Comeback Trail: Broadcast TV Storms Into Fall

Stronger Lineups, Better Talent Fuel Ratings Growth and Ad-Rate Hikes

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NEW YORK (AdAge.com) -- Cancel the funeral: Broadcast TV is alive and kicking harder than it has in years.
'Grey's Anatomy' is just one of a slew of blockbuster broadcast TV shows pulling in high ratings and pushing 30-second spot rates to new heights.
'Grey's Anatomy' is just one of a slew of blockbuster broadcast TV shows pulling in high ratings and pushing 30-second spot rates to new heights.

Price levels
Audiences have shown up in droves for the start of the fall season; 30-second-spot prices are reaching some of the highest levels of all time; marketers are throwing more money at the medium; and Wall Street is betting on CBS over cable stronghold Viacom. Doesn't sound much like a business in decline, does it?

Of course no one really thought broadcast was about to die, but the 800-pound gorilla in the media universe has had to weather numerous threats to its well-being and attendant inches of ink proclaiming its imminent demise. The first round of obits was written when its cable siblings started nipping at its audience with their "niche" network story. More recently there's been the endless waves of new-media attacks that were meant to absorb potential viewers' time and splinter broadcast audiences into little, difficult-to-monetize pieces.

Broadcast's reach unrivaled
Yet broadcast's reach is still unrivaled and is spiking this fall season. In total viewers, the networks have already outperformed last year for the first week of the season -- 42.3 million viewers showed up for premiere week, compared with 40.7 million last year.

ABC's "Grey's Anatomy" pulled in 25.4 million viewers Sept. 21. That rating would have put the show on the top-five list 10 years ago. While the first week's numbers don't reflect how the entire season will play out, keep in mind that last season's No. 1 show, Fox's "American Idol," drew 31 million viewers on average, more than the 30 million that NBC megahit "Seinfeld" drew during the 1994-1995 season.

Of course, the threats to broadcast's hegemony are real and are really taking a toll -- its overall audiences are declining year on year. But the fall season shows that the TV chiefs are fighting back. All the networks have hired high-priced talent, invested in costlier productions and are getting savvier about promoting their wares on every outlet from online to VOD. Those efforts appear to be working -- for the moment -- especially as emerging platforms for viewing TV programs remain, well, emerging.

Biggest audience around
With the networks and media agencies still dealing in live-only viewers, the audience advertisers pay for is getting scheduled ad messages, not user-controlled and time-delayed messages. And even if that audience ultimately is smaller than the one 10 years ago, it's still the biggest one around.

While it's tough to make on-air-to-online comparisons, it takes internet video weeks to get anywhere near the audience numbers the broadcast networks have delivered. Yahoo, the top online property in terms of unique video streamers, aggregated 37.9 million people for the month of July, according to ComScore data released Sept. 27. The typical video streamer viewed an average of two streams a day, but of course, it's unlikely each streamer viewed the same two streams each day.

At least one beleaguered ad buyer said the effort and cost involved in keeping on top of new media has his agency questioning whether it's just simpler and cheaper to target the mass audience and live with the waste. A number of indicators have suggested recently that the online ad market is slowing, including a warning from Yahoo and a forecast from eMarketer that suggested online spending would be down in 2006 from a projected $16.7 billion to $15.9 billion. (Broadcast-TV ad revenue in 2004 was $46.3 billion, according to Universal McCann, including network, spot, syndicated and Spanish-language, and that was up 10% from the year before.)

Commercial ratings impact
Even the specter of commercial ratings -- billed as one of the biggest threats to broadcast TV -- could turn out to be a boon. The initial data show broadcast commercial ratings to be much more stable than cable's, and that more broadcast viewers stick around through the ad breaks than cable viewers. The drop from programming ratings means that, with fewer ratings points to go around, broadcasters can most likely command greater costs per thousand.

Some might argue that the broadcast networks are adept at tooting their own well-worn horns, but advertisers, to some extent, agree. While the upfront was lackluster, the money that some suspected had been held back for digital plays showed up right before the season's kickoff, with marketers adding dollars to their original upfront commitments. Buoyed by reasonable pricing, increased interest not only in prime time but also evening news -- Katie helped! -- media buyers are adding to their initial upfront commitments.

Even struggling NBC took advantage of agencies' interest in shifting the deal-making paradigms, by making guarantees against specific engagement metrics for the first time. Ad Age's own pricing chart speaks to the continued financial strength of the 30-second spot on network TV. The unstoppable "American Idol," airing next year as often as three times a week, commands an average of $620,000 per spot. Only three years ago, NBC's "Friends" was the top earner at $473,000.

New shows doing weell
Just two weeks into the 2006-2007 season, the expected stalwarts -- such as CBS's "CSI" and NBC's "ER" -- aren't the only ones performing well. The freshman class, including ABC's "Brothers and Sisters" and NBC's "Heroes," are among the top performers so far, as are CBS's "Shark," starring James Woods, and "Smith," starring Ray Liotta and Virginia Madsen.

Broadcasters invested more in their new shows, and that's attracted more than just viewers. Bigger-name talent is now more willing to work for the networks. At the TV critics' annual press tour in Pasadena, Calif., this summer, many stars enthused about how happy they were working for the risk-taking broadcast networks rather than toiling on any of the narrow range of vanilla movie scripts offered by Hollywood. Veteran media buyers, used to carping about the quality of network offerings, also have high praise for the new season, describing the shows as the best crop in years.

"What we've seen, from ABC's perspective over the last couple of years, is a creative renaissance, tremendous risk-taking, with [Entertainment President] Steve McPherson leading the charge," said Anne Sweeney, co-chair of Disney Media Networks and president of Disney-ABC Television. "Added to this great creative is the growth of digital, and the attention is thrown on the companies that are the hit makers. In a large, complicated industry, one thing digital media -- iTunes and ABC.com -- did was to point to creative excellence to drive the new opportunities."

NBC digital properties
Those opportunities seem to already be paying off. NBC Universal Chairman Bob Wright predicted last week at an Advertising Week event that digital revenue for the year would be in the region of $400 million-$500 million. The NBC network is in charge of selling the iVillage property and the new open access video-sharing syndication business, NBBC.

Speaking at a Goldman Sachs conference Sept. 19, CBS CEO Leslie Moonves predicted that revenue and profits at the CBS Corp. would be better in 2007. "We can get paid for our content in a hundred new ways," Mr. Moonves said. "We can grow more than low single digits." The stock, generally regarded as a bellwether of broadcast-network health, is up 10% since the beginning of the year.

Even media buyers are willing to give broadcast its due. "Broadcast networks are looking as great as they ever did. When Bravo's 'Queer Eye for the Straight Guy' came out, everybody said cable's hot and the networks are dead. People are finally realizing they're not dead," said Jon Mandel, who is taking on a senior role within Group M, which controls $11 billion dollars in advertising spending. Mr. Mandel said the stream of dollars online is mainly incremental ad dollars drawn from other sources that neither the networks nor the media agencies ever had their hands on. "There's never been such a plethora of programming for consumers in the history of the media. It's all additive."
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