By Brian Steinberg
While the nation tuned in TV favorites such as "24," "Lost" and "The Biggest Loser," the majority of U.S. broadcast and cable networks tuned in ad-revenue declines in 2009, according to new full year data from Kantar Media.
Indeed, the five mainstream broadcast networks –ABC, CBS, CW, Fox and NBC – all experienced dips in ad revenue, bolstering a larger trend. In 2008, only Fox and NBC were able to muster increases in ad sales – and those were due to NBC’s airing of the Beijing Olympics and Fox’s outsize performance at the Super Bowl.
Could the figures mark the broadening of a disconcerting outlook for TV outlets? It’s relatively rare for broadcast revenue to decline from one year to the next. Indeed, until 2008, CBS’s ad revenue as measured by Kantar had risen steadily since 2005, when the network took in about $6.674 billion. Likewise, ABC took in about $5.897 billion in 2005, then saw steady increases until 2008. Of the four biggest broadcast networks, only NBC, beset in the last several years by ratings declines and programming issues, saw its 2007 ad revenue decrease noticeably from the roughly $6.02 billion it raked in during 2006.
The Kantar numbers chronicle an entire year of advertiser outlays to TV, while other numbers commonly used to gauge TV’s fortunes usually center on the annual TV-industry "upfront" market, in which advertisers commit the majority of their ad budgets to the fall TV schedule. The trouble? The upfront numbers represent only commitments, not hard, cold cash in the networks’ coffers. And they are often wildly inaccurate, differing significantly from media-company balance sheets later on in the year.
The Kantar numbers are widely used in the media industry but are often taken as directional indicators rather than gospel. Analysts point out the data is often based on commonly available rates, when it’s well known in the ad world that each deal is often founded on very specific terms.
Yet with the economy roiling and so many new and emerging media options available to consumers and marketers, it’s clear 2009’s outlays dwindled. ABC saw ad revenue fall to about $5.98 billion in 2009 from about $6.12 billion in 2008, according to Kantar. CBS saw ad revenue dip to about $6.29 billion in 2009 from about $6.64 billion in the prior year. Fox’s ad revenue dipped to about $4.44 billion in 2009, compared with approximately $4.59 billion in 2008. And the CW, owned jointly by Time Warner and CBS Corp., saw ad revenue decline to about $591.2 million in 2009 from approximately $790 million in 2008.
The majority of cable networks also experienced declines in 2009, though some were able to increase the flow of ad monies year over year. Walt Disney’s ESPN; Time Warner’s TNT, TBS and TruTV; Scripps Networks’ Food Network; and Viacom Inc.’s MTV, Comedy Central and VH1 all saw declines, for example, but others fared more successfully. News Corp.’s FX saw ad revenue increase to about $396.7 million in 2009, up from about $365.9 million in 2008. NBC Universal’s USA network saw ad sales rise to about $1.09 billion in 2009 from about $921.3 million in 2008, according to Kantar. The company’s SyFy network saw ad sales rise to about $322.2 million from about $302.4 million. And Comcast’s E! saw ad sales rise to about $402.8 million from approximately $390 million in 2008.
In all, broadcast TV saw ad revenue fall to about $21.9 billion in 2009 from about $23.7 billion in 2008, according to the Kantar data. Cable ad revenue fell to about $19.5 billion from about $19.7 billion in the previous year, Kantar said. And Spanish-language TV saw ad revenue decline to about $3.5 billion from about $3.6 billion.
"From our perspective, it’s no surprise: 2009 was a tough year for traditional broadcast and over the air broadcast-network advertising," said Jim Rutherfurd, managing director at Veronis Suhler Stevenson, a private-equity firm that specializes in the media and communications sectors.
Cable’s ad-revenue losses may not be as drastic because its channels are "more targetable" for advertisers than broadcast has been, Mr. Rutherfurd added, as marketers increasingly seek distinct audience niches.
Not all is doom and gloom. Media analysts and ad buyers say the current marketplace for TV-ad time favors the media owners. It seems as if things are trending up," said Mr. Rutherfurd. With demand high and inventory tight, networks are securing significant premiums for so-called "scatter" advertising, or ad time bought much closer air date. That trend usually augurs a robust upfront, and indicates advertisers will want to lock down prices for the fall and 2010 holiday season in advance, for fear costs will go up later on in the year.#