NETWORK TV: STILL AMONG THE MASSES By ERIC SCHMUCKLE

For a business that's supposed to be going the way of the dinosaurs, network television is showing surprising resilience. Consider that profits are up among the

Not that the nets are home free. Last year’s ratings uptick proved to be an anomaly, just as agency forecasters had predicted (ratings are still slipping, but at a slower pace). Meanwhile, rival media continue to gain strength and new types are nearer to fruition. The industry also is threatened by the arcane issue of retransmission consent, a high-stakes game of chicken that pits broadcasters against cable companies and could disrupt the TV business and the advertisers who depend on it.
Yet network television remains the biggest game in town, and there seems to be renewed appreciation for that fact. With all the talk about a 500-channel world, broadcasters are beating the drums about their mass audiences – not just for their utility to advertisers, but as a cultural unifier in an ever more fragmented society. Leaving aside the socio-political implications (Tim Allen for president, anyone?), mass reach is clearly a strong selling point. ‘You’ll see the needle going up to the 80- or 85-share mark when we put the right programs on,’ says Larry Hoffner, executive vp/sales for NBC. ‘That’s what the marketers are looking for.’ The huge audiences pulled in by Oprah Winfrey’s interview with Michael Jackson and the Cheers finale are just icing on the cake. Media analyst Dennis McAlpine of Josephthal Lyon & Ross says the total network pie in the upcoming season will be ‘something over $11 billion.’ That modest increase of 2-3% from the year earlier is a decent gain considering the vigorous competition from new cable networks and syndicated shows.
One of the most encouraging signs for broadcasters was the 1993-94 upfront market. Agency media buyers had predicted a $300-million drop from ’92-’93 in upfront commitments for primetime shows. But when the dust cleared, the networks were down only $50-100 million at $3.5 billion. ‘The money was there,’ says Joe Abruzzese, senior vp/sales at CBS. ‘It just took a little longer to write.’
Remember, too, that this upfront was not a seller’s market. But measured in costs-per-thousand viewers, the average account still paid an increase of 1-2% across all four nets. CBS and Fox wrestled the highest raises, ABC won a token increase and NBC absorbed some price cuts. Overall, the four networks sold a slightly higher percentage of their inventory and slightly better packages of programs than in the previous year.
The networks enter the fall season with their ratings somewhat stabilized. The numbers slipped significantly last year compared to the 1991-92 season – down 4.4% – but part of that was because the ’92 Winter Olympics drew such high ratings. Some people argue that NBC’s dismal performance (off 11%) dragged the four-network average down, but CBS and Fox also posted slight losses. The upside is that, compared to two seasons ago, the numbers are relatively flat. Combined share is down only 1 point, and the combined rating is actually up 1%. (The discrepancy is explained by the rising number of TV sets per home.) Most agency seers predict the nets will lose another share point this year.
CBS is proclaimed the primetime leader because of its comfortable margin in household ratings, but that’s only good for bragging rights. In the battle for demographics – the basis on which practically every advertising dollar is committed – ABC is clearly No. 1. The network is tops in the 18-34, 18-49 and 25-54 age groups. It was also the only net to post ratings gains last year. And ABC is ahead in daytime and news. Of course, CBS does strong business in selling its core 25-54 demo, and its profits are growing.
NBC has convinced agency programmers its ratings have bottomed out, but many are equally unimpressed with the new lineup and no real rebound is expected. Fox has its work cut out. This season marks the network’s move to a seven-night-a-week schedule. At the same time, it is trying to go beyond its core audience of 18-34-year-olds. Although buyers like many of the new programs, they doubt Fox can improve its numbers while expanding its program hours. Some also object to the new programming mission. ‘I’m quite concerned about Fox,’ says Bozell senior vp Werner Michel. ‘They’re walking right into the field of the established nets.’
The crop of new shows appears to be as uninspired this year as it was last year – when there were no breakout hits and just a few modest successes (Love & War, Hangin’ with Mr. Cooper and Martin). CBS argues that Dr. Quinn: Medicine Woman is a hit, but it skews so old it’s hardly on anyone’s must-buy list.
All the excitement this fall has come in the late-night arena, where early indications are that NBC’s dominance has been broken and that CBS has a winner on its hands with David Letterman. But how about daytime? It generates more than twice the revenue of late night and used to be a network cash cow. Competition from syndication has hurt – NBC is barely a presence, and all the nets have given time back to affiliates – but demand has been quite strong lately. And in sports, it appears the nets will stop the financial bloodletting of recent years after signing risk-minimizing deals with pro basketball and baseball.
Against this rather sunny backdrop, retransmission consent has loomed as a threatening storm. In a nutshell, Congress gave broadcast stations the right to demand that cable systems pay to carry their signals. Broadcasters and system operators have been trying to hammer out deals to keep TV stations on cable by the Oct. 6 deadline.
The nets have traded retransmission rights to their owned stations for cable commitments to add new, network-created cable channels, such as ESPN2 from ABC and a talk network from NBC. But plenty of deals have yet to be signed between cable operators and the networks, their affiliates and independent stations. ‘It’s possible that some stations could get dumped from cable systems next month, wreaking havoc on viewership. But one top agency strategist says, ‘It ain’t gonna happen, because nobody wins. One can’t live without the other. They’re posturing now, but everybody’s going to cave in and it’ll all go away.’
Another cloud on the horizon is the sudden hullabaloo over television violence. The nets feel unduly singled out by Congressional grandstanders and fundraising-driven pressure groups, and rightly so, considering the uncut theatrical films that run on pay cable. Still, it will take all of their patented slick sincerity to finesse this one without some government action. Steven Bochco’s ‘R-rated’ NYPD Blue, already bucking affiliate and advertiser resistance, could hardly have come at a worse time.
But for all the potential storm clouds, the networks continue to seek silver linings. In pursuit of new avenues of growth, ABC is trading commercial time for equity in growth companies, NBC is offering an 800-number service so viewers can get info from advertisers and everybody is mulling home-shopping ventures. Even the retransmission battle, which makes cable part of the networks’ future, will help broadcasters shed their dinosaur image.
Copyright Adweek L.P. (1993)