'X Factor': Ad Rates Drop, Advertisers Compensated for Weaker-Than-Projected Ratings (Report)

6:21 AM PDT 10/20/2011 by Georg Szalai

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Jeffrey Niera/FOX

Since the talent show's debut, it has reached 12.2 million viewers on average, compared to the 20 million that creator and star Simon Cowell had set as a target.

NEW YORK - Fox's X Factor is so far drawing smaller audiences than projected, pushing down advertising rates and leading Fox to compensate marketers with additional ad time on the show, the Wall Street Journal reported.

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Since the talent show's debut in mid-September, X Factor has reached 12.2 million viewers on average, compared to the 20 million that the show's creator and former American Idol judge Simon Cowell had said was needed to avoid a "disappointment," the Journal said.

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The viewership also compares with the average of 25.2 million viewers of American Idol last season, the paper said, citing Nielsen data.

Fox guaranteed advertisers a rating of around 6, or approximately 7.6 million viewers, in the 18-49 demographic, according to the Journal. About 5.4 million viewers in that demo have watched on average so far, it said, citing Nielsen data.

The show has nonetheless boosted Fox's Thursday viewership by 59 percent, giving the network the ratings lead among viewers aged 18 to 49 on that night for the first time in network history, according to the Journal.

The paper said network sources say Fox is selling ads at or above upfront market prices, which averaged $400,000 for a 30-second spot. But some media buyers told the Journal that they have been getting spots for as low as $280,000-$300,000.

A Fox spokeswoman declined to comment on the financial performance of X Factor, the Journal, which just like Fox is owned by Rupert Murdoch's News Corp., said.

Mike Darnell, Fox's president of alternative entertainment, said he is "thrilled" with the early ratings for X Factor. "My competitors would give one eye and two legs to have this show," he told the Journal. If the show maintains its current audience, "I would be perfectly happy, and the show would become a staple of the network."

Among the marketers that Fox is compensating for the X Factor ratings shortfall is PepsiCo, the show's biggest sponsor. A spokeswoman told the Journal: "We're pleased with the total value we're extracting from our partnership."