-television networks represents more than just holiday-season goodwill.
Cable TV is suddenly on a mini roll, with advertising dollars and viewership up. And cable executives are predicting another solid year in 1995.
``We have been doing very well [this year], and we expect to continue to grow,'' says Joseph Ostrow, president of the Cabletelevision Advertising Bureau (CAB). ``We've become a heavier investor in programming, involving both the quality of programming and the targeting of programming. And that has meant increases in audiences.''
For the latest key survey period, the November ``sweeps,'' prime-time cable viewing rose 4.4 percent to a cumulative rating of 14.3 percent, compared with 13.7 percent in November 1993, according to a poll conducted by the A. C. Nielsen Company. Cable's viewing share rose from 22 percent to 23 percent of all TV sets in use during that period.
Viewership for the major networks was not so positive, however. ``The big three networks [ABC, CBS, and NBC] lost ground to Fox, which picked up new viewers,'' says Arthur Gruen, president of Wilkofsky Gruen Associates, Inc., a media-consulting firm in New York. ``For the four networks as a whole, [viewership growth] was about flat,'' he adds.
Big three ratings drop
According to Nielsen data, the prime-time ratings of the big three networks dropped 2.6 percent during the November sweeps (to 36.9 percent from 37.9 percent in November 1993), while the share of the viewing audience slid 3.3 percent (to 59 percent from 61 percent last year.)
Gains for cable were particularly sweet, since viewership had been down late last year and early this year. As more viewers click on cable networks, advertising dollars flow their way. Total cable ad revenues are expected to reach around $4.6 billion this year, up from about $3.9 billion last year, says Donna Peltier, a spokeswoman for CAB. Total cable revenues should reach around $5.3 billion in 1995, she says.
Still, ad dollars for cable remain far below the level of aggregate ad spending at the big networks. Of the total $4.6 billion in ad revenues for cable this year, about $3.1 billion goes to cable-TV networks. The other $1.5 billion goes to local cable carriers and regional networks. By contrast, the big four networks will accumulate about $11.1 billion in ad revenues this year, up from $10.2 billion in 1993, according to research by McCann-Erickson, an advertising agency in New York.
Balancing cable and broadcast
While some 66 percent of all American homes are wired for cable, the ``main growth in cable penetration'' is over, Mr. Gruen says. He says he believes that ``a new equilibrium'' between cable and broadcast networks will help television, in general, lure new ad revenues vis-a-vis other mass media, such as newspapers and magazines. Cable's strength, according to Mr. Ostrow, lies in its diversity. ``Mass-market advertising is far less attractive than in the past; but our networks and our shows are highly specialized,'' he says. ``Advertisers can use cable to target ad dollars to very specific audiences.''
Today, advertising dollars support some 46 national cable networks and 25 regional ones. The latest is the ``Popcorn Network,'' which provides information about movies, Ms. Peltier says. Some five or six new networks are expected to start up next year.
Broadcast-TV executives note that most cable networks attract very small audiences. During the third quarter of 1994, for example, the highest-rated cable network was USA Network, with a rating of 2.3 percent. For the week of Dec. 5-11, the top-rated cable program was NFL Football on ESPN, a sports network, with a rating of 6.6 percent, according to Nielsen data. But a popular show such as ABC's ``Home Improvement'' usually posts a rating of 19 percentage points or more.
Still, an announcement last week by the Federal Communications Commission in Washington underscored cable's growing clout. The FCC said it is considering loosening restrictions on ownership of broadcasting stations, including allowing station owners to increase their holdings. One reason, the agency cited, is greater competition, including from cable TV.
Whether the viewer rush to cable will continue, of course, remains unknown. A number of cable networks are presenting special holiday programming that should help increase audiences.