Outlook 2008: Network TV

The prolonged Writers' Guild of America strike has rendered the financial picture for the broadcast networks unclear—adversely affecting the current TV season as well as casting a cloud over next season.Analysts predict broadcast revenue growth to fall between 5 and 7 percent in 2008. Lee Westerfield of BMO Capital Markets Corp. projected that broadcast network ad revenue for all dayparts would rise by 6.2 percent to $17 billion, with just over $2 billion of that coming from prime-time scatter. "There is no substitute for broadcast TV for brand marketers," Westerfield says.Despite some ominous indicators, Westerfield does not believe there will be an economic recession. Other than some softening among a few big ad categories, including home products and financial services, advertiser demand should be strong in 2008, he predicts.Even if advertiser demand is strong, however, the broadcast nets may not have enough available air time to accommodate marketers.As 2007 ended, all the networks were in precarious make-good positions, and NBC, because of prime-time ratings shortfalls, was already giving advertisers cash back for ratings underdelivery in the fourth quarter. The outlook for first quarter is not much better, since few advertisers exercised cancellation options from their upfront buys.With the writers' strike entering its third month and with no new, first-run scripted programming in the works, broadcast prime-time viewership is expected to continue to decline, worsening the make-good situation. And the more make goods the networks have to continue doling out, the less advertising time they will have to sell.Although no one would admit to it on the record, some network executives are hoping the strike will lead to changes in the programming production cycle. Their rationale: If the nets load up on reality shows and viewers come to embrace reality as much as scripted fare, a money-saving model will emerge.Recently, ABC has enjoyed some modest short-term success with the game show Duel, as has Fox with Are You Smarter than a Fifth Grader? and Kitchen Nightmares, but most other network attempts at reality shows have not been as successful for the long haul."Reality show audiences are borrowed audiences," says one industry research executive. "You can see that in the way the audiences decline in huge numbers for the shows leading out of even the most successful reality shows."Also, network watchers agree, a huge make-good carryover into next season could create unprecedented chaos for the networks—and put advertisers in the position of seriously hunting for alternative methods of reaching viewers. A tight spot indeed.

Brand Marketing

Outlook 2008: Network TV

John Consoli

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John Consoli