Ad base shrinking: TV news can't carry own weight

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Forget the crisis at CBS News; the real crisis in broadcast news is its inability to attract advertisers.

The war in Iraq, the presidential elections and the cost of covering the Asian tsunami heaped a huge financial burden on broadcast network news divisions. The added strain, as well as the shakeup in CBS's producer ranks last week, couldn't come at a worse time. Evening news has suffered significant ratings erosion and contributes a tiny percentage of total revenue to its parent companies. On top of its other woes, its mainstay ad category, direct-to-consumer pharmaceuticals, has suffered its own travails with the Food and Drug Administration scrutinizing ad claims more closely and ordering ads off the air.

vanity daypart

"It's a vanity daypart more than anything else," said Peggy Green, president-broadcast at Zenith Media, part of Publicis Groupe, whose clients include Toyota Motor Sales USA and Nestle. "The news is very good for certain categories, but the average age has gotten older and if pharmaceutical companies are spending less, then [network] revenue goes down. It is definitely an issue for the networks."

Viacom's CBS Evening News was the most heavily reliant on pharmaceutical spending. Just under a third of the network's advertisers were in the pharmaceutical category, 32.4% compared with 29.8% for Walt Disney Co.'s ABC and 30% for General Electric Co.'s NBC Nightly News, according to TNS/Media Intelligence CMR, through the third quarter of 2004.

But even that preponderance of DTC ads hasn't been enough to boost news departments' take. The top three broadcast network news units provided $830.6 million, or 10.5% of total revenue, to ABC, CBS and NBC ten years ago. By 2004, that had dropped to 4.8% of total revenue, according to an Advertising Age analysis of data provided by the Broadcast Cable Financial Management Association.

Revenue has followed a steep decline in ratings. Thirty-five years ago, the three nightly news broadcasts earned a combined rating of 35.2, representing a 75 share of network audience. During the 1994/1995 viewing season, the three network evening news broadcasts drew a 25.5 rating, 52 share.

The current broadcast season shows a much-changed picture. The three evening news shows earned a paltry 19.1 rating, 37 share. NBC is the ratings leader, bringing in 10.6 million viewers compared with ABC's 9.4 million and CBS' 7.3 million.

For advertisers, those are still big numbers given that cable news outlets offer less than half that, but it still points towards an economic crisis, especially for CBS.

Since the season began, all network news shows are down in total viewers, but third-place CBS Evening News has dropped from 8.1 million viewers to 7.3 million viewers season to date, according to Nielsen Media Research.

CBS News, Ms. Green points out, already gave back time to its local affiliates, so it has fewer ad units to sell. "There's going to be a shakeout. There are too many GRPs [gross ratings points] around," she said.

financial impact

Ed Gentner, senior VP-group director, national broadcast, Publicis Groupe's MediaVest said, in reference to CBS News ratings being down around 8% in households season-to-date, "The fact that the ratings are down will have a financial impact." A CBS spokesman had no comment.

Mr. Gentner adds that his ratings analysis shows that when major news events hit, both broadcast and cable news viewers spike. But that "the network news saw a moderate spike, while cable news saw a big spike."

Fox News President-Ad Sales Paul Rittenberg said news attracts only around 200 active advertisers compared to entertainment programming which gets between 500 to 600. Cable outlets, like News Corp.'s Fox News, Time Warner's CNN and MSNBC, are now in the hunt for those marketers' dollars. CBS' troubles, Mr. Rittenberg said, "are an opportunity for us. There has got to be a lot of disgruntled viewers."

contributing: bradley johnson

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