Making TV numbers add up

Network-advertiser battle looms over viewer count, setting commercial rates

May 14, 2007|By David Zurawik | David Zurawik,SUN TELEVISION CRITIC

For nearly a half-century, television network executives and advertising buyers have gathered each May in New York to negotiate the cost of commercial spots for the fall season. And for nearly a half-century, the ritual has remained a relatively predictable and temperate affair, as both groups depended on a single ratings source: the Nielsens.

But when the weeklong "upfront" bargaining begins today, network chiefs will be ready for battle.

Faced with radical changes in the way people watch television, NBC, CBS, ABC and Fox hope to introduce new ways of measuring - and getting paid for - the growing number of viewers who download, stream or replay TV shows. That goal sets the stage for one of the most potentially confusing and divisive upfront weeks in TV history.

"Those people will be counted, and we will be paid for them," says CBS President and Chief Executive Officer Leslie Moonves, sounding the networks' call to arms.

"For the first time, I am confident we will get paid for DVR [digital video recorders] viewing in this year's upfront - turning a current problem into a big and ongoing asset."

It is unlikely that advertisers will agree without a fight.

"Each network could find itself facing the chaos of negotiating sales on an agency-by-agency and show-by-show basis this week. And that will probably mean less money than ever for the networks at these upfronts," says Abe Novick, an advertising executive who specializes in new media at Channel Communications in Towson.

"There is no longer a single measurement tool that everyone will accept when it comes to network TV viewing."

Predicting diminished earnings for network TV has become a safe venture in recent years. At the 2004 upfronts, advertisers bought $9.5 billion worth of commercial airtime. The next year, the tally dropped to $9.2 billion.

Last year, the networks made $8.9 billion in ad revenue. Analysts predict that this year, the networks' total earnings won't exceed $8.5 billion. That would represent a loss of $1 billion in just three years.

That decline follows a parallel slide in TV viewership that began more than a decade ago. According to the most recent data from Nielsen Media Research, ABC, NBC, CBS and Fox collectively have lost 2.5 million viewers since last year at this time.

Advertising executives will point to that drop as the networks unveil their fall rosters this week at celebrity-studded presentations held throughout Manhattan.

They also will argue that the networks cannot guarantee that viewers who replay shows are not fast-forwarding past the advertisements.

TV sales executives, however, plan to counter with figures they say represent the new reality of television viewership.

They'll bolster their argument with research gathered by fledgling operations such as Buzzmeter, Doubleclick, Atlas and Omniture. These new firms track TV programs and ads that are downloaded, streamed, recorded and chatted about online.

These days, the networks say, there are three kinds of TV viewers: those who watch the show when it airs, those who download or stream the show, and those who record and replay the show on their DVRs.

"The last two audiences are growing and have not been adequately counted," says Jason Wertlieb, a veteran of a half-dozen upfronts who now serves as president and general manger of NBC affiliate WBAL-TV (Channel 11) in Baltimore.

"That's a huge issue for the TV industry and a major point of contention for the upfronts."

The show that most clearly illustrates the crux of the debate may be NBC's freshman hit Heroes, a serialized drama about ordinary people with extraordinary abilities who try to save the world. NBC has aggressively marketed the epic saga to young tech-savvy viewers, making it available at a Web site full of digital content that includes an online companion novel.

According to Nielsen, 14.7 million viewers tune in to NBC each Monday evening to watch the show.

Another 2.5 million fans download or stream full-length video episodes each week from, according to the Omniture online measurement service.

Still another 1.3 million people record the program weekly and watch it within seven days.

When these viewers are added to the conventional viewership figures, NBC says, the weekly audience for Heroes is 18.5 million fans a week.

Similar changes in viewership patterns can be seen at the other networks.

About 2.7 million viewers routinely tape and replay Fox's medical drama House, but they are not considered by advertisers as part of the series' weekly audience. (Although Nielsen last month began measuring these new audiences, the New York-based research company has not yet begun to include them in its official tallies.)

ABC's Lost, which attracts a weekly audience of 10.8 million, also is seen in replay by an additional 2.5 million people. And while the CBS drama CSI: Crime Scene Investigation attracts a conventional audience of 20.9 million viewers, 2.2 million additional fans watch the drama on a delayed basis.

Thus far, these new viewers are not included in the Nielsen tallies.

But if the networks have their way, that could change this week.

"It's a new media world, and the old Nielsen methodology just can't measure it," says Kathy Sharpe, a former account executive at Ogilvy & Mather who now heads Sharpe Partners, an interactive advertising agency in New York City that focuses on new media.

"I think people are going to be shocked this week at how much the world of network TV has changed - as the industry tries to comes to terms with the new ways in which millions are now watching television."

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