While broadcasters have blamed everything from the DVR to the Olympics for a soft ad sales marketplace, Walt Disney Co. chairman and CEO Bob Iger on Thursday allowed that unspectacular programming may have something to do with recent ratings shortfalls.
Speaking to investors during the company’s FY Q4 earnings call, Iger said broadcasters this season have failed to roll out any new blockbusters. “There’s been an absence of new, big, real buzz-worthy hits,” Iger said of the freshman class of dramas and comedies. “Would I have liked ABC to have put on the schedule a really big hit at the beginning of the year? Of course. But they put on a few shows that are I think quite serviceable and have potential, Nashville being one.”
ABC thus far has launched five new series, including a brace of comedies (The Neighbors, Malibu Country) and the dramas 666 Park Avenue, Last Resort and the aforementioned Nashville. Disregarding Malibu Country, which premiered last Friday to 9.13 million viewers and a 2.1 rating among adults 18-49, the new crop of ABC shows has underwhelmed.
Per Nielsen live-plus-same-day ratings data, none of the series that premiered in September and October has been able to maintain so much as a 2.0 in the demo. After bowing to 8.93 million viewers and a 2.8 on Oct. 10, the critics’ darling Nashville has fallen precipitously, drawing 5.74 million viewers and a 1.8 in the demo in its most recent outing. Meanwhile, Last Resort and 666 Park Avenue are both down to a 1.3 rating.
Through the first six weeks of the season, ABC is averaging a 2.5 in the dollar demo, leaving it tied with Fox for last place among the Big Four. A year ago at this time, ABC was averaging a 2.8 rating in prime time.
Like every other executive with a broadcast network in his company portfolio, Iger said increased penetration and usage of the DVR has disrupted traditional prime-time viewing patterns, although he added that the C3 ratings help offset some of those apparent live losses. (ABC’s overall average in the demo improves one-tenth of a ratings point upon application of C3.)
In the period spanning July 1 through Sept. 30, ABC’s broadcast and cable properties generated $4.88 billion in total revenue, up 2 percent versus FY Q4 in 2011. Cable (ESPN, ABC Family, et al.) accounted for $3.54 billion in quarterly revenue, while the broadcast side produced $1.35 billion.
Operating income at the media networks unit improved 7 percent to $1.57 billion—the vast majority ($1.38 billion) being generated by cable.
Growth at ESPN was credited to higher affiliate revenue, although that was offset somewhat by higher programming costs related to the net’s coverage of college football and Major League Baseball. Ad sales were flat, as higher rates were offset by a 3 percent ratings decline in the 18-49 demo and as demand for the ESPN product didn’t bounce back as quickly as was anticipated following the disruption of NBC’s Summer Olympics.
Q4 scatter at ESPN is “pacing down modestly,” said chief financial officer Jay Rasulo, before adding that ABC’s scatter pricing is now “pacing in the mid-teens above upfront rates” on a percentile basis.
For the quarter, operating income at the broadcasting unit decreased $9 million to $192 million, driven by a decline in ad sales revenues at ratings-challenged ABC. Higher equity losses at Hulu also had an impact.
Looking ahead, Iger said that programming costs at ESPN will be $170 million higher in the first three months of 2013 than they were in the year-ago period, due to an increase in Pac 12 and Big 12 rights fees.
Yesterday, CBS posted its earnings for the third quarter, announcing that ad sales at its broadcast division had fallen 5 percent to $895 million. As was the case across the TV dial, the Olympics played some part in CBS’ year-over-year decline.
Also not helping matters—a fall ratings slump. Through Week 6 of the 2012-13 broadcast season, CBS is averaging a 2.8 rating among adults 18-49, a decline of 18 percent versus the year-ago period. Deliveries of adults 25-54 have been impacted similarly.
“This clearly was an unusual start to the season, with most networks’ ratings all over the place,” said CBS president and CEO Les Moonves, who added that a number of factors were shaking up the Nielsen ratings. “People are watching more programming than ever, but they are increasingly time-shifting that content through the DVR, streaming and video-on-demand. Nielsen is doing a good job of finding ways to measure this viewing, but not all of it is captured yet.”
Moonves added that year-to-year comps present a challenge, as four nights of programming were preempted by the presidential and vp debates, while Thursday nights have been shaken up by NFL Network’s enhanced football package.
“These early numbers you’re seeing are atypical,” Moonves said. “We fully expect … that when the season ends, we will once again win in viewers in 25-54 and be right there in 18-49 as well.”
Along with softer ratings for its Monday night comedy lineup, CBS has seen spotty results with its new programming efforts. The network canceled the Friday night legal drama Made in Jersey after just two episodes—a pair of previously unaired installments will be burned off on consecutive Saturday nights—and the new comedy Partners is averaging just 5.96 million viewers and a 2.1 in the demo on Monday nights.
That said, CBS has given full-season orders to its remaining set of freshman dramas. Elementary is the net’s top new performer, averaging 11.2 million total viewers and a 3.4 in CBS’ target demo (25-54), while the older-skewing Vegas is drawing 12.1 million viewers and a 2.8 in the demo.
Elementary happens to be one of the more valuable new dramas on broadcast, as clients who invested in the show during the upfront are paying around $145,000 per 30-second spot, per SQAD NetCost data. By comparison, NBC’s hit drama Revolution fetched a unit cost of just $95,000.
CBS’ priciest offerings are found within its weekly NFL packages. Per SQAD, the early Sunday game fetches some $316,200 per spot, while the 4 p.m./4:30 p.m. EST broadcast commands $385,000 a pop.
Naturally, the Super Bowl is CBS’ most desirable showcase; Moonves reiterated that the net has just a few spots left and has moved inventory at rates as high as $4 million per :30. (In New York City alone, the sales team has sold a local spot on WCBS-2 for a towering $1 million.)
Moonves said that despite the ratings shortfall, CBS is not facing “any make-good issues whatsoever.” He added that Q4 scatter is “very strong and is, in fact, now building.”
Looking ahead, CBS expects a major push from the AFC Championship Game, Super Bowl and Grammy Awards. “These broadcasts will give us a huge boost in advertising, and thanks to the promotional platform they will provide, our ratings in the quarter after that will benefit as well,” Moonves said. “We are very confident that our prime-time ratings will continue to improve.”
All told, revenue at the entertainment segment was up 3 percent in the July 1-Sept. 30 period, adding up to $1.68 billion.
Lastly, the cable network segment grew 4 percent to $436 million, driven by continued steady growth in rates and subscribers at Showtime. The premium net is now in more than 22 million households.