Nielsen's aggressive push to deploy so-called commercial ratings by the end of this year is raising eyebrows among some clients who are wondering what the real agenda is. After months of discussion Nielsen Wednesday unveiled a formal plan to begin releasing "average commercial minute" ratings beginning Dec. 11. Nielsen emphasized that the new ratings are being made available for "evaluation" purposes only, and that it would only include data for TV clients who choose to "opt-in" to the process. That last part has created a quandary for some Nielsen clients, especially major cable TV networks, which have raised important questions about the way Nielsen plans to process the new ratings, which some executives say create an uneven playing field for cable. The dilemma for cable networks is whether to participate in the test, and provide a tacit endorsement for the new ratings, or to sit the process out, in which case they will be excluded from influencing it and will not have direct access to the data. As part of the plan, Nielsen said that clients who choose to "opt out" will not have access to the data. The major broadcast networks and some agency executives have been pushing the plan, because they see it as the first real shot at getting some commercial ratings data flowing in the U.S. marketplace. Commercial ratings are common in most other major TV markets around the world. But the way the plan developed and the way Nielsen plans to process the new ratings has raised concerns among cable networks, particularly the differences in the way Nielsen monitors commercial data broadcast and cable networks. Nielsen has said it plans to address those issues, and has begun revising its systems to do that. Some agency executives have also expressed concerns with the way Nielsen plans to "weight" the commercial minutes data, giving minutes with even fractions of commercials in them the same weight as minutes that are all or mostly commercial time. Another big question is whether the new commercial minute ratings will include DVR playback or will be based on "live" only data, which is currently the standard for network advertising deals. In its announcement this week, Nielsen said that, "at the request of clients," it is currently analyzing the amount of DVR playback occurring within the first seven days of a program's original airing. "This data will be made available to all national clients by Oct. 26," Nielsen said. Nielsen's offer to make the first year of data available for free, meanwhile, indicates how important the rollout is to the TV ratings giant. "I think if we did not succeed in getting the commercial ratings concept through this time, it would have been delayed for years," said a Nielsen insider, adding that client reaction to the plan, "so far, seems positive." More reactions undoubtedly will be vetted during two industry forums on the topic: An Advertising Research Foundation meeting on Oct. 25; and a Radio-TV Research Council luncheon on Nov. 6. Meanwhile, some observers say Nielsen's freebie is less than altruistic. For one thing, the U.S. market is the only major market where commercial ratings data is not available, raising questions about Nielsen's vitality on its home turf, even as its pushes forward with plans to measure new video platforms. For another thing, Nielsen stands to reap a humongous new revenue stream if and when commercial ratings are deployed as actual currency data.
Two years after NBC Universal Television took an $800 million ad revenue drop in the upfront, it will make $800 million in cuts from staff reductions and production savings. Is there a correlation between the advertising--especially in today's environment--and the layoffs? Absolutely. "It is a response to current advertising conditions," says Mark R. Fratrik, vice president of Chantilly, Va-based BIA Financial. "With J&J not being in the upfront, with automotive cutting back, it has been a long time in NBC's thinking." Analysts say NBC is concerned about being in fourth place among all the networks. But the real issues are the increasingly troubling equations of production costs versus advertising sales, says Fratrik, especially when high-priced dramas yield mediocre ratings. For example, published reports claim that rookie NBC show that "Heroes" costs a whopping $2.7 million an episode. The good news is that "Heroes" is doing well, with almost a 6.0 rating in adults 18-49--the highest among all new network shows. But shows like "Studio 60" cost about the same as "Heroes," yet deliver half the 18-49 rating that "Heroes" does. During the upfront, according to Ad Age, "Heroes" grabbed $171,000 for a 30-second spot; "Studio 60" took in $210,000. The price tag for "Heroes" will no doubt rise--perhaps in the $200,000 to $240,000 range. With 20 national spots per hour, at $200,000, that would reap a gross $4 million per episode. Of course, NBC also has re-run availabilities, as well as consumer pay-per-play fees and ad revenues from its many digital platforms. In the old days, this formula would come out somewhat differently. A network could negotiate a low license fee (versus the production costs) from the producer. But the math doesn't really work any more. "Heroes" is produced by NBC Universal Television Studio, while "Studio 60," the exception to the rule, is produced by Warner Bros. Television. Which still leaves scores of other network shows out of the money loop. That's why Jeff Zucker, chief executive of NBC Universal Television Group, says there will be fewer scripted shows in the future. Fratrik surmises that Zucker's threat is targeted at the weaker 8 p.m. hour that kicks off the prime-time schedule. Networks have mostly backed away from traditional half-hour sitcoms. So Fratrik expects to see more reality shows, game shows and new shows from NBC during that hour. NBC stations are already on the right track, say analysts. Its O&O stations have been praised for their ability to sell more in the digital space than most other stations groups. Analysts believe NBC stations are now getting 15% or more of their ad revenues from the digital space. In the broader picture, NBC expects to generate $1 billion in digital revenues from subscription program fees and ad revenues by the year 2009. "The reality of network television is that the model doesn't work as well as it used to," says Fratrik. "They are not going back."
