As the network TV upfront ad sales period comes to an end -- the numbers are surprisingly strong-- back up into the range of $9 billion in advertising revenues, by some estimates up 3% over last year. ABC and CBS are pretty much done with their upfront ad deals, with ABC snagging the biggest price increases per rating point, up 8.5% to 10%. (This means that ratings aren't necessarily up, but advertisers are paying more for lower ratings.)
This puts ABC prime time revenues of more than $2.4 billion, with
about 20% of its inventory left to sell in the "scatter market"--right before or during the season. CBS, which kept its schedule pretty much the same, says it has price increases of about 8% this year, giving CBS a total of about $2.5 billion in ad commitments for the season--up 5% from last year. And NBC did the first big upfront deal-- selling a chunk of its inventory to Group M for $1 billion. The big change this year, is that the ad prices were based on Nielsen's new commercial ratings data, rather than ratings of the shows themselves, and the sales counted viewing on DVR up to 3 days after a show's initial run.
I just interviewed Susan Whiting, who runs Nielsen Media Research,about the huge impact of Nielsen's measurement of TV viewers who "time shift" with DVRs and watch shows later (it's about 17% of TV viewers) and most recently, the impact of TV commercial ratings. Just last month, a TV ratings system launched--that's easily telling nets and advertisers how many people actually watch commercials, and yes--a good chunk of the time they do watch commercials even when they're watching a show on TiVo later.
The big surprise that Nielsen found, is that commercial viewership fluctuates widely depending on when and how commercials are placed in a program. Longer "pods" (more commercials at once), or just short little commercial snippets, placed at the beginning of the middle of a show--these decisions entirely affect viewership. And this new information is sure to totally transform the way commercials are programmed. Whiting also told me that despite the fragmentation in the marketplace, 90% of people still watch their TV at home, though their homes may have more TVs. So no, network TV isn't dying-- people are just consuming more entertainment in addition to it.
Bank of America's Jonathan Jacoby says today in a report that while upfront sales are heading toward 5% year over year growth, it doesn't necessarily correlate to higher total annual growth, because of a number of issues--including how much inventory the nets are putting out there for the upfronts, and how much they're saving for the scatter market. Plus, let's not forget that the upfront networks have a number of cancellation options. Jacoby also points out that commercial ratings may benefit the broadcast networks, but a reported 8% average decline in cable commercial ratings may have hurt the cable networks.
Needless to say, there are certainly plenty of changes afoot that make comparisons this year tough to sort out.
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