NEW YORK (AdAge.com) -- Three of the nation's five big broadcast networks showed year-over-year declines in 2008 ad revenue, according to TNS Media Intelligence, a sign that one of the media industry's most stable venues continues to struggle in an extremely challenging and changing economic and media landscape.
In 2008, only News Corp.'s Fox and General Electric's NBC mustered gains in ad sales, and one analyst suggested the two networks may have benefited from broadcasting either the Olympics (NBC) or the Super Bowl (Fox) in that year. "In general, it was a disastrous year for most advertising-based media," said Marci Ryvicker, a media-industry analyst for Wachovia Capital Markets.
The ad-sales declines are likely to put the big networks in a somewhat weakened position when it comes to negotiating in this year's coming upfront market, when the outlets typically sell 75% to 80% of their ad inventory for the coming season. Already, pricing for so-called scatter inventory, or ad time sold closer to air date, is holding close to or running a little lower than pricing for ad time in last year's upfront market, according to analysts and media buyers, suggesting that buyers could press an advantage.
CBS Corp.'s CBS saw a 6.7% decrease in ad revenue in 2008, when ad sales totaled about $6.64 billion, according to TNS, compared with about $7.12 billion in 2007. CBS broadcast the Super Bowl in 2007 and was hurt by the writers' strike in 2008 while rivals benefited from popular reality fare such as ABC's "Dancing with the Stars" and Fox's "American Idol."
Meanwhile, Walt Disney's ABC saw ad revenue decline about 0.8% in 2008, TNS said, to about $6.16 billion compared with about $6.21 billion in 2007. CW, jointly held by Time Warner and CBS, saw ad revenue decline approximately 13.1% in 2008 to about $790 million from about $909 million in 2007. The network had three fewer hours of time to sell in the last part of the year, owing to a time-share agreement with a third-party producer for its Sunday-night prime-time schedule.
NBC, however, saw its ad intake rise about 8.3% in 2008, to about $5.39 billion, compared with about $4.98 billion in 2007. Fox saw ad revenue increase about 5.4% with 2008 ad revenue coming in at about $4.59 billion, according to TNS, compared with about $4.35 billion in 2007.
The networks either declined to comment or were not able to make executives available to respond to queries.
The 2008 numbers are notable because it's relatively rare for broadcast revenues to decline from one year to the next. Indeed, until 2008, CBS's ad revenue as measured by TNS had risen steadily from 2005, when the network took in about $6.674 billion. Likewise, ABC took in about $5.897 billion in 2005, and had seen steady increases. Of the four biggest broadcast networks, only NBC, beset in the last several years by ratings declines and programming issues, saw its 2007 ad revenue decrease noticeably from the about $6.02 billion it raked in during 2006.
In industry circles, the TNS numbers are used in widespread fashion, but they have their flaws. Analysts point out the data are often based on commonly available rates, when it's well known in the ad world that each deal is often founded on very specific terms. So the numbers are often taken as directional indicators rather than gospel (which is why it's odd to see lowly-rated NBC show an increase while top-rated CBS declines).
After slogging through a very difficult back half of 2008, suggested Wachovia's Ms. Ryvicker, "broadcast has improved." She noted foreign automakers, U.S. movie studios and telecommunications marketers have been active in the ad market, and that there's a sense the TV ad market "has stabilized. To knock it down so much more this year, something drastic would have to happen."
Even so, media buyers suggest this coming upfront will be a long, plodding one for the broadcast networks. Many advertisers are playing things much more close to the vest, canceling options for ad inventory they had reserved in last year's upfront and instead doling out money on an as-needed basis. Buyers report that few clients are even focused on the annual sales event, which suggests it may take much longer than usual for budgets to be registered and deals to get done. The broadcast-network upfronts typically commence in late May and are completed in June, though they have been known to last into the early summer when the economy is not robust.