It began with traditional newspaper circulation about a decade ago, and now the phenomenon has spread to television: Like millions of Americans who shun the daily paper, many are voting with their remotes and are turning off network TV.
According to the Financial Times, U.S. broadcast networks have suffered “a precipitous drop” in ratings so far this year, which is bound to hit their balance sheets as they lose a share of the $70 billion in annual ad sales.
Media CEOs say television viewing itself is at an all-time high, but the way Americans watch is changing. Millions now watch programs via digital recorders (so they can skip through the commercials) or ad-less, on-demand videos and programming they can stream online, either to computers or hand-held devices.
Trend is watching less primetime
But, they add, the traditional Nielsen ratings system which is used in the TV business to gauge viewership does not reflect this new reality. As a result, television media execs say the plan to push the industry to develop a new standard so they can earn revenues on the additional types of viewing.
According to the FT report, which cited UBS investment research, so far this season the average primetime ratings for live and same-day viewing among the lucrative 18-49-year-old demographic has fallen off by more than 10 percent for ABC, CBS and Fox.
Indeed, Fox has suffered the largest viewership decline; ratings in this audience group have fallen by more than one-third so far this season. Not good if you’re trying to maintain revenue levels.
Only one network, Comcast’s NBC, has demonstrated a season-to-date viewership increase in primetime ratings among the valued 18-49-year-old group.
“People are watching more programming than ever but they are increasingly time-shifting,” Les Moonves, chief executive of CBS, said in a conference call last week. His lament echoed that of executives at Fox, which is owned by News Corp, as well as Time Warner and Walt Disney. “Because more and more people are absorbing content, and we’re going to get paid more and more.”
Advertisers and networks; however, don’t agree on the issue of revenue. Ad buyers argue that they are already paying for the additional alternative viewership. They also say they don’t have much incentive to pay even more for something they are already buying.
Either way, industry experts say the way is being paved for a substantial overhaul in the way that advertisers assess the overall value of television commercials. “It also heralds in what are expected to be contentious negotiations between television networks and advertising buyers during the annual market in the spring, when broadcast networks sell about three-quarters of their commercial inventory,” FT reported.
Maybe it’s just bad programming?
In essence, it could just be that technology needs to catch up with technology, so to speak. Executives with ratings firm Nielsen said the company was working on a way to capture television viewing wherever, whenever and however it occurs but that the industry was ultimately responsible for adopting any new metrics and standards.
But is overall decline in network viewership all the fault of these new innovative ways to watch programming? No, says Bob Iger, Disney’s chief executive. He says it’s possible the drop-off in ratings could actually be due to the fact that the networks aren’t producing programming that the public wants to see.
“The other story is that there seems to be somewhat of an absence of what I’ll call new, big, real, buzz-worthy hits,” said Iger. “Because of that, I would say that it would be premature to either write the epitaph or suggest we’re seeing a trend.”
Iger’s explanation is probably a lot closer to the truth than any other explanation, new technology and all.