So far this season, ratings for the big broadcast networks have been down, continuing an ongoing pattern of audience erosion.
But it’s different this time. With use of digital video recorders hitting a critical mass and more people accessing content online and via video-on-demand on a variety of devices, network executives have become like petulant Little Leaguers, striking out and then blaming the umpires because they can’t get a hit.
In a steady drumbeat designed to ward off the mojo of a lethargic scatter market and expectations of doldrums after 2012’s Olympics and elections, media company honchos are chanting a new mantra: People are watching their programs, but they’re not all being counted, because of when, where or on what device they’re watching.
Can Ratings Rebound?
Early returns for the 2012-13 season show audience declines at Fox, CBS and ABC, with NBC, which had been the last-place network, rebounding on the strength of Sunday Night Football and The Voice. None of the shows introduced at last year’s upfront appears to have the makings of a breakout hit. In fact, the biggest scripted series sensation with the 18-49 audience last fall was The Walking Dead, which appeared on a cable network, AMC.
David Poltrack, chief research officer for CBS and senior defender of the broadcast networks, said the season had gotten off to a “chaotic” start, disrupted by factors ranging from shows making early debuts to political preemptions to Superstorm Sandy.
Nevertheless, erosion appears inevitable. Fox, which suffered the deepest declines in the fall, is getting some buzz from midseason show The Following, but the network is very dependent on American Idol, which isn’t getting any younger.
Can You See 7?
With ratings trends raising concern on Wall Street, Walt Disney CEO Robert Iger and CBS boss Leslie Moonves both recently told investors the ratings used for ad sales should be changed. Instead of counting the people watching commercials over three days—the current C3 ratings—they want seven days’ worth of viewing to count. “I think we’ll have C7 within a year and a half,” Moonves said at an investors’ conference in December. “I’m willing to bet a lot on that.”
Of course, some advertisers won’t go along with paying for commercials seen seven days after they air. One possible outcome among the largest media investment companies, according to Irwin Gotlieb, CEO of GroupM, is a market that runs on more than one currency.
Making TV Everywhere Count
In addition to delays caused by widespread DVR use, viewing is moving from the TV set to online and to other gadgets. TV Everywhere is spreading, as new distribution deals allow subscribers access to programming in a variety of ways. “I would hypothesize in the next few years there will be more erosion in TV delivery to alternative mechanisms, starting with this guy,” Gotlieb said recently, holding up his iPad.
Media companies and agencies, which are increasingly turning to multiplatform campaigns to follow and engage with viewers wherever they are, won’t pay for viewing on new alternative devices unless viewers are counted.
Viacom CEO Philippe Dauman said his company is working with Nielsen and other research companies on multiplatform measurement and that he’s encouraged by the progress he’s seen. “We are going to benefit enormously in particular from measurement of viewing on other devices because our audiences are the ones who are spending incremental time on other platforms,” he said.
The Other Stream
Advertising isn’t the only revenue stream under pressure. Historically, subscriber fees have done nothing but go up, but now distributors— squeezed by a weak economy and rising sports programming costs—are sounding the call that not only should rates not rise, but operators will stop paying for low-rated channels.
“We’re going to take a hard look at each service, and those services that cost too much relative to the viewership, we’re going to drop them,” Glenn Britt, CEO of Time Warner Cable, told the December investment conference. First network to be dropped: Ovation.
For programmers, that sounds like the start of another staring contest. In 2013, we’ll see who blinks first.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.