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Cable Nets Run More Ads as Streamers Steal Eyeballs

Not long ago, cutting commercials seemed like a good idea.

A few years back, advertising dollars were migrating to digital and viewers were just starting to stream video and cut the cord that connected them to cable networks.

Fox, NBCUniversal, WarnerMedia’s Turner networks and Viacom were among the major programmers that unveiled plans to reduce commercial clutter, a move that was seen as making traditional TV more attractive to viewers and more effective for advertisers.

New data compiled by MoffettNathanson Research senior analyst Michael Nathanson has found that for the fourth quarter of 2019, total day commercial loads rose 1.3% to 12.7 minutes per hour.

Ad loads had been flat during the third quarter, according to Nathanson. “This is the first quarter where the growth in aggregate cable commercial minutes per hour accelerated since early 2018 as cable networks try to help offset the linear ratings challenges,” he said in a research report. “Increased ad loads will likely only push more viewers to on-demand viewing for entertainment content.”

The linear ratings challenge Nathanson refers to are the 8% drop in C3 commercial ratings for broadcast and 14% slide for cable in primetime during the period. Fox was the only broadcaster to post a C3 ratings gain. All of the cable network groups were down, with AMC Networks posting the biggest drop at 22%.

Minutes Down, Sales Up

Comcast’s NBCU unit, a major proponent of reducing commercial clutter under ad-sales chairman Linda Yaccarino, was the only programmer with fewer ad minutes per hour. NBCU networks ran 11.8 commercial minutes per hour, down 1.6% from the fourth quarter of 2018.

At the same time, Nathanson notes that NBCU’s cable networks earlier this month reported that cable network ad revenues were up 2% to $886 million.

Not coincidentally, when NBCU provided details about its upcoming ad-supported streaming service Peacock in January, Yaccarino crowed that it will have no more than five commercial minutes per hour.

A+E Networks-owned channels were flat, but their 13.7 commercial minutes per hour was the highest on cable.

All of the other cable programmers showed upticks in commercial loads. The biggest increase was registered by AT&T’s Turner networks, where commercial minutes jumped 3.7% to 12.7 minutes per hour.

Ad minutes on Discovery’s networks rose 3.2% to 12.1 per hour, the second-biggest hike. The Walt Disney Co.’s channels registered a 2.2% increase, leaving them at 11.2 minutes per hour.

Ad loads were up 1.3% and 1.2% at Fox and AMC Networks, respectively, and ViacomCBS registered a relatively small increase of 0.6%, but its minutes per hour average stands at a hefty 13.4 for total day. ViacomCBS in the past has said it was taking measures to reduce ad loads during primetime in particular.

The ad clutter is a symptom of a national TV ad market where flat appears to be the new up, according to Nathanson.

For the fourth quarter, Nathanson projected that national TV advertising will finish up 0.4% at $10.7 billion. Broadcast networks will be down 0.5% with CBS doing the best with a 2% increase and ABC and NBC each down 1.5%.

Cable advertising is expected to show a 1.2% increase, led by ViacomCBS’s 2.8% gain, which was bolstered by the addition of streaming service Pluto TV. AMC Networks is expected to drop 6.5%.