Broadcast station groups displayed mixed third-quarter results Thursday--highlighted by the Tribune Co. reporting a slight revenue drop, even in a year with significant political spending. But their parent companies with print operations saw those segments suffer. Tribune--which operates 25 local stations including those in top three markets--reported a 3% revenue drop to $278 million for its television group. With a governor's race in California, the company said revenues at its LA station increased, but stations in the other leading markets, New York and Chicago, dropped. Slow categories included retail--perhaps hurt by Federated's decision to consolidate stores under the Macy's brand and move into national advertising--as well as auto and health care. The company did not specify whether the slowdowns were in national or local spot. Among the Tribune stations are 16 affiliates of the new CW network, which so far this season has posted ratings at about the same level as the defunct WB (which stations were previously affiliated with). Even though there was some hope that the CW would outperform the WB since its combination with UPN was supposed to add some programming firepower, Tribune Chairman-CEO Dennis FitzSimons said the network would ultimately buoy the stations and "drive improved prime-time ratings and revenues." Tribune's woes contrasted with growth at Belo Corp., which runs 19 stations, including 13 affiliated with the higher-rated ABC, CBS and NBC. Revenue for the station group jumped 6.9% to $179 million, although political revenues accounted for 64% of the increase. Belo said it posted an 8.4% jump in spot dollars. In keeping with trends, local revenues increased slightly by 2.7%, while national jumped 7.7%. Ad dollars for station Web sites--a major focus for station groups as spot dollar growth slows--increased 45% to $4.8 million. McGraw-Hill, which operates four ABC stations, joined Tribune in posting a revenue decline for its station group. The company reported a 5.9% drop for the segment to $26 million. Political revenues could not overcome declines in national and local sales. McGraw-Hill has two stations in politically hot California, including one in large market San Diego. Its decline was somewhat surprising, considering ABC's ratings success. The New York Times Co.--which plans to sell its nine stations--posted a 27.8% increase in the segment to $4.3 million, but offered no other details. In print, the Times Co., Tribune, and Belo all struggled. Print advertising took a hit in the third quarter at the Times Co.'s major properties, including the New York flagship and the Boston Globe--with a 4.2% decline in ad revenue contributing to a 2.4% decline in total revenues versus the same period in 2005, ending at $739.6 million. As in previous months, the New England Group turned in the worst performance, with a 10% drop in ad revenue. Squeezed by falling revenues and costs associated with layoffs and its sale of the Discovery Times Channel, profits fell 39% from $23.1 million in the third quarter of 2005 to $14 million in 2006. According to Janet L. Robinson, President-CEO of the Times Co., the weak performance is due in part to softening demand for print classifieds: "Print advertising remains challenging, especially in categories such as studio entertainment, help wanted and automotive where we are experiencing declines." In September's monthly returns, the Internet was a bright spot, with online ad revenue jumping 18.9% across the Times' three media groups compared to September 2005. That number is up slightly from 17.3% in August--but both August and September figures were relatively low compared to results from earlier this year, suggesting a possible slowdown in online advertising. By comparison, July revenues were up 27.5% compared to last year, June was up 23%, and May was up 27%. Although the Tribune Co.'s third-quarter earnings showed a big increase over the same period of 2005, without the one-time increase resulting from its acquisition of the Times Mirror, revenues would have fallen 3% compared to the third quarter in 2005. Print ad revenues at the company's various newspapers, including the Chicago Tribune and Los Angeles Times, fell 2% to about $1.35 billion, missing analysts' expectations by $200 million. As a result, the Tribune's publishing division saw profits fall 17% to $141 million. Like the Times, Tribune executives blamed weakening demand for national and classified advertising, with the former falling 8% and the latter 1%. Recently the Tribune Co.'s board of directors has been battling with dissident shareholders from the Chandler family, a wealthy group of private investors who have urged the company to sell key properties and break itself up. The