Broadcast TV Down: Is That Bad News?

One way to make money from TV other than ads in the program.

Today’s Wall St. Journal story on the decline in TV ratings snapped me back to an alternate universe, a week after listening to ABC’s digital programming EVP Albert Cheng talk about revenue “per episode" at the Streaming Media West show. If broadcast TV executives are counting their pennies the way the “blast-from-the-past” story described it, they are in trouble:

Many viewers haven't rushed back to their television sets to watch this year's highly promoted season premieres, preferring to catch the shows on digital video recording devices and online -- or not catch them at all.

An average of 9 million people tuned in to prime-time programs on the top five English-language broadcast networks the night they aired last week, a 4.3% decline from the first week of the 2007 TV season, according to Nielsen Media Research.

OK, the “not catch them at all” part would be distressing. But why would watching in some fashion other than linear broadcast be considered a negative? Advertisers and Nielsen are already allowing for the “+3” formulation that accounts for viewers who watch a show up to three days after initial airing. TiVO has good measures of how many ads are viewed in a DVR’d program, making the case that even when forwarded through, some ads stick. Ads that are actually watched on a DVR are probably more impactful than on broadcast. And, what about the bathroom or snack or pick-up-a-coffee-table-magazine breaks during commercials?

Perhaps NBC’s Jeff Zucker was right when he said that NBC now has to manage not for ratings, but rather for profitability. What’s a show worth if you add up the revenues not just from broadcast TV ads (and reruns and overseas...) but also DVD and iTunes sales, and Web and mobile and anything else from which you can make a penny? Perhaps broadcast’s worth can even be counted as a marketing opportunity for sales in the other platforms.

It’s not like any TV executive should, at this point, be surprised by any of this, except perhaps the pace, accelerated by the apparent lasting effect of the writer’s strike. It’s not like DVRs or the Web are a surprise at this point. Sure, the days when a TV ad sales exec could just wait for the phone to ring and take the order are long gone. A show that’s a hit has so much more than broadcast TV to rely on. That people are watching in other ways than over the air should be seen as a triumph of the programming, not a downside. Even for ads, there are innovative ways to go about it. There's no reason, for example, that commercials have to be exactly 30 seconds and fit neatly into a format that's decades old (and easy to skip and avoid). Now, it’s the executives’ jobs to turn that popularity into money. That takes work, sure. But that’s all it is.

Albert Cheng: Closed is Open, but Money Matters

Summarizing two posts I wrote on CNET's Webware and the Naked Media blog, from Disney-ABC EVP for digital media Albert Cheng:

1. ABC, though requiring people to watch Web video in the ABC player is open because it's working so hard to give people video when, where and how they want -- everywhere from the ABC site to Facebook, AOL and Veoh.
2. You have to think of the digital media business not purely in terms of revenue per viewer or per ad, but rather *per episode,* where, he said, ABC's digital properties were not that far off TV, sort of like the comparison of a teenager to an adult, not pennies to the dollar.

Shelly Palmer: It's the Programming, Stupid (But it's not Ben Silverman)

Shelly, for whom I contribute, and is a colleague and friend also contributing the JackMyers Media Business Report, portends the end of broadcast TV, as it goes into a downward spiral of managing for margins, rather than programming for audiences. Shelly may be right, and he's certainly smart to hold up radio as an unfortunate example -- terrestrial radio is now unlistenable, packed as it is with undistinguished programming and interruptive ads. If broadcast TV sings the money tune to the exclusion of creating good programming, it, too, will find itself an emptied shell. Certainly a visible future, as more and more creativity goes to other forms of video distribution -- cable, premium cable, the Internet and so on.

Shelly calls NBC exec Ben Silverman courageous for being willing to admit managing for margins. Silverman, though, is simply repeating what his boss Jeff Zucker said a couple months ago before the big TV "Upfront" sales presentations:

We’re managing for margin, not for ratings. So it’s the expense of our shows, the consistency of our shows being on the schedule. It’s not determined by the size of the ratings.

Zucker raised eyebrows at the time for honestly addressing speaking the financial side ahead of a big sales show.

Shelly Palmer: It's the Programming, Stupid (But it's not Ben Silverman)

Shelly, for whom I contribute, and is a colleague and friend also contributing the JackMyers Media Business Report, portends the end of broadcast TV, as it goes into a downward spiral of managing for margins, rather than programming for audiences. Shelly may be right, and he's certainly smart to hold up radio as an unfortunate example -- terrestrial radio is now unlistenable, packed as it is with undistinguished programming and interruptive ads. If broadcast TV sings the money tune to the exclusion of creating good programming, it, too, will find itself an emptied shell. Certainly a visible future, as more and more creativity goes to other forms of video distribution -- cable, premium cable, the Internet and so on.

Shelly calls NBC exec Ben Silverman courageous for being willing to admit managing for margins. Silverman, though, is simply repeating what his boss Jeff Zucker said a couple months ago before the big TV "Upfront" sales presentations:

We’re managing for margin, not for ratings. So it’s the expense of our shows, the consistency of our shows being on the schedule. It’s not determined by the size of the ratings.

Zucker raised eyebrows at the time for honestly addressing speaking the financial side ahead of a big sales show.