CBS Research Chief Sees Flattish 2015 Broadcast Networks Ad Sales
David Poltrack also discusses why licensing content to Netflix makes sense and says broadcast is gaining shares from cable, but some ad dollars are moving from TV to digital
David Poltrack, CBS Corp.'s chief research officer, said Monday that broadcast network TV advertising revenue will remain "stable but not growing" through at least mid-2015.
Speaking at the UBS Global Media and Communications Conference in New York, he forecasted that broadcast networks would see unchanged advertising revenue in 2015, or growth of 2 percent on an underlying basis when adjusted for the Olympics in 2014. That includes one percentage point in viewer share shifts from cable networks, he said.
"I missed the call for 2014 by a wide margin," he also told the conference. "The advertising market never gained any momentum in 2014." He cited buyer resistance in the upfront and fluctuating trends afterward.
He said broadcast networks would see advertising revenue growth of 1 percent this year, or down 1 percent when adjusted for the Olympics. A year ago, Poltrack had at the conference predicted 6 percent growth in 2014, or 4 percent when adjusting for the Olympics boost and focusing on underlying trends.
For the new TV season, Poltrack said the broadcast networks are off to "a solid start," with stable trends for all networks except for Fox. Excluding Fox, no networks should have audience "deficiency" issues, he said. Poltrack added that cable primetime ratings losers outpace winners, allowing broadcast networks to win back some audience share. Only one new cable show, The Last Ship, has entered the top 10 of cable shows this year, he said.
Do not expect the amount of original fare on cable networks "to appreciate anytime soon," he told the UBS conference. Meanwhile, CBS primetime will have a higher 83.4 percent share of originals in the 2014-2015 season, Poltrack up. He lauded the broadcast networks for having four new shows in the top 20 ranking as well.
He also discussed the shift of ad dollars from TV to digital and SVOD, or what he called "the Netflix factor."
Are ad dollars being shifted from TV to digital? Poltrack said the short answer was yes. But should they? He said no.
“Should advertisers be investing in a full array of new digital media options? Absolutely,” he said. “Should they be funding these investments from their TV advertising budgets? Absolutely not.”
He said streaming on mobile phones, streaming on OTT devices and viewing 30 days after a show's debut still aren't included in viewership figures yet. And he argued that increased Netflix viewing was one of the major factors in the overall decline of measured TV viewing as Nielsen doesn't measure it.
He concluded that it makes sense for broadcast networks to license shows to Netflix and other SVOD players. One analyst recently suggested that content licensing was starting to hurt networks. The streaming video company pays for content and doesn't compete with networks for advertising, Poltrack highlighted. And ad-supported VOD options are emerging as a business opportunity.
The researcher said CBS is planning to test how Nielsen's on demand commercial ratings affect business via episodes of new show Madame Secretary. Poltrack predicted this could become “an additional incentive for advertisers to move to C7 guarantees" rather than pay the current prices for ratings for the live airing plus the three following days.
The average adult reports viewing 5.2 hours of Netflix a week, Poltrack told the UBS conference, concluding that "children are very important to Netflix." A CBS panel says that 81 percent of those with children see their kids watching Netflix programming, he said.
Five original series, including House of Cards, amount to 6.6 percent of Netflix viewing, Poltrack said. NCIS in comparison accounted for 800 million hours of viewing last year on CBS alone. The Blacklist and other broadcast shows are among the key programs being watched on Netflix, he added.
Dec 8, 2:10 p.m. Updated with correct attribution of Nielsen's on demand commercial ratings.