Networks Minimize Impact of DVRs on Financial Model

Nov 16, 2005  •  Post A Comment

Network executives say recent research suggests that the use of digital video recorders is resulting in an increase in program viewing and advertising impressions, rather than threatening the business model for commercial broadcasting.

At an unusual multinetwork press conference Wednesday conducted by Alan Wurtzel, president of research and media development at NBC Universal, and David Poltrack, executive VP of research and planning for CBS, and attended by the research chiefs for Fox, ABC and The WB, the networks tried to counter arguments by ad buyers that DVR viewing should not be included in the audience they pay for when they buy commercials.

Nielsen Media Research will begin releasing data Dec. 26 on viewership that includes same-day DVR viewership and seven-day DVR viewership in addition to the current ratings numbers. (All of the figures include VCR recording.) Some ad buyers said they will not accept numbers that include DVRs when they negotiate future ad buys. But the networks argue that the DVRs increase viewership of television, especially viewership of the top-rated network shows. Prime-time series are showing a 4 percent increase in viewership in seven markets studied by Nielsen. And the networks say that as more “normal” viewers get DVRs-as opposed to very early adopters and media geeks-the amount of commercial avoidance is dropping.

“Right now there seems to be kind of an urban myth that anything that’s viewed on a disk winds up taking commercial effectiveness down to zero, that it basically has absolutely no value and as a result it suggests that advertising through the DVR winds up being irrelevant. And the reality is that that’s wrong,” Mr. Wurtzel said.

“The DVR is going to enhance, increase the viewership to the major network television programs,” Mr. Poltrack said, “and it is going to increase the amount of advertising exposures in those programs, because offsetting the 1 [percent] to 3 percent loss due to commercial fast-forwarding will be anywhere from a 4 [percent] to 8 percent gain as penetration increases in total viewership.”

Which data stream the networks plan to use for ad sales and viewership guarantees was not discussed at the press conference. Mr. Wurtzel said the executives were allowed to discuss research but not business plans because of antitrust issues.