company formed a special committee to consider this and other options intended to improve its various properties' financial performance on September 21, and on Wednesday it announced it has hired Morgan Stanley as financial advisor to this committee. The Belo Corp. also posted weak third-quarter results at its newspaper properties, including The Dallas Morning News, with overall print revenue falling 4.2%. In addition to a weakening ad market, Belo blamed its shrinking profit margin on severance costs associated with layoffs at The Dallas Morning News, as well a $10 million technology initiative. According to Ken Doctor, an analyst with Outsell, Inc., the latest round of newspaper results have surprised even observers who anticipated bad news from newspapers: "Top side, the revenues are decelerating faster than people had expected. We do seem to have a softening of the economy, but the main thing is the advertising dollars are moving to other media even faster than predicted." In part, Doctor explained, that's because "we're starting to see a Craigslist effect: advertising is no longer even keeping pace with inflation, because advertisers are finding more efficient ways to reach those customers, including of course the Internet."
As some of the biggest magazine genres struggle with declining readership and ad pages, one plucky category--celebrity mags--is having a blockbuster year. Without question, the big story for celebrity mags in 2006 is the phenomenal growth of InTouch Weekly and sister publication Life&Style Weekly, launched in 2002 and 2005 by Bauer Publishing. There's also good news from its competitors, like Us Weekly--launched by Wenner Media in 2000 and relaunched as a glossy celebrity mag in 2002--and Star Magazine, a tabloid relaunched as a glossy mag by American Media, Inc. in 2004. Although the magazines are nearly indistinguishable at the newsstand, they still succeed individually. According to the Audit Bureau of Circulations (ABC), in the first half of 2006, InTouch Weekly's newsstand sales rose 5.3% over the same period in 2005, climbing from 1,090,088 to 1,147,390. In a marked difference from almost every other genre, InTouch Weekly's newsstand sales dwarf its subscription base, which grew 27.5% to 42,546. And according to the latest figures from the Publishers' Information Bureau (PIB), in January-September, InTouch's ad pages rose 38.6% compared to the same period last year--topping 646, as revenue jumped 84.6% to almost $78 million. Meanwhile, a similar Bauer title that also offers celebrity fashion tips, Life&Style Weekly, saw newsstand sales increase 48.3% to 469,749, as pages grew 13.4% to 283 and revenue jumped 113.5% to over $15 million during the first nine months of 2006. Bauer is not the only company turning gossip into gold. American Media's weekly Star Magazine is following a somewhat different route, transitioning to a subscription base model, with the blessing of advertisers. While newsstand sales fell 14.4% from 879,356 to 752,498, subscriptions rose 39% to 761,505, for total 6.1% circulation growth. On the ad end, in the first nine months of 2006, ad pages rose 9.1% to 689, and revenue jumped 27.6% to over $114 million. Finally, Us Weekly's newsstand sales rose 1.7% to 1,006,191 as subscriptions jumped 15.1% to 788,670. In the first nine months of 2006, the mag's ad pages rose 4.8% to 1,311 and revenue jumped 34.6% to almost $197 million. While the celebrity weekly niche has risen, there have been casualties--most notably Time Inc.'s Teen People, which the publisher announced it would close in July after months of falling ad pages and revenue. According to the PIB, Teen People's total ad pages for the first half of this year fell 14.4% from 2005, from about 353 to 302, while ad revenue fell over 10% in the same time period. Samir Husni, a magazine expert at the University of Mississippi's journalism school, said Teen People is a victim of its own success, tracing the title's rise and fall beginning with its 1998 launch. "When Teen People was launched, it was one of the big success stories. But then we had title after title for teens hitting the newsstands. That created this whole teen celebrity niche." The death knell was the arrival of InTouch, Husni says--in large part because of its greater frequency: "I call it the InTouch weekly revolution. When InTouch launched, the first major weekly covering the celebrities at this apparently cheaper price--$1.99 per issue--they took the market by storm. Then came all the other weekly titles. InStyle, Us, Star changed from a tabloid to a magazine, then OK came to the market, then Celebrity Living." Looking back, Husni says, "those celebrity weeklies have replaced the need for the more expensive teen monthlies."
