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TV Loses 2.5 Million Viewers This Spring, Imperiling Ad Income

AP
Wednesday, 9 May 2007 | 12:21 PM ET

Maybe they're outside in the garden. They could be playing softball. Or perhaps they're just plain bored.

In TV's worst spring in recent memory, an alarming number of Americans drifted away from television the past two months: More than 2.5 million fewer people were watching ABC, CBS, NBC and Fox than at the same time last year, statistics show.

Everyone has a theory to explain the plummeting ratings: early Daylight Savings Time, more reruns, bad shows, more shows being recorded or downloaded or streamed.

Scariest of all for the networks, however, is the idea that many people are now making their own television schedules. The industry isn't fully equipped to keep track of them, and as a result the networks are scrambling to hold on to the nearly $8.8 billion they collected during last spring's ad-buying season.

"This may be the spring where we see a radical shift in the way the culture thinks of watching TV," said Sarah Bunting, co-founder of the Web site Television Without Pity.

To Preview Fall Schedules Next Week

The viewer plunge couldn't have come at a worse time for the networks -- next week they will showcase their fall schedules to advertisers in the annual "up-front" presentations.

The networks argue that viewership is changing, not necessarily declining.

Some advertisers respond that they are no longer willing to pay full price up front to reach viewers that may not tune in later.

This fall, both sides will be watching what happens with families like Tony Cort's. During prime-time, Cort, his wife and four kids tend to scatter to computers or other activities in different parts of their New Jersey home. (Not during 'American Idol' or 'Lost,' though.) They're definitely watching less TV, said Cort, who runs a Web site for martial arts aficionados.

"I remember when "24" was on, that was something there was a lot of interest and excitement about," he said.

News flash: "24" is still on. Its ratings are down, too, amid a critically savaged season.

More bad news abounds. NBC set a record last month for its least-watched week during the past 20 years, and maybe ever -- then broke it a week later. This also is the least popular season ever for CBS' "Survivor." ABC's "Lost" has lost nearly half its live audience -- more than 10 million people -- from the days it was a sensation. "The Sopranos" is ending on HBO, and the response is a collective yawn.

Events like "American Idol" on Fox (which is owned by News Corp. ) and "Dancing With the Stars" on ABC (owned by Walt Disney ) are doing the most to prop up the industry. But still, in the six weeks after Daylight Savings Time started in early March, prime-time viewership for the four biggest broadcast networks was down to 37.6 million people, from 40.3 million during the same period in 2006, according to Nielsen Media Research.

Millions of missing viewers could translate into millions of missing dollars for the networks heading into the up-front sales season.

Advertisers don't believe that the drop in viewership is as dramatic as the numbers suggest, but they're no longer willing to spend what they once did in the spring market, said Brad Adgate of Horizon Media, an ad buying firm.

Johnson & Johnson and Coca-Cola sat out the spring market last year -- betting they could get lower prices later -- and it's likely other companies will do the same this year, he said.

Early Daylight Saving Time Hurt Viewership

The early start to Daylight Savings Time has hurt ratings. Prime-time viewership traditionally dips then as people do more things outside, and this year folks had a three-week head start to get into the habit of doing something else. More network reruns during March and April dampened interest, too.

"We let them get out of the habit of watching television a little bit, and it's going to take some time to get these people back in front of their television sets," said David Poltrack, chief researcher for CBS (owned by CBS ).

Strategic decisions to send some popular serial dramas on long hiatuses appeared to backfire. NBC's "Heroes," CBS' "Jericho" and "Lost" lost significant momentum when they returned. Besides HBO's "The Sopranos," there are no lengthy countdowns toward the end of very popular series, unless you count "The King of Queens."

There also are technical reasons that this apparent diminished interest in television may be overstated.

New Data Collection Methods

This year, for the first time, Nielsen is measuring viewership in the estimated 17% of homes with digital video recorders. Since last year's Nielsen sample contained no DVR homes and this year's sample does, logic dictates that fewer Nielsen families are watching TV live this year, deflating ratings.

If you recorded "Desperate Housewives" this spring and watched it more than 24 hours later, you're not counted in the show's ratings. Same thing if you bought a copy of a show on iTunes and watched it on your iPod or cell phone, or streamed an episode from a network Web site.

"People are not consuming less television, they're watching it in different ways, and the measurements haven't caught up," said Alan Wurtzel, chief research executive at NBC (owned by General Electric , which also is the parent of CNBC and CNBC.com).

The numbers can be significant. When "The Office" aired on NBC on April 5, Nielsen said there were 5.8 million people watching. Add in the people who recorded the episode and watched it within the next week, and viewership swelled to 7.6 million, a 32% increase, Nielsen said.

"The Sopranos" is another interesting case study. For its first four episodes this season, the show averaged 7.4 million viewers for its weekly Sunday night premiere, down from 8.9 million at the same point its last season.

But HBO shows each new episode eight times a week. Between the multiple plays and DVR viewing, each episode this spring gets 11.1 million viewers, down from 13 million last year. And these figures don't count people who watch on demand.

Numbers for "The Sopranos" may be down because people can watch whenever they want. They may not be as interested in the show as they used to be -- or it could be a combination of both.

Television has made billions based on how many people watch a show at its regular time. That idea may already be obsolete. So should the industry use DVR viewing when setting ad rates? If so, how quickly must people watch the shows -- within two days? A week? What about people who watch shows on their cell phones or on network Web sites, which Nielsen doesn't measure yet? Later this month Nielsen will begin measuring how many people watch commercials. Should those be used to compute advertising costs?

Right now, none of those questions have answers.

However, "if we continue to do business assuming people will watch television as they always have," said NBC's Wurtzel, "it's a dead-end game."

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