Cable Networks Struggle to Match Broadcast Ad Dollars

by Marisa Guthrie

Starting next month, executives will make their cases to media buyers with more original scripted content and event coverage while touting their growing ratings ("Walking Dead," anyone?).

The demarcating line between broadcast and cable may be fading fast for viewers who quickly are becoming platform agnostic. But that divide likely still exists in the minds of one important constituency: media buyers. 

As another upfront selling season unfolds in April, cable executives will make their cases for a bigger slice of buyers' TV budgets with more original scripted content and splashy event specials (some of them live) while touting ratings that are closing in on broadcast competitors and, in some cases (AMC's The Walking Dead), surpassing them.

But cable execs can expect significant push-back. That's because in spite of a handful of sought-after series, it's difficult to undo the legacy pricing bases that broadcasters have enjoyed for decades.

Analysts say there is still a 3:1 rate gap between broadcast and cable. While the CPM (cost per thousand viewers) gap "has been closing over time," notes SNL Kagan senior analyst Derek Baine, "it's been closing at a slower pace than everybody had predicted.

There are still a lot of low-rated shows on broadcast that are getting higher CPMs than comparable shows on cable by a wide margin."

Meanwhile, cable's impressive post-recession ad growth also is naturally beginning to plateau.

According to the Cabletelevision Advertising Bureau, ad-supported cable networks took in $10.2 billion in upfront commitments for the 2013-14 season, a 4 percent gain from 2012-13. 

By comparison, the five English-language broadcast networks (ABC, CBS, Fox, NBC and The CW) generated $9.15 billion for 2013-14. While it was the third consecutive year that cable outstripped broadcast, cable notched a 5 percent increase in 2012-13 (to $9.8 billion), a 16 percent increase in 2011-12 and a 19 percent increase in 2010-11 when the industry was digging out of the recession.

For ad-supported cable, The Walking Dead is the high-water mark. The top-rated show on TV among the advertiser-coveted 18-to-49 demographic for the past two seasons, Dead now commands among the highest CPM rates on TV, at close to $350,000 for a 30-second spot during the upfront selling season, according to Adweek. By comparison, buyers ponied up an average of $326,000 for a 30-second spot on CBS' The Big Bang Theory, the top-rated scripted show on broadcast.

The problem for cable execs: There's only one Walking Dead.

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Top 5 ad-supported cable networks:

ESPN: $1.7 BILLION

USA: $1.2 BILLION

TNT: $1 BILLION

TBS: $999 MILLION

FOX NEWS: $776 MILLION

*Net advertising revenue in 2013