Why Wall Street Is Becoming Uneasy About Television

Oct 11, 2012  •  Post A Comment

Wall Street investors are becoming uncomfortable about television, according to a report by David Lieberman on Deadline.com, and it has everything to do with the fall season’s lower ratings.

“Season-to-date prime time ratings are down 11% vs last year for the Big Four networks in live-plus-same-day results for their target audience of 18-to-49 year olds,” Lieberman writes. “And investors want to know: Is this a blip, or a symptom of a deeper problem — possibly viewer defection to online videos?”

The piece cites two reports out today, which caution investors to wait until more information is available before panicking about investing in the big media firms that own the top broadcast nets. One reason that’s cited for the slumping viewer numbers: weak content.

Says Anthony DiClemente of Barclays Equity Research: “Most of the freshman shows have been a disappointment. Without top quality new programs to augment the success of past hits, we believe aggregate network ratings have suffered.”

A report by Nomura Equity Research’s Michael Nathanson points to scheduling issues, including the shift of CBS’s “Two and a Half Men” from Monday to Thursday. The move “impacts both nights because of last year’s early success on Monday [with the introduction of Ashton Kutcher, who replaced Charlie Sheen] combined with the greater competition this year on Thursday,” Nathanson writes.

Lieberman adds: “NFL football also may be tipping the scales: Matchups are stronger this year for ‘Monday Night Football,’ and the NFL Network added five ‘Thursday Night Football’ games. (Previously it didn’t begin its schedule until week 10.) That could be taking a bigger bite than usual from live ratings as the number of people who use DVRs to time-shift non-sports programming grows.”

Some shows are adding 50% or more to their viewer numbers when DVR viewing is included, Lieberman notes, singling out “Revolution,” “Glee,” “The Office” and “Up All Night” as especially strong on DVR.

The piece notes: “When Nielsen releases the data that advertisers value most, live-plus-three day ratings, that ‘will tell a more complete story,’ DiClemente says.”

Still, concerns remain, with Nathanson saying that even though the additional data may help, ”We don’t see it offsetting this year’s higher declines.”

Nathanson “warns that CBS, which collects 27% of its revenues from broadcast network advertising, is ‘most exposed’ if the ratings drop continues,” Lieberman writes. “It would affect 8% of News Corp.’s revenues, 7% of Disney’s, and 5% of Comcast’s (which controls NBCUniversal). Put another way, if broadcast network ad sales dropped by 5% due to poor ratings it could cut earnings per share at CBS by 5.7%, News Corp. by 2.1%, Disney by 1.3%, and Comcast by 0.7%.”

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