THE UNCERTAINTY OF how the new broadcast prime-time television season, which officially began last week, will play out among viewers has left the financial community and TV executives in a state of flux as far as ad revenue predictions go for the fourth quarter and for 2007.
ABC has nine new shows on the fall schedule, NBC has six and Fox has five. In addition to their new shows, many of ABC's and NBC's returning shows have shifted time period. Add to that the new CW Network, most of whose schedule consists of former WB and UPN shows leading into and out of each other. Plus, every network is streaming a slew of their shows online or offering them on cable system video-on-demand or via iTunes. So no one really knows what impact all of this will have on viewing patterns, ratings and, thus, the impact on ad dollar allocation.
"For network broadcasting, the fall advertising picture remains a blur," says Lee Westerfield, senior media analyst at Harris Nesbitt. He says that while the top-rated returning prime-time series, as well as NBC's new Sunday Night Football, will bring in sizable ad prices, those shows will be dwarfed by all the new programming which could make or break the ad packages sold by the networks.
Overall, Westerfield says he is predicting only a flat to 1 percent ad revenue gain overall for the broadcast networks in fourth quarter. And that uncertainty makes it harder to project what will happen in 2007.
Dave Poltrack, executive vp and chief research officer for CBS Corp., who traditionally has his projections ready for 2007 by now, says there are too many intangibles, too many unknowns, to make an accurate forecast for next year at this point. "There are so many new shows, shows in new time periods; plus, a lot of advertisers held money back in the upfront," he says. "So, many of the networks have more ad inventory left to sell in scatter. When scatter becomes such an important factor, it makes the entire process hard to predict."
Poltrack says it will be necessary to monitor viewer patterns for several weeks to see what the impact of all the online streaming and VOD availability of shows has on live ratings. However, he's certain that broadcast network TV shows will get much more sampling with all the alternative ways for viewers to watch them. Thus, the good shows may pick up additional viewers, meaning higher ratings, leading to more advertiser demand in scatter.
Analysts at media agency ZenithOptimedia say that the alternate availability of shows will "create more opportunities for the networks to attract viewers," according to its most recent forecast.
In its Global Entertainment and Media Outlook report, financial company PricewaterhouseCoopers concurs: "We believe there will be no meaningful cannibilization, and, in fact, expect that expanded distribution [of TV shows] will enhance the network audience. The subsequent airings will allow viewers to catch an episode they missed."
ZenithOptimedia is predicting that ad spending on network television will be up 4 percent in 2006 and will increase another 3 percent in 2007. PwC is projecting that broadcast network TV advertising will be up 6 percent in 2006 to $19.1 billion and up 2 percent in 2007 to $19.5 billion.
Steve Grubbs, CEO of media agency PHD, says he "applauds" broadcast networks for expanding the platforms on which they televise their programming, adding that as long as the networks can accurately measure the additional audiences, the advertisers will be willing to pay more for that extended reach. "If they are providing more audience, we will come up with an equitable way to pay for that audience," Grubbs says.
As far as money held back by advertisers in the upfront, ZenithOptimedia is still not sure where those dollars will eventually go. "It is unclear if this is simply posturing by the buying community," analysts there say, or if that money will be invested down the road as the ratings picture becomes clearer and some of the digital platform deals that the broadcast networks touted in their upfront presentations take shape.
John Consoli writes about network television for Mediaweek.