Cable Viewers Aren’t Watching the Shows You Think They Are

MoffettNathanson analysts find ratings in odd places

Analysts at MoffettNathanson are bearish on cable TV in a variety of categories (though they contend Disney, Fox and Viacom are still strong). Overall, as the upfront market kicks into gear, ad sales chiefs who are anxious to sell loyal viewers are finding themselves with less and less on the table, and with a shift in the location of those vital ratings. 

The analysts did some serious digging, looking at total GRPs—meaning viewers watching at all hours of the day and night, not just during prime time or single, braggable episodes of shows like The Walking Dead—and what they found is fairly damning: Viewers overwhelmingly watch cable for library content, not originals. And the originals they reliably watch aren't the big award winners, either.

In a market where buyers are almost always forced to buy reruns of prestige shows if they want a high-profile slot in the original airing where everyone finds out who lives and who dies, that's an important distinction. A fondly remembered show that can snag a channel surfer is a much, much more valuable piece of real estate.

Generally speaking, the sales falloff is worse than even the analysts had predicted. In a note issued Tuesday, MoffettNathanson said it had tracked a mere 1 percent growth when it had expected 6 percent in the cable TV ad market. Companies are having to make these concessions in public, too. On Discovery's earnings call last month, David Zaslav said in his opening remarks that his company was looking to international markets to make up the shortfall. "We are not satisfied with our U.S. ratings performance in 2014," he said, "and with the softer U.S. ad sales in the second half of the year, it is important to note that we program for a global audience."

It's become ridiculously difficult for ad salespeople to locate enough salable viewers amid the millions who consume a given TV show on Netflix, Hulu, YouTube and illegal platforms operating in the shadows. With the exception of pirated viewership (although even on that count, opinions vary), those are all potentially lucrative options, but increased licensing fees don't allow entertainment companies to just abandon the advertising revenue stream. "It's really about monetizing the streaming environment," Fox co-CFO James Murdoch said on his company's earnings call.

That needs to happen quickly.

MoffettNathanson carved up TV networks into specific categories and found that the two biggest—general entertainment networks like TNT and USA and kids networks like Nick and Cartoon—were both down double digits in 2014: kids off by 10 percent and general entertainment by 11. Of the 31 networks designated as general entertainment, only six showed any growth at all (the biggest growth spurt, of course, was Fox's FXX, buoyed by its seminal deal to syndicate The Simpsons).

Moreover, viewers could care less about original content at many of these networks, even the top performers—library shows are king, and those are aging. Law & Order: SVU was fully 42 percent of USA's GRPs last year, according to MoffettNathanson, with the most-watched of its in-house productions accounting for a mere 2 percent (that would be Chrisley Knows Best). Of programming exclusive to the network, WWE accounted for 8 percent of its viewership.

Interestingly, looking purely at GRPs per telecast, WWE was also easily the most popular show on general entertainment cable, averaging 107,741 viewers in the demo and experiencing virtually no fall-off year over year. Other popular originals: Syfy's slate of original movies (yes, best exemplified by those Sharknado things—your guess is as good as ours) and Comedy Central's perennial satirical cartoon South Park.

That doesn't mean The Walking Dead isn't the most popular original show on TV; it means that, on average, all broadcasts of The Walking Dead, including reruns at 2 a.m., don't do as well as all broadcasts of WWE including reruns at 2 a.m. (And WWE runs originals on USA more than once a week.)

Going into the upfront, this is absolutely vital information—if you want bang for your buck, based on the MoffettNathanson report, it looks like your best bets aren't prestigious, big-budget shows with swanky award pedigrees. It's cartoons with elementary schoolers making jokes about politics and farts, and grown men in neon singlets pretending to bodyslam one other. This is America, after all.