Broadcast television is at a crossroads.
The four broadcast networks — ABC, CBS, FOX, and NBC — once money-making machines, have lost a million viewers a year for the last decade and now have an average nightly audience of 38.6 million this season, compared to 48 million in 1999, according to The Nielsen Company.
The financial model is in question, too, made evident this past week with Comcast’s takeover of NBC Universal, a deal made possible in part by the ratings- and profits-challenged NBC network.
While executives at the four networks agree that broadcast TV is not going away, they differ on what the new playbook is. In separate conversations at a recent media conference, the executives talked about their view of TV.
Tiffany network boss Les Moonves has been the most bullish about the future prospects of broadcast television.
“I’m tired of reading about how network television is dying, it’s not,” he said.
Moonves’ outlook is owed in no small part to the fact that CBS has been the No. 1- or No. 2-ranked network for the last several years and currently boasts television’s most watched show, “NCIS.” For him, the viability of broadcast television simply depends on making hit shows.
“You have to keep the pipeline coming, you don’t take four or five years off from making hits,” Moonves said, in an obvious dig at rival NBC. “Building a network is brick by brick, and it is brick by brick because sometimes you need to replace some bricks. It’s when you have to replace the whole house that you’re in trouble.”
Fox doesn’t get into meat of its programming season until January when “American Idol” and “24” return, but it still ended the fall season as the most-watched television network. The strength of Fox’s programming has given News Corp. Chief Operating Officer Chase Carey leverage to be aggressive about seeking a second revenue stream in the form of retransmission fees from distributors.
“We need to have a business model that enables us to compete with the ESPNs and the TNTs and USAs that are doing more original programming and buying more sports programming,” he said.
While retransmission fees — payments from cable companies to carry the network’s programming — historically have been a pittance, Carey speculated that if ESPN can get close to $4 per subscriber per month in carriage fees, Fox could justifiably get $5 per subscriber given programming like the Super Bowl and World Series.
ABC, the female-oriented, Disney-owned network, has had its troubles in primetime, particularly with dramas in the 10 p.m. hour. But after a long drought, ABC has scored with some freshman shows this season, notably “FlashForward” and “Modern Family.” According to Disney boss Bob Iger, those shows are evidence that broadcast television can still aggregate large audiences better than any other medium.
“I don’t think it’s an inevitability that ratings continue to fall, you can stem the tide with great programming,” Iger said. “It’s not like you can’t get traction, you just have to have something good. When we budget for the year, we don’t budget negative ratings expectations. We actually budget the opposite.”
Iger also thinks that DVR playback skews ratings data to make audience erosion worse than it seems. He claims that Live Plus Three Day and Live Plus Seven Day ratings are better indicators than overnight ratings.
“That measurement is encouraging for us because it means that we’ve got programs that have a pretty decent chance of deriving income from alternative markets.”
It should come as no surprise that Jeff Zucker, the leader of NBC, the lowest-rated broadcast network for several years running, has been the most vocal about the broadcast television model being broken.
He has purposely cut the number of primetime hours on NBC to go after profit margins instead of ratings. He now refers to NBC as a cable company, and seems to have nothing but derision for the broadcast network’s performance.
“We haven’t done a good job,” Zucker said, of NBC’s primetime programming efforts. “We stuck with things too long. We underinvested in development, which was a mistake.”
Indeed, Zucker seems to view NBC as little more than a marketing engine for its cable nets.
“The broadcast network’s ability to provide promotional power to the rest of our platform often gets lost,” Zucker said.
Luckily for NBC, Comcast seems to still believe in the power of broadcast TV.
While it has been widely speculated that Comcast might sell NBC after the deal closes, company execs dismissed that notion.