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Programmers Ready for Revenue Hits

3/23/2003 7:00 PM Eastern

The all-news networks and even some cable entertainment services absorbed planned-for early hits to advertising revenue last week, during the initial stages of the war in Iraq.

But Cable News Network and MSNBC, which both went commercial free, claimed that many sponsors were ready to start advertising again.

"We have a lot of advertisers that want back on," said CNN executive vice president of sales Greg D'Alba. "Travel and tourism is obviously one that's sitting back for a while, but every other category — including financial services and automotive — has requested [to be] on as soon as we start to break. Dozens and dozens of advertisers."

The movie studios are particularly eager to get spots for their theatrical releases to run on CNN, according to D'Alba.

"But we have to be careful," he said. "We're not going to run movie creative that's violent in nature.

"Depending on the movie, depending on our break structure, we'll run it. There's a lot of interest there, obviously, because of the audience levels we're achieving."

After the U.S. military's attack on Baghdad Wednesday night, the 24-hour cable news outlets did what they said they would do: They initially went commercial-free with their around-the-clock war coverage.

Skittish buyers

At times last week, even MTV: Music Television and CNBC ran commercial-free when airing war-related coverage.

Several entertainment-oriented and niche cable services reported that some of their sponsors, such as airlines, were looking to pull their commercials. But like CNN, these programmers were not expecting a long-term downturn in advertising because of the war.

"The vast majority of our advertisers have remained on the air," Scripps Networks senior vice president of advertising Steve Gigliotti said. "They realize that our programming will be an appealing respite for the viewers."

A few Scripps advertisers asked to be off for 48 hours. "Some of those advertisers you would expect because of their category: tourism and airlines, for example," Gigliotti said. "We are so heavily sold through the end of this quarter and the beginning of second quarter, most advertisers don't want to jeopardize their schedules.

"For all those who do remain on the air, we are committed to delivering the impressions that we have promised."

At MSNBC, senior vice president of ad sales Jim Hoffman was also upbeat about sponsors returning to the air quickly as soon as his network started running spots again. "Advertisers are across the map," Hoffman said. "A lot depends on what their creative is all about, and their flighting, and also obviously their industry. Travel and tourism are going to want to stay off the air for a little while. Most advertisers would actually like to be on the air as soon as possible ... Everybody's afraid of being off the air too long."

Such optimism ran contrary to a report issued early last week by Goldman Sachs & Co., which predicted that both CNN and such entertainment services as TBS Superstation and Turner Network Television could lose ad revenue because of the war, as skittish sponsors pull back.

The report said CNN could lose from $3 million to $6 million in ad revenue over the first three days of the war and $5 million to $10 million in the first week. Goldman Sachs & Co. said AOL Time Warner Inc.'s entertainment networks also risk exposure to $3 million to $6 million in commercial revenue over the first three days of the war, and more after that.

Like CNN and MSNBC, Fox News Channel also went commercial-free. Fox News spokesmen could not be reached for comment, and as of deadline Friday, MSNBC did not know how long it would go before telecasting spots.

D'Alba didn't want to attempt to quantify how much ad revenue CNN lost last week. He did, however, express optimism about its ability to do make-goods and make up any revenue losses, in part because of the spike in network's ratings.

MSNBC officials felt the same.

"It's all of our intents, whether Fox News or NBC network or any of the networks that are preempting, what we'd like to do is replace [advertisers' pre-empted] commercials at a different time within their flighting," Hoffman said. "We should have the inventory going into the second quarter, as far as the cable news channels go. All of us should have the inventory."

Ratings rise

From 9:30 p.m. EST last Wednesday, when the war broke out, to 3 a.m. that morning Fox News won the ratings race. All of the news outlets saw huge increases in ratings, though.

Fox News posted a 5.1 household rating, or 5.8 million total viewers. CNN did a 4.2 rating, or 5 million viewers, while MSNBC captured a 2.3 rating, or 2.3 million viewers.

D'Alba expected CNN to ramp back to a normal commercial load fairly quickly. But CNN will be flexible, and if there is major breaking war news, the network will return to commercial-free status, D'Alba said.

"Three days from now, if there's heavy activity, we're certainly not going to break in or around heavy coverage [with ads]," D'Alba said.

In any case, he added, CNN would not go from live coverage of the war to a commercial. Rather, it would only break for commercials from a static set.

CNN officially pulled the plug on all advertising at about 9 a.m. last Thursday. As of Friday, CNN planned to go back to "modified breaks" early Saturday morning, after 2 a.m. Commercials resumed on Headline News Friday morning.

"It's a hard one to call, and I guess we're erring on the conservative side," D'Alba said. "We want to do the right thing, Obviously, we're going to lose money in the short term."

After last Thursday's bombing of Baghdad at 1 p.m., CNBC stopped running ads for several hours, said senior vice president of business news David Friend. "The events of the world were so compelling and were driving important moves in the stock market, [so] we felt we had to stay with that coverage in service to our audience," he said.

 

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