The broadcast networks are cumulatively drawing 7 million fewer viewers a night in prime time during the May sweeps than the November 2007 sweeps, but media buyers said they do not believe the heavy makegood situation being created will negatively impact the fall season.
The buyers said an expected slowdown in ad demand this summer as a result of the depressed economy will enable the nets to dole out all their owed audience deficiency units before the start of the fall. That was not the case last summer, when heavy ad demand, coupled with a large amount of makegoods, tightened scatter pricing so much that at the start of the fall '07 season the price tag for ad units was 40-50 percent higher than upfront prices.
Many of the broadcast networks' most popular shows are drawing between 2 million to 3 million fewer viewers than back in November, when the Writers Guild of America strike had just begun. For example, CBS' CSI is averaging 17.5 million viewers, down from 20.5 million in November, off 15 percent; ABC's Grey's Anatomy is averaging 15.8 million viewers, off from 19.4 million, a 22 percent decline, and Fox's House is down 18 percent to 14.6 million.
Some second-tier shows are down even worse. ABC's Boston Legal, for example, is averaging 7.3 million viewers, down by a third from 11 million. But there are a few exceptions. NBC drama Law & Order: SVU is up 200,000 viewers, while CBS sitcom Two and a Half Men is virtually flat.
Clearly, most of those numbers, however, are way below audience level guarantees set by the networks in their last upfront deals.
At the end of the 2006-'07 TV season, the networks took advantage of heavy summer demand and sold most of the available ad units at highly inflated prices--rather than taking care of all of their ADU problems with advertisers. Makegoods were subsequently given out in fourth quarter, further tightening available inventory and perpetuating overinflated pricing for TV scatter buys throughout this season.
"If the broadcast networks are smart, they will try to give out all of their makegoods before the start of next season," said Donna Speciale, president of investment and activation at MediaVest. "They have plenty of time to do it."
Speciale said with ratings showing double-digit declines for the second year in a row, media agencies continue to look at other options. And that, combined with the softening economy, dictates that the last thing the networks should be doing is artificially inflating ad prices, other buyers agreed.
Rino Scanzoni, chief investment officer for media buying conglomerate GroupM, said that while the same ratings dynamics exist this season compared to last, "advertisers are not looking to spend as much this summer. The networks are going to have to pay back advertisers [with makegoods] this summer."
"The demand for scatter right now is not as robust as it was last year at this time," concurred Jason Kanefsky, senior vp of national broadcast at media agency MPG. "But the networks are not going to want to reduce scatter prices. So if they give out all of their makegoods this summer, it will enable them to keep inventory tight, be able to charge higher prices for scatter while not collapsing the market. It will benefit them to do that."
Steve Sternberg, executive vp of audience analysis for Magna Global USA, said while viewership declines are hefty this year, it is not because of the writers'strike, but more based on historical patterns.
"Ratings in the spring are consistently lower than in fourth quarter," Sternberg said. "Viewers will be back to the broadcast networks next season, although normal audience erosion will continue."