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Time-Shifting Could Cost Broadcast TV $600 Million

The Great Commercial Ratings Debate, Round 6

By Published on . 2

NEW YORK (AdAge.com) -- Nielsen Media Research CEO Susan Whiting spearheaded the latest industry get-together on the great commercial-ratings debate yesterday and revealed data that underscored just why broadcast networks are so eager to shift away from program ratings to a new currency, one based on advertising ratings.
One estimate suggests that if the networks continue to be paid only on the basis of live viewing, lost revenue could be as much as $600 million next year compared with an estimated $300 million this year.
One estimate suggests that if the networks continue to be paid only on the basis of live viewing, lost revenue could be as much as $600 million next year compared with an estimated $300 million this year.

40% of viewers time shift
The measurement giant showed that in sample homes with digital video recorders, 40% of broadcast viewing occurs using those time-shifting devices. Broadcast networks figure that roughly half of those watching shows in playback are seeing commercials, and the netowrks are upset they are not compensated for those viewers. Networks backed down on demands to be paid for viewers watching in playback mode during the broadcast TV "upfront" ad-selling market this year, but are gearing up to argue the case when the 2007 upfront wheels around in May.

One estimate suggests that if the networks lose that fight again, and continue to be paid only on the basis of live viewing, lost revenue could be as much as $600 million next year compared with an estimated $300 million in 2006.

"Forty percent of viewers are time shifting and viewing out of the live bucket. That is so critical," said Alan Wurtzel, NBC Universal's president-research and media development. "What percent watched it within an hour? We've got to get some legitimate credit for that."

Seconds and minutes
Around 100 Nielsen clients attended yesterday's discussion about commercial ratings and while the mood was more upbeat than at previous gatherings, some critical issues remain unanswered. Still to be determined is what the timetable is for the release of Nielsen's revamped average commercial-ratings file, which will detail what viewers watched in minute increments. The average commercial minute is calculated on a per program basis and is backed by some media-buying agencies, such as Mediaedge:cia, as a more stable measurement than the second-by-second commercial ratings advocated by another media shop, Starcom, which sees little value in averages. Those in Starcom's camp argue that because most TV ads are 30 seconds long, minute-by-minute data leaves too many unanswered questions as to whether a particular marketer's ad was seen.

Nielsen is, however, enhancing another product called the "All Minute Data File," which is already available to agencies through Nielsen's analytic software NPower. It will give clients enough data for them to create their own ratings for any given minute of the day for any period of DVR playback.

Gearing up for upfront '07
Still, David Poltrack, president of CBS Vision, the network's research unit, said yesterday: "Nielsen did a good job of addressing the major issues and made a lot of progress in solving challenges. I think we're on the way to a conversion to the currency." He added, however, that whatever the status of the Nielsen product come next May, "we're comfortable that we have the analysis to build a currency base and a network sales strategy around commercial ratings for this upfront."

When NBC's Mr. Wurtzel was asked if he thought that Nielsen would be in a position to provide average commercial ratings in time for next year's upfront, he said: "I do have a sense that this is not going to be ready. I don't think it's a horrible thing if we can look at all the different data streams. The ball is in Nielsen's court, as these meetings go. This one was pretty productive."
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