If Todd Juenger has it right, the Big Four broadcasters may have less to worry about with all the declining ratings this season. The Bernstein analyst suggests it’s less about DVRs and Netflix and more about just finding hits.
There has been a dearth of them this season. Save for NBC’s “Revolution,” nothing new has emerged as a breakout star, while some veteran shows have lost pop such as Fox’s “Glee” and “New Girl” (in its second season), along with “Dancing With The Stars” on ABC. Even NBC -- the one network that is up -- has ridden “The Voice” heavily to get there.
That’s not to say that discovering the next “Big Bang” will be easy, but broadcasters would certainly be happier if their troubles were cyclical, not secular. Certainly, the Madison Avenue divisions at the Big Four would like the blame to go to Hollywood.
Here’s Juenger’s thesis: broadcast ratings erosion can be largely attributed to cable networks grabbing share from broadcasters. “Surprisingly overlooked,” Juenger writes in a report.
Here are some figures he offers: for the first seven weeks of the season, broadcast prime-time ratings are down 8%. Ad-supported cable -- not including kids’ stuff -- up 2%.
Those numbers do show that combined broadcast/cable inventory is down. But with cable accounting for about 60% of total consumption, recent increases there have led to combined broadcast/cable viewing that is basically flat this season, Juenger writes.
What that means for broadcasters is that monetizable inventory exists in TV at a healthy rate -- networks weren’t complaining last year -- and it’s up to the Big Four to go grab it from cable. He was talking about the Olympics, but former NBCUniversal CEO Jeff Zucker once said about broadcast TV: “the pipes still work.” Juenger’s calculations seem to back that up and suggest networks should look in the mirror.
(Of course, ratings could improve even without a creative resurgence now that cable should lose some viewers as the election is over and cable news might be less of a draw and “Monday Night Football” draws to a close.)
Broadcasters have suggested that if they could just have all their DVR-enabled viewing captured, they would be much better off. So they are arguing for a switch in currency that gives them credit for time-shifted viewing taking place over an additional four days. If they could get that and meld in video-on-demand and online consumption, they say it would be 1999 again.
The would-be C3 to C7 switch seems exceedingly unlikely. Networks are pushing it, so perhaps they have advertisers telling them “we’re in,” but it’s difficult to conjure up why they would be. Networks may have cut a monumentally bad deal when they agreed to C3.
And if advertisers agree to C7, when does it stop? DVR-enabled viewing will only increase, so do networks ask for C14 in three years?
The DVR impact as a ratings chiller, of course, should not be dismissed. Nor should Netflix or Hulu. Nor should people who watched online in college at the library to avoid studying still doing so after graduating.
Going back to the blame-cable narrative, Juenger suggests that a C7 move could help broadcasters snag some cable share because broadcast shows would account for most of the viewership taking place in the added four days.
But in general, he would seem to agree with the insight recently offered by the usually reasoned Disney CEO Bob Iger: blame DVRs, but some of it is on us. Iger argued for a C7 adoption, but said this season has brought a lack of “buzzworthy hits.”
“And because of that,” he said, “I would say that it would be premature to either write the epitaph or suggest that we’re seeing a trend.”