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War's Slow Buildup Limits Network Losses

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NEW YORK Perhaps it was because the war had been building up for some time, but by the end of last week, the television business -- the Big Four broadcast networks, cable networks and local stations -- had suffered a lesser financial hit from covering the outset of the conflict with Iraq than many had expected. But at press time last Friday, as the U.S. stepped up its bombing campaign to far more significant levels, it was unclear how much more regularly scheduled programming might be pre-empted and if more advertisers would try to get off TV.

The slow escalation of combat in the opening days of the war enabled at least some of the broadcast networks to air their regularly scheduled programming in prime time, mitigating at least early-on the impact of advertising losses resulting from the switch to continuous, commercial-free, all-news coverage.

And while many advertisers expressed a desire to not have their commercials run in potentially grisly war coverage, most allowed their scheduled ads to air on the Big Four networks, which expansively covered the early days of the war but did not go wall-to-wall.

A switch to continuous ad-free coverage of the war in prime-time would mean ad revenue losses for ABC, NBC and CBS of about $20 million each per day, according to media buyers. Fox would lose about $8 million daily. As it played out, however, during the first 44 hours from the start of combat on March 19, instead of losing a potential $32 million CBS and NBC only took about $14 million in revenue hits, buyers estimated. ABC, which was the only Big Three network to pre-empt its prime-time entertainment programming on March 20 for commercial-free war coverage, took an estimated $24 million hit over the 44-hour period.

After NBC News first broke to coverage on March 19 at 9:33 p.m., the broadcast networks and cable news channels all stayed with commercial-free news the rest of the night. From last Thursday morning through Friday afternoon, however, the networks chose to switch out of news coverage when they could and ran commercials. CBS carried the NCAA basketball tournament Thursday night, while NBC ran the first two hours of its Must See TV lineup. ABC and Fox pre-empted all prime-time programming in favor of news coverage, but as one media buyer noted, ABC's scheduled Are You Hot? and Fox's Married By America "would not have gotten any audience anyway." The reality programs "are shows that advertisers probably would have wanted to pull out of" on a night when the other networks ran war coverage, the buyer said.

Ad revenue losses were expected to escalate over the weekend, however, as the U.S. military on Friday afternoon began the first phase of its "shock and awe" bombing campaign of Iraq, and Iraqi forces offered some resistance to U.S. troops advancing toward Baghdad.

Tempers did flare between some broadcast-network sales executives and a handful of buyers, who, fearing potential viewer backlash, demanded that their clients' ads be pulled in all programming for a week after the war began. At least two of the Big Four networks initially balked at those demands, reasoning that no ads would run in war coverage anyway, but that once regular entertainment fare returned, the advertisers were under contract to run.

"We're not opposed to discussing switching of an ad that might not be in the best taste, and realize there are certain categories that may not be appropriate to run ads during a conflict," said one network sales exec. "But for an advertiser to say they want to pull all of their ads for 7 or 10 days and not pay for them is obnoxious. They have a contract to run these ads and can't unilaterally decide they won't pay for them."

Mike Drexler, CEO of Optimedia, said that both sides have to realize the extenuating circumstances and "drop their clubs," adding: "It's all about discussion, relationships and negotiation, and it needs to be done on an advertiser-by-advertiser basis because all products and categories are different."

Several major advertisers refused to be scared off by the war. When NBC aired its regular Thursday comedies, for example, General Motors, Wal-Mart, JCPenney, Wendy's, Lowe's, H&R Block, Toyota, Ford, Motrin and several movie companies all advertised. And Chrysler, V8, Kit Kat, Bayer Aspirin, GM and some pharmaceutical companies ran spots on NBC's and CBS' Thursday-evening newscasts.

"We don't want to pull our advertising," an executive for one major retailer told Mediaweek. "A lot of advertisers learned after 9/11 that once you go off the air, it can take a while to re-express and find holes to get your ads back on the air. We just don't want our ads in TV newsmagazines that feature war coverage."