Coca-Cola reported a year-to-date revenue jump Thursday, propelled partly by a 10% increase in worldwide marketing spending, company officials said. "We believe we're getting traction out of the spend," said Chairman-CEO Neville Isdell on a conference call with analysts. Isdell has made increasing ad dollars a priority in his tenure. Isdell reportedly has boosted Coke's marketing investment by $400 million a year--meaning that it will come close to $3 billion this year. The company is currently employing a worldwide "Coke Side of Life" campaign. So far, however, the global revenue increase has trailed the rate of increase in marketing dollars. Net operating revenues for the first nine months of 2006 jumped 3% to $18.16 billion. In the most recent third quarter, net operating revenues increased 7% to $6.45 billion. Still, Isdell added, "effective marketing programs ... are increasingly connecting with our consumers." Particularly helpful this year, he noted, were marketing initiatives tied to the World Cup this summer outside the U.S., highlighted by soccer hotbeds Europe and Latin America. Isdell said World Cup programs were rolled out in more than 100 markets. However, one troubled business segment he cited Thursday was in ready-to-drink tea and coffee beverages, which he deemed unsatisfactory. "There's clearly more that we can do," he said.
The game remains the same on Wednesday--ABC narrowly wins over CBS. This time around, "Dancing with the Stars" improved slightly, but "Lost" lost out on some viewers. "Stars" moved up to a 5.0/14 for the 8 p.m. to 9 p.m. time period; "Lost" fell to a 6.6/16 from a 6.9/17 the week before. CBS will claim that "Criminal Minds" is now virtually on par with "Lost" in overall viewers, although it's behind two whole ratings points in 18-49s with the ABC show. In overall viewers, "Lost" had 16.3 million; "Minds" took 16.2 million. Interestingly, both "Minds" and "Lost" each lost about 500,000 overall viewers from the week before. "Minds" 18-49 numbers were flat at a 4.5/11 versus the week before. What's the end result for Wednesday evening? For the night, ABC came in at an exact 4.9/13 versus the previous week. CBS slowed down to a 4.3/11 from a 4.6/12--mostly from a slight drop from in "CSI: NY," which came in with a still-dominant 10 p.m. time period-leading 5.2/14. NBC's "30 Rock" and "20 Good Years" weren't good enough. Both sitcoms dropped again--"Rock" to a 2.3/7, and "Years" to a 2.0/5. This put the network in fifth place behind The CW during the 8 p.m. period. Overall, NBC ended up in fourth place with a 2.7/7--down from the previous week's 2.9/8. Third-place Fox was a factor for the night. Its League Championship Series, the St. Louis-New York baseball game, perked up to a 3.5/10--slightly better than the previous week's divisional series Detroit-Oakland game, which took in a 3.2/9. The CW continued to roll along with the best-rated program on its schedule--"America's Next Top Model"--grabbing a strong 2.7/8, as well as second place in adults 18-34 versus the first-place "Stars." For the night, "Model" was just behind NBC with a 2.1/6.
While NBC continues to relegate comedy "Scrubs" to bench player, at least one metric shows it has some buzz. Strangely, rankings from lower-tier portal/search engine Lycos show that "Scrubs" generated the most search activity last week of any prime-time show--more than bona-fide hits such as "Lost" and "Desperate Housewives." There is an explanation. One of the reasons "Scrubs" may have moved to the top is the Oct. 10 release of its fourth-season DVD. "Scrubs" hasn't aired this season on NBC yet, but the network plans to use it as a mid-season replacement for a struggling show/time period. It does air in syndication, and is available on iTunes. This season would be its sixth on NBC. The shows that immediately followed it in the Lycos rankings were hits "Dancing with the Stars," "Lost," and "CSI." "Desperate Housewives" came in at number eight. "Often, the television shows creating the most buzz on the Internet are not necessarily shows that reach the most viewers," a Lycos rep says. "Scrubs" would fit that bill. So would shows that have a significant following, although not necessarily on broadcast TV, such as "Veronica Mars" (ranked fifth) and "The Office (ranked 10th). Lycos was the twentieth-most popular Web property last month, according to comScore, with 25.7 million unique users.
