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Belch: Advertising and
Promotion, Sixth Edition
V. Developing the
Integrated Marketing
Communications Program
marathon of athletic events. Another reality show is
planned called The Life, which is based on a feature in
ESPN The Magazine and will show viewers how rich
and famous athletes manage to spend all that money.
Analysts explain these recent moves by noting that
the Walt Disney Company didn’t just buy a 24-hour
sports cable network when it bought ESPN as part of a
package deal for ABC/Capital Cities back in 1995. Disney
bought a valuable brand, out of which it wants to
squeeze as much value as possible. The ESPN-produced
programs will have secondary markets on other channels
owned by Disney, and they may also help expand
11. Evaluation of Broadcast
Media
cable advertisers generally do not have to make the large up-front commitments,
which may be as much as a year in advance, the networks require.
The low costs of cable make it a very popular advertising medium among local
advertisers. Car dealers, furniture stores, restaurants, and many other merchants are
switching advertising spending from traditional media such as radio, newspapers, and
even magazines to take advantage of the low rates of local cable channels. Local cable
advertising is one of the fastest-growing segments of the advertising market, and cable
systems are increasing the percentage of revenue they earn from local advertising.
Limitations of Cable While cable has become increasingly popular among
national, regional, and local advertisers, it still has a number of drawbacks. One major
problem is that cable is overshadowed by the major networks, as households with
basic cable service still watch considerably more network and syndicated programming
than cable shows. This stems from the fact that cable generally has less desirable
programming than broadcast TV.
Another drawback of cable is audience fragmentation. Although cable’s share of
the TV viewing audience has increased significantly, the viewers are spread out among
the large number of channels available to cable subscribers. The number of viewers
who watch any one cable channel is generally quite low. Even MTV, ESPN, and CNN
have prime-time ratings of only about 1 or 2. The large number of cable stations has
fragmented audiences and made buying procedures more difficult, since numerous
stations must be contacted to reach the majority of the cable audience in a market.
There are also problems with the quality and availability of local ratings for cable stations
as well as research on audience characteristics.
Cable also still lacks total penetration, especially in the major markets. As of 2002,
cable penetration was 74 percent in the New York City designated market area and 65
percent in Los Angeles and Chicago. While cable programming now penetrates 78
percent of all U.S. television households, this still means that nearly a quarter of the
market cannot be reached by advertising on cable.
The Future of Cable Cable TV should continue to experience strong growth as
its audience share increases and advertisers spend more money to reach cable viewers.
However, the cable industry faces several challenges: increases in the number of channels,
leading to fragmentation of the audience, changes in government regulations,
and competition in the programming distribution business from other telecommunications
companies and direct broadcast satellite services. Advances in technology such
as digital video compression and fiber optics, coupled with massive investments in
system upgrades, are making it possible for cable operators to offer more channels and
thus subject existing cable channels to greater competition. In 2002, over 42 million
U.S. homes could receive at least 54 channels. An average 95 percent of cable subscribers
could receive 30 channels or more. Increases in the number of channels available
lead to further fragmentation of the cable audience and make it more difficult for
cable networks to charge the ad rates needed to finance original programming. Some
© The McGraw−Hill
Companies, 2003
the viewing audience beyond the core sports junkie.
However, some media experts argue that ESPN is taking
a big risk and may alienate its core viewers in an
effort to get higher ratings. ESPN’s success may ultimately
depend on how elastic the brand is to viewers
and how far the network can stretch the definition of
“sports coverage.” It will be interesting to see what happens
as the “E” in ESPN steps forward.
Sources: Tom Lowry, “ESPN’s Full-Court Press,” BusinessWeek, Feb.
11, 2002, pp. 60–61; Joseph Guinto “Against the Grain,” Southwest
Airlines Spirit, Feb. 2002, pp. 67–70.
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Chapter Eleven Evaluation of Broadcast Media