The situation appeared to be much more civil on the cable side. The major cable news networks -- CNN, Fox News Channel and MSNBC -- had already planned to operate commercial-free for at least 48 hours once the war began and had discussed with advertisers in advance how to reallocate those dollars when commercial breaks returned. "We have been there so many times before," Greg D'Alba, executive vp of CNN sales, said on Friday. "We have left our office numbers, home numbers, cell phone numbers and pagers with all our advertisers and plan to be in constant contact with them at night and over the weekend."

A TV audience survey sponsored by media agency MediaVest (whose client roster includes Procter & Gamble and Kraft), completed in early March, found that 70 percent of viewers do not find advertising offensive during a war or conflict, as long as it runs in non-news programs. The survey also found, however, that 60 percent of those polled believe commercials should not be of a humorous nature. Another significant finding of the viewer poll -- 71 percent believe it is appropriate for the networks to air commercials two days or less into or immediately following a "national crisis."

On the programming side, 67 percent of viewers said they will not watch reality shows during the war, compared to 28 percent who said they will not watch sitcoms and 29 percent who will not watch dramas.

Mel Berning, MediaVest president of broadcast, said viewer polling will be done continuously, with results being fed to the agency's clients to help them evaluate their ad decisions.

Broadcast and cable entertainment networks were taking a close look at the content of upcoming episodes of their original series. But most said that while the war may be cutting into the networks' prime-time schedules, it has yet to impact the content of most scheduled programming. MTV, noting that much of its young audience gleans its news from the network, chose to hold back its regular Spring Break coverage in favor of interviewing young troops overseas. But aside from eliminating some sensitive material from schedules, few cable entertainment nets altered their lineups, citing a need for viewers to have alternatives.

"The vast majority of our advertisers have remained on. They realize that our programming will be an appealing respite for the viewers," said Steve Gigliotti, senior vp of advertising for Scripps Networks, which includes Food Network and HGTV. "A handful of advertisers have asked to be off for 48 hours. Some of those advertisers you would expect -- tourism and airlines, for example. "

Fox, if it did not elect to run Fox News Channel's war coverage in prime time again on Sunday night, was planning to switch out the action movie True Lies in favor of The Lost World: Jurassic Park 2. ABC, meanwhile, pulled the documentary-style military series Profiles From the Line from its schedule. "We don't want to blur the line between entertainment and news, and this series could confuse the viewer at a time of war," said Jeff Bader, executive vp of ABC Entertainment.

Scripted series receiving the most scrutiny are those with plot lines that could allude to current events, ranging from NBC's The West Wing to Fox's 24. 24 is scheduled to return to the Fox schedule on Tuesday night, and a Fox representative said at press time that there were no plans to pre-empt or postpone it.

A recent study by media agency Carat examining the impact of the Sept. 11, 2001 terrorist attacks on prime-time viewing patterns found that shows like Law & Order and the CBS military drama JAG attracted large audience hikes during the month following the attacks.

For stations, the financial impact of the war on network affiliates was uncertain entering the weekend. "At this point it is very difficult to project financial impact because we don't know network plans hour-by-hour, day-by-day," said Jack Sander, Belo Corp. executive vp of media operations and TV group president. He said Belo had lost minimal revenue so far from unaired local spots. "We lost the NCAAs on [March 20] in the afternoon, so there was some revenue loss there, but nothing major."

But Alan Frank, president of Post-Newsweek Stations, owner of six outlets including Independent WJXT in Jacksonville, Fla., had a different take. "The financial impact is immediate and deep," said Frank, "and the longer the wall-to-wall coverage, the deeper our losses. Even if we wished to run commercials now, most advertisers do not want to run in war."

According to the Television Bureau of Advertising, in third-quarter 2001 (following the Sept. 11 attacks), local TV ad revenue plunged 24 percent compared to the same period a year earlier. A TVB representative suggested that advertisers should be cautious when they pull out. "Advertisers have to be sensitive during times like this, but in general it can be [a risk] to be quiet for too long," the TVB rep said.

Meanwhile, many ABC affiliates were upset when the network halted its news coverage at the end of prime time on March 19 after earlier telling stations it would continue broadcasting. Most affiliates were dark for several minutes before they could scramble to get their own local newscasts up and running.

-- with Sandy Brown, A.J. Frutkin and Megan Larson