It's make-good time
Buyers don't think the fall season will be hurtThe broadcast networks cumulatively are drawing 7 million fewer viewers a night in primetime during the May sweep than the November sweep, but media buyers said they do not believe the heavy make-good situation being created will negatively impact the fall season.
The buyers said an expected slowdown in ad demand in the summer as a result of the depressed economy will enable the networks to dole out all their owed audience deficiency units before the start of the fall season. That was not the case last summer, when heavy ad demand, coupled with a large amount of make-goods, tightened scatter pricing so much that at the start of the fall '07 season, ad units were 40%-50% higher than upfront prices.
Many of the broadcast networks' most popular shows are drawing 2 million-3 million fewer viewers than in November, when the WGA strike had just begun. For example, CBS' "CSI: Crime Scene Investigation" is averaging 17.5 million viewers, down 15% from 20.5 million in November; ABC's "Grey's Anatomy" is averaging 15.8 million viewers, off 22% from 19.4 million; and Fox's "House" is down 18% to 14.6 million.
Some second-tier shows are down even worse. ABC's "Boston Legal," for example, is averaging 7.3 million viewers, down a third from 11 million. But there are a few exceptions. NBC drama "Law & Order: SVU" is up 200,000 viewers, while CBS sitcom "Two and a Half Men" is virtually flat.
Clearly, however, most of those numbers are way below audience level guarantees set by the networks in their most recent upfront deals.
At the end of the 2006-07 TV season, the networks took advantage of heavy summer demand and sold most of the available ad units at highly inflated prices -- rather than taking care of all of their ADU problems with advertisers. Make-goods subsequently were given out in the fourth quarter, further tightening available inventory and perpetuating over-inflated pricing for TV scatter buys throughout this season.
"If the broadcast networks are smart, they will try to give out all of their make-goods before the start of next season," said Donna Speciale, president of investment and activation at MediaVest. "They have plenty of time to do it."
Speciale said that with ratings showing double-digit declines for the second year in a row, media agencies continue to look at other options. And that, combined with the softening economy, dictates that the last thing the networks should be doing is artificially inflating ad prices, other buyers agreed.
Rino Scanzoni, chief investment officer for media buying conglomerate GroupM, said that while the same ratings dynamics exist this season compared with last, "advertisers are not looking to spend as much this summer. The networks are going to have to pay back advertisers (with make-goods) this summer."
Said Jason Kanefsky, senior vp national broadcast at media agency MPG: "The demand for scatter right now is not as robust as it was last year at this time, but the networks are not going to want to reduce scatter prices. So if they give out all of their make-goods this summer, it will enable them to keep inventory tight, to be able to charge higher prices for scatter while not collapsing the market. It will benefit them to do that."
Steve Sternberg, executive vp audience analysis for Magna Global USA, said that while viewership declines are hefty this year, it is not because of the writers strike but more based on historical patterns.
"Ratings in the spring are consistently lower than in fourth quarter," Sternberg said. "Viewers will be back to the broadcast networks next season although normal audience erosion will continue."