With Slow Buildup, Networks Limit Losses

Mix of traditional fare and war coverage stems ad-revenue hit—so far

Perhaps it was because hostilities had been building for some time, but by the end of last week, the television business took a lesser financial hit from covering the war’s outset than many had expected. At press time, however, as the bombing campaign against Iraq was stepped up, it was unclear how much regularly scheduled programming would get pre-empted and if more advertisers would attempt to get off TV.

The gradual escalation of combat in the opening days of the war allowed at least some of the broadcast networks to air their regular programming in prime time, mitigating early on the impact of advertising losses resulting from the switch to commercial-less, all-news coverage.

And while many advertisers wanted their commercials nowhere near grisly war coverage, most allowed their scheduled ads to air on the Big Three networks, which expansively covered the early days of the war but did not go wall-to-wall with news.

Continuous ad-free news coverage can mean ad-revenue losses for ABC, NBC and CBS of about $20 million a day. As it played out, however, during the 44 hours after the combat started Wednesday night, CBS and NBC took only about a $14 million ad loss each, media buyers estimated. ABC, the only Big Three network to pre-empt its entire Thursday prime-time entertainment lineup in favor of commercial-free war news, took about a $24 million hit over the 44-hour period.

Ad revenue losses were expected to escalate over the weekend, however, as the military campaign against Iraq was stepped up.

After NBC News broke to war coverage on 9:33 p.m. Wednesday, the networks and news channels all stayed with commercial-free news for the night. From Thursday morning through week’s end, however, the networks chose to switch out of news coverage when they could—CBS carried its NCAA basketball tournament Thursday night, for example, 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, but as one media buyer pointed out, “Under the circumstances [ABC’s Are You Hot? and Fox’s Married By America], they would not have gotten any audiences anyway. They’re two shows that advertisers probably would have wanted to pull out of.”

Tempers flared between some of the broadcast networks’ sales executives and a handful of advertisers demanding that their spots be pulled from all programming for a week after the war’s start. At least two of the Big Four networks initially balked, reasoning that ads would routinely be pulled from war coverage but that once regular programming returned, advertisers were under contract to run.

“We are not opposed to discussing the 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 ad executive. “But to unabashedly say they want to pull all of their ads for seven 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, advised both sides to “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.”

Many major marketers stayed on the air during regular programming. During NBC’s Thursday sitcoms, for example, advertisers included General Motors, Wal-Mart, J.C. Penney, Wendy’s, H&R Block and Toyota. Chrysler, V8, Kit-Kat, Bayer Aspirin, General Motors and some pharmaceutical companies ran spots on the networks’ nightly news.

“We don’t want to pull our advertising,” said an exec at a major retailer. “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. We just don’t want our ads in TV news magazines that feature war coverage.”

The cable news networks had already planned to run commercial-free for at least 48 hours once the war began and had discussed with advertisers how to reallocate those dollars when commercial breaks returned.