In the lead-up to the American Magazine Conference in Phoenix, Arizona this weekend, the Magazine Publishers of America announced the launch of 47 new magazines in the third quarter of 2006, demonstrating publishers' belief in the continued vitality of the medium in the face of Internet competition. According to the MPA, the new launches include 17 lifestyle mags; 14 mags targeting affluent readers; 13 men's magazines; 12 women's magazines; and nine magazines for African-Americans. Among the new titles launched by MPA members are Vogue Living from Conde Nast, JunkMarket Style from Meredith, Sherman's Travel, from Sherman's Travel LLC, and SI Edge from Time Inc. Together, the 47 launches represent a 34% increase over the number of new launches in the third quarter of 2005. In the last year, the industry has also seen the launch of new events and awards intended to refine magazines' competitive edge versus other media. In December 2005, the MPA hosted the first "Magazines 24/7," a conference devoted to magazine publishers' digital strategies. A second "24/7" conference was held in April 2006. The American Society of Magazine Editors also announced a new awards event, the Best Cover Competition, to focus attention on graphic and editorial elements that attract consumer attention in a crowded newsstand environment. The first winners of the Best Cover Competition will be announced at the AMC conference in the Biltmore Hotel, Phoenix, on Tuesday. Ad Revenue Up At Business Pubs The latest figures (July) available for business publications from the Business Information Network showed a 4.5% increase in monthly ad revenue over the same period in 2005, and a 1.4% increase for the year-to-date. Ad pages were up 2.21% on a monthly basis, and 1% on a yearly basis. Although the number is somewhat delayed, "this upswing in ad revenue is a welcome harbinger for the second half of the year," according to Gordon T. Hughes II, president and CEO of American Business Media (ABM). Hughes adds: "This growth, coupled with the strength of face-to-face this year already, is an exciting indicator that as an industry we are holding steady." The three leading ad categories were: architecture, design and lighting, which grew 8.14%; resources, environment and utilities, which grew 8.81%; and aviation, aerospace and military, which grew 9.8%. A number of studies released in 2006 have suggested the special persuasiveness of B-to-B publications as ad platforms. For example, according to one study conducted for ABM by Harris Interactive, more than half of executives who read B-to-B magazines have acted on an ad they saw. Specifically, "57% [of respondents] said it had caused them to make a purchase or recommend a purchase" for their company, recalls Regina Corso, research director for Harris Interactive. This year's revenue figures seem to confirm another finding of the Harris study, which placed B-to-B publications second only to live calls by sales executives--including company reps at trade shows and expos--in terms of sales success. According to Harris, 70% of the study respondents said interactions with company reps at industry functions caused them to make or recommend a purchase to their company. Financial Advisors Rely On Trade Pubs While B-to-B publications are undeniably popular as sources of information for executives from a broad spectrum of businesses, financial advisors seem to rely on them even more than others, according to Aptura Research. In a survey of 400 personal financial advisors, Aptura found they relied on trade publications over every other medium, with 61% citing them in job-related decisions. According to Joseph Hardin, Aptura's research director, "personal financial advisors view trade publications as the most important source of media to get information concerning their jobs. The study confirms that they look to trade publications more than Web sites, trade shows, newspapers or television. Some titles are read more thoroughly and frequently than others among professionals, suggesting advertising dollars may be better spent in such titles." Magazines.com Agrees To ABC Evaluation Magazines.com has signed on to be the first consumer magazine subscription agent to be evaluated by the Audit Bureau of Circulations for compliance with ABC's circulation bylaws and rules. The ABC program is an important step forward in making magazine subscription sales more transparent, which itself is crucial to sustaining advertiser interest. The ABC evaluation uses a control review process and transactional testing procedures to verify that subscription agents' practices are above-board. Analysts: Time4Media Strong, Despite Difficulties Time Inc.'s Time4Media and parenting publications--including 18 titles currently up for sale--are strong despite their current difficulties, according to Reed Phillips, managing partner of the investment media banking firm DeSilva + Phillips, reports Red7Media, an online business publication. Conceding that the titles will likely finish the year down from last year, Phillips still says that given the high-profile sale, "you're going to get a lot more people interested in taking a look at these titles than you normally would." Likely bidders include Bonnier AB, a Swedish media company worth $2.7 billion, Aspire Media, and Apprise Media.