Commentary

The 2% Or The 50% Rule: What's More Important For TV Executives?

by Wayne Friedman , Staff Writer, February 26, 2013

For TV executives, looking for an extra 2% in the short term might mean sacrificing 50% in the long term. Right now, says Needham & Co.’s Laura Martin, networks are "fighting over the 0-2% viewing growth pie rather than the 50% viewing growth pie." Instead of continuing to spend money on traditional TV half-hour, hour and two-hour programming, perhaps, she says, networks should devote 10% of their money to shorter digital video programming.

We all know digital video stuff can't get the big advertising dollars. But as the population ages, those younger viewers who have incorporated a lot of snackable video bites may be increasingly important to future TV-video marketers looking to find ways for new delivery of commercial messages. The question is whether traditional TV networks will be left behind if that happens.

Martin's warning may not be that far-fetched. Increasingly higher sports programming fees for cable operators, satellite TV services, and telco companies could be hitting the breaking point. Cablevision Systems just recently instituted a surcharge to consumers for certain sports programming networks. DirecTV, Verizon, and others made similar adjustments. Could other TV categories be next -- leading to perhaps a business formula for a la carte pricing?

You can actually go one step further when considering the wrong percentage goals. Two or three percent is also the difference between current C3 and C7 ratings. C3 ratings -- average commercial ratings plus three days of time shifted viewing -- are how national TV networks get paid from TV advertisers these days.

In the short term, C7 ratings are where TV networks want to go. But is that a direction they should be going? Are there other rules to consider?

3 comments about "The 2% Or The 50% Rule: What's More Important For TV Executives?".

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Nicholas Schiavone from Nicholas P. Schiavone, LLC, February 26, 2013 at 7:33 p.m.
"Innumeracy: Mathematical Illiteracy and Its Consequences" by John Allen Paulos. Read it. It's the only way to make sense of today's TV Watch, which makes no sense at all. Chaotic, random percentages: 2% of this; 50% of that. A wild ride that careens from base-less numbers to equity research to "growth pies" (anything like cow pies?) to "younger viewers" (who?) to "shorter digital video programming" (what?) to "a la carte" (à la carte?) pricing (What no Red Lobster reference?) to the alphabet soup of TV Ratings 2013 (C3, C7, See you later) and, finally, to "rules." RULES? Well, MediaPost should have a RULE: Reporters should write about numbers so that readers can understand them. As for the most important rule for TV Executives ... It's probably something like learn about numbers (AND people) well enough so you don't go from first to fifth like NBC. Now, don't you like math you can do on one hand? Onwards and upwards!
Reply

John Grono from GAP Research, February 26, 2013 at 10:15 p.m.

Yep, younger viewers prefer 'snackable video bites' which is why under-18s don't go to the cinema any more. Hang on. What's that? They do? Well there goes that theory.

Nicholas Schiavone from Nicholas P. Schiavone, LLC, February 27, 2013 at 7:16 p.m.

To be fair, I reread the latest TV Watch as it appeared again today (Wednesday). Then, I read David Lieberman's Monday article in Deadline about the assessments of Laura Martin (http://www.deadline.com/2013/02/are-big-media-companies-too-lax-about-mobile-streaming/).
And I still conclude: WHAT A MESS!
As we cannot be sure what Laura Martin said --given the lack of a precise document reference in either piece - we need to rely on the writing of two professional journalists: David & Wayne.
Please guys, do not form a musical group any time soon. No one will understand the lyrics, let alone stomach the ersatz New Age (rhymes with Sewage) tune. If MediaPost & Deadline are going to report on numbers, they must learn to count. They must also learn not to treat ever digital prognostication as the Lost Gospel of Jobs. The sense of "Apocalypse Now" is not only out of place, it's just plain foolish. (How I wanted to write to write "stupid."). If David and Wayne, not to mention Deadline and MediaPost, are going to get it right, they need to exercise some "Bounded Rationality" and stop the numerical hyperventilation. Onwards and upwards!