Cable Still Strong Despite Recession

Network television has been taking a hard hit from the recession, with their advertisers pulling out at the last minute and bidding much lower for the time slots that used to bring in the major advertising dollars.

Since it gets much smaller numbers in terms of viewers, it’s easy to think that cable would be, if anything, in even more trouble than network when it comes to bringing in advertisers.

Turns out that isn’t so. Advertisers cut their budgets for television by $10 billion in the first two quarters of 2009, but cable actually managed to grow nonetheless, getting up to nearly $8.8 billion, a 1.5% increase from last year. Granted, these aren’t exactly mind-shattering growth numbers, but they’re still extremely impressive when you consider that television advertising overall took such a major hit.

The upfronts are of course the most looked-to barometer for how well network television is doing, and the numbers are consistent with the advertising reports overall. Upfront spending dropped 12% to just $6.7 billion. This doesn’t necessary mean that network advertising spending is as bleak as many would speculate from upfront numbers alone, because the recession has forced many companies into a “wait and see” philosophy rather than gambling on the future success of a show.

Even more telling, sellers are depending more on “scatter” than ever before, which continues to improve the return on investment for advertising budgets. The amount of airtime held back for scatter could cause a large excess of unsold inventory, which may very well turn into a bidding war as air time gets closer. Even if such a scenario occurs, it’s not likely to turn out well for the networks, since they need to fill that air time and may need to sell that inventory at lower rates.

While network takes a thrashing, cable is expected to grow over twice as fast this year, with a 3.6% increase to $20.2 billion in 2010.