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.
