Many local cable systems are pinning their hopes for a first-quarter ad sales revival on the 2002 Olympic Winter Games by selling premium, packaged local advertising around the events, with the help of NBC Cable. Some systems, though, don't have such high expectations for the Olympics, which air on NBC in February.

?I'm not sure the real filet is there. It's more of a hamburger,? says Ron Pancratz, VP-ad sales for Cable One, an MSO in Phoenix, Ariz. Although Cable One signed on last year to carry the Olympics on MSNBC and CNBC, Pancratz doesn't expect the most popular events to air on cable, especially at night. He wants more prime-time Olympic events on cable so Cable One's advertisers won't think that they're buying nonpremium avails on programming stuck during the daytime.

Carrying the games has been a sticking point with some independent operators. These normally smaller cable outfits can't afford the surcharge added to the MSNBC and CNBC carriage fees. The fees to carry last year's Olympics were, depending on the contract, around 18 cents per subscriber for CNBC and 13 cents for MSNBC, or 31 cents total, and will increase through the end of the contract's term in 2008. NBC Cable wouldn't comment on the rates.

?We couldn't justify what they wanted to charge at the local ad sales level,? says Tony Heaton, general sales manager of Antietam Cable in Hagerstown, Md. ?You're talking about doubling your revenue output for a month just to break even.? At 38,000-subscriber Antietam, Heaton and his sales crew, typically generating around $2 million in revenue each year, would need to raise roughly $1.2 million more, based on last year's fees, to pay the surcharge. And considering the toppling of the ad market after Sept. 11's terrorist attacks, Heaton says, ?it really would be tough.?

Those who opted out of paying the surcharge and airing the Olympics, it should be noted, amount to quite a small number. Brian Hunt, NBC Cable's VP-local ad sales, says, ?We have 99% distribution. We're locked under contracts, negotiated at the corporate level.?

Erica Conaty, NBC Cable director-marketing and communications, says that since last year's Summer Games in Sydney, ?roughly ten independent additional Olympic deals [all through 2008] with a variety of independents and smaller MSOs? have been completed. One example, she says, is a third system of Bethlehem, Penn.'s Service Electric Cable TV; two had signed up before the Summer Games in Sydney. Conaty adds that NBC Cable sales reps are trying to sign more independent systems every day.

Local systems of many of the larger MSOs are already filling up their inventory for the February Olympics, and not just with auto dealers, the traditional prop for local ad markets. According to Kirt Burton, GM of AT&T media services, Salt Lake City, Utah, his system brought in several nontraditional advertisers in the insurance industry. Although he wouldn't be specific, he aims to do ?substantially more? sales during 2002's first quarter than in 2001's. (Burton wouldn't confirm, but NBC's Hunt said two weeks ago that Burton's system had already sold 80% of its Olympic inventory.)

Expecting a tremendously popular Olympics, AT&T Broadband in Salt Lake isn't selling its Olympic avails à la carte. According to Burton, ?To let somebody come in and just buy premium inventory would be unfair.? So he's bundling Olympic avails with advertisements on other networks.

NBC is partnering closely with local affiliates in order to avoid what NBC Cable president David Zaslav called a ?last-minute? selling of inventory at the Summer Olympics in Sydney. For professional-quality co-branded advertisements and guidance in selling local ads, NBC Cable has already sent its affiliated operators ?Local Marketing Plan Support Kits.?

The kits contain CD-ROMs with co-branded advertisements containing messages such as ?3 Times the Games,? referring to the upside of being a cable subscriber and getting the Olympics on NBC, MSNBC and CNBC.

Mike Russell, GM of Opp Cablevision in Opp, Alabama, won't be getting a kit, although he does insert ads locally for his 3,400 subscribers. It's the surcharge: ?If you paid it,? Russell says, ?you'd never regain your money.? And even if there were hope of making that money back, he says, ?once they put a surcharge on you, they come back for something else.?

When Russell took over as GM in 1979, he paid no fees to programmers; now, he says, half his revenues go to them ? more than $45,000 each month.

Back to this issue