The final month of the 2016-17 broadcast season was something of a disaster from a ratings perspective, although in keeping with the dynamics of the TV marketplace, the exodus of viewers didn't precipitate a drop in ad spending.
According to new research from Standard Media Index, broadcast ad revenue in May ticked up 1% over the month a year earlier, as the networks booked some $1.36 billion in commercial time. Broadcasters registered the slight increase despite having to gut out a 13% drop in primetime C3 ratings during the month, and a 14% drop in total-day deliveries.
In aggregate, the networks in May averaged a 4.1 C3 rating in primetime, which works out to 5.23 million adults 18 to 49. In the year-ago period, the broadcasters averaged a 4.7 rating in the C3 currency, which translates to a hair under 6 million viewers in the demographic most desirable to advertisers.
The price they paid
SMI noted that broadcast primetime spend was down 4% in May, with Fox taking the biggest hit among the Big Four networks, dropping 8% as a result of lowered unit costs in shows such as "Empire." Price chopping aside, the cost of buying a 30-second slice of airtime in "Empire" remained dizzyingly high; according to SMI's estimates, the going rate for a unit in the four episodes that aired in May was a princely $568,700.
To say that "Empire" wasn't much of a bargain for advertisers that bought time in the final four episodes is to traffic in profound understatement. Per Nielsen live-plus-same-day data, the last leg of season three averaged 2.82 million adults 18 to 49, and while that demo yield improved to around 4 million targeted viewers upon conversion to the C3 metric, the price per thousand viewers was still high enough to trigger nosebleeds.
A far better deal could be had by picking up a unit or two in ABC's "Grey's Anatomy," which closed out its 13th season with an average C3 delivery of around 2.8 million adults 18 to 49. The cost of a 30-second spot in broadcast's second highest-rated drama was just north of $200,000 a pop, according to SMI, which aggregates its data directly from the billing systems of a group of media agencies that accounts for 75% of all U.S. ad spending.
At least one long-running comedy in May provided advertisers with a favorable, um, bang-to-buck ratio. "The Big Bang Theory" closed out its tenth season with a pair of episodes that averaged 12.7 million live-same-day viewers and a 3.8 rating in CBS's target demo, which works out to 4.57 million adults 25 to 54. Per SMI, the average cost of a standard unit in the May 4 and May 11 episodes was $275,000.
With an average draw of a 3.1 among adults 18 to 49 and a 4.5 in CBS's dollar demo, "The Big Bang Theory" this season ended "Empire's" two-year reign as broadcast TV's top-rated scripted show.
Perhaps some of the best broadcast bargains were to be found among the ranks of the competition series. CBS in May aired four episodes of "Survivor," which on average delivered a little more than 3 million adults 25 to 54. The average unit cost for each show was $136,000.
While CBS saw its May C3 ratings drop 18% from the year-ago period, the network's sales volume during the month slipped just 1%. Per SMI, NBC's ad revenue dipped 4% in May as its primetime C3 deliveries fell 8% while ABC's sales were off 6% during a period in which 15% of its ratings points had been wiped off the board. Supply and demand: It's a hell of a drug.
The SMI data does not take into account the NBA Finals on ABC, which tipped off on June 1, or four of the six NHL Stanley Cup Final broadcasts on NBC/NBCSN. That said, the company estimates that ESPN and TNT raked in $24 million fewer NBA dollars in May, as the Warriors and Cavs conspired to eliminate 11 possible Semifinals and Conference Championship games from the schedule. (The sweep-happy Warriors were particularly complicit in putting the squeeze on available ad inventory; basketball fans this season were treated to just 79 of a possible 105 NBA postseason games, the fewest in 10 years.)
According to SMI, the average cost of a 30-second ad in one of the 29 May NBA playoff games that aired on TNT, ESPN and ABC was $135,333.
News props up cable
On the pay-TV side of the ledger, cable networks posted a 2% increase in May ad sales revenue, gains that coincided with a 13% drop in primetime C3 ratings. Cable hasn't put together a month of organic year-over-year ratings growth since January 2014.
All told, cable networks last month raked in approximately $2.6 billion in ad sales revenue.
Cable ad sales have been inflated by the endless bizarro news cycle and its ongoing impact at MSNBC, Fox News Channel and CNN. While MSNBC has been the biggest beneficiary of the so-called "Trump Bump" -- thanks in large part to its red-hot "Rachel Maddow Show," the network saw its monthly ad sales revenue soar 43% compared to May 2016 -- it still has a long way to go before it can bridge the pricing gap between it and Fox News.
For example, while Maddow last month won the all-important news demo for the first time ever (her show averaged 637,000 adults 25 to 54, topping the 525,000 advertiser-coveted viewers who tuned in to Tucker Carlson's FNC program), MSNBC's ad rates still pale in comparison to its competition. According to SMI, the average 30-second spot in "Tucker Carlson Tonight" fetched a cable news-high $14,100, or more than three times the going rate in Maddow's show -- this despite the fact that her pricing has increased 69% since last May.
Also seeing significant gains in May were a host of lifestyle networks such as Discovery Channel, HGTV, Food Network and E!. "The national TV market is being kept in the black by cable news and lifestyle programming, both of which racked up some big year on year gains in May," said Standard Media Index CEO James Fennessy. "On the flip side, the major networks will be very concerned at the continued softness in broadcast primetime."
TV last month was given a boost by categories like pharma, which boosted its spend by 19%, or $40 million, and quick-service restaurants (+11%) and telecom (+10%). At the same time those categories were pouring money into TV, auto and movie dollars were in retreat. Auto spend fell 5% compared to last May, bringing the category's year-to-date deficit to negative 13%, nearly $238 million dollars fewer than it invested during the first five months of 2016.
Entertainment spend was down $60 million last month, marking a 24% drop compared to the year-ago period.