• by Wayne Friedman , April 17, 2007

This season's broadcast erosion caught some executives by surprise--and many are still wondering where viewers have gone.

"I couldn't believe the numbers were that low. I had to rerun them just to make sure," says Bill Abbott, executive vice president of advertising sales for Crown Media Holdings, Inc., owner of the Hallmark Channel and Hallmark Movie Channel.

Since the start of the season--excluding the Super Bowl--TV viewership among the four networks is down 11%, and down 15% when looking at the six-network average. All this came suddenly, after virtually no erosion over the past three years. ("Upfront Worries: Broadcast Ratings Erosion Rampant," MediaDailyNews, April 16.)

Andy Donchin, executive vice president and director of national broadcast for Carat USA, admits it's a big concern. "Even with DVR viewership, the numbers are still down."

The numbers appear to be worsening recently. In looking at the four-network average in first-quarter 2006, Carat USA says gross ratings points are down 15% among 18-49 viewers. Every broadcast network is down, says Donchin--with the exception of Fox, which has been flat, versus a year ago. When factoring in time-shifting of TV programming, broadcast erosion among the four networks is still down 10% versus last year.

So where are viewers going? Not necessarily to cable, where gross ratings points are only 1% higher than a year ago.

The big question: what does it mean for the upfront? Broadcast erosion could be a major factor in negotiations. Add it to the laundry list of issues, such as the potential effects of commercial ratings, DVR viewership and engagement metrics.

Media executives say broadcast networks will be hard-pressed to raise program pricing--CPMs, the cost per one thousand viewers--higher than mid-single-digit percentage increases. At these prices (considering the same sellout levels), this means overall upfront revenue would be down, versus a year ago.