The buyers’ feeding frenzy that fueled the stunning uptick in the conventional television ad market this fall has spilled over into the specialty segment. Indeed, some of the nation’s top media buyers are carping about rate hikes of up to 50% on some specialty channels.

‘We haven’t seen a wild market like this since 1997,’ says Helena Shelton, VP of broadcast operations at MBS/The Media Company in Toronto. ‘All of the broadcasters – the specialties included – are doing whatever they can to get every dime they can until the tap is turned off.’

Against the backdrop of a record-smashing upfront market south of the border, media buyers have been jumping on board the buying parade in Canada – if not somewhat reluctantly. Buyers say they’ve never faced rate hikes on the specialty channels like the ones they are witnessing this fall.

There are whispers of rate increases in the order of 50% at Alliance Atlantis Broadcasting, as well as increases of about 10% at Corus Entertainment and 5% at CHUM. For their part, broadcasting executives have been loath to confirm the amount of their rate hikes, but admit that they are on the upswing.

Brad Alles, SVP of broadcast sales at Alliance Atlantis of Toronto, says this fall’s increases are just a continuation of rising rates seen in the specialty market over the past few years.

‘It’s accelerating a trend that’s been in the works for some time. Dollars are following the eyeballs. Total dollars are up well into the double digits this year,’ he says.

However, Alles is taciturn when asked about reported 50% increases for some specialty properties at Alliance Atlantis – such as Alliance-owned HGTV.

‘I’m going to stay out of that. Let’s just say we’re pleased with our negotiations,’ Alles says.

David Kirkland, VP of marketing and sales for Toronto-based CHUM, is also mum about the size of the rate increases, but admits that CHUM is drumming up increased ad revenues. However, he says it’s not that rates have increased, but simply a matter of less discounting this year.

Certainly the specialty broadcasters argue that fatter rates are long overdue. As a group, the specialty channels have been gaining ground, according to BBM numbers from Toronto-based Solutions Research Group.

Over the past five years, their share of tuning jumped to 33% from 14%, while the conventional broadcasters slipped to 50% from 63%. And increasingly, specialty channels are likely to be top-of-mind favourites. For example, Canadians ranked six specialty channels among their top 10 favourite networks or specialty channels, a recent study by Solutions Research found.

Ad revenues have increased in tandem. While conventional broadcasters saw their ad sales shrink by 1.8% in 2002, sales growth in the specialty segment grew by 16.1% – from about $305 million to nearly $509 million, according to the latest Statistics Canada figures.

Many specialty broadcasters believe they are finally getting their due, but advertisers are not happy about the hikes.

‘It’s been a bit of a shock for many of our clients,’ says Dennis Dinga, director of broadcast buying for M2 Universal in Toronto, adding that advertisers pitching the adult female market have been hit hard with rate increases on the specialty channels. ‘But mostly they do understand that it’s going to happen from time to time.’

MBS’s Shelton agrees that while many advertisers are reeling in the wake of the rate increases, many are shelling out for their coveted spots.

‘Some have drunk the Kool-Aid. They’re very married to certain shows and programs. They’re saying, ‘I’ve got to have it no matter what.’ Others are saying, ‘Count me out this time,” she says.

Most buyers believe that the Canadian market is riding the wave of pent-up demand in the U.S. market where advertisers have held on to their wallets because of 9/11 and the war in Iraq. By this time next year, the bubble is bound to burst, they predict.

‘The potential is huge for the taps to be completely turned off in the not-too-distant future,’ Shelton says.

Sunni Boot, president of Toronto-based Zenith Optimedia Canada, agrees that a slowdown is in the works. Up until a few weeks ago, she was predicting a buoyant outlook into the next fall season, but now she is feeling less optimistic due to some signs of a slowing Canadian economy.

Regardless of how ad revenues stack up in the coming months, Boot says she doesn’t think the rate gap will ever narrow substantially between the specialty and conventional broadcasters.

However, Gerry MacKrell, VP of sales at Corus Entertainment in Toronto, believes the narrowing rate trend will continue. ‘Advertisers are certainly aware of the continued cost attractiveness of the specialty channels,’ he says. ‘Combine that with an increased share of tuning, and rates on the specialty channels will continue to rise.’