• by David Goetzl  @dgoetzl, April 23, 2009

A top executive overseeing "Mad Men" network AMC said Thursday that the industry's ability to continue producing expensive hits is uncertain in the face of threats posed by DVRs. And he suggested that executives may be too blasé about it.

"For the first time in the history of TV, the consumer has become empowered to watch the shows they like without having to watch the commercials ... it puts our jobs at risk," said Ed Carroll, COO of Rainbow Entertainment Services.

The "highest-quality" shows are the most costly to produce, he said, citing FX's "Damages," ABC's "Lost" and AMC's "Mad Men" and "Breaking Bad." And networks continue to invest in them despite DVR penetration headed toward 40%. Plus, data shows that 55% of people with the devices are ad-skippers.

Not to mention, Carroll added, much of that premium content is available free on the Web, where advertisers pay far less to be in them, compared to costs for the on-air feed.

"We seem a bit calm about all this as an industry -- or maybe simply distracted by the recession," he said in a keynote at a TV Week Upfront Summit. "But there is no model by which these shows can be produced and then -- once DVR penetration is pervasive -- get ad posting credit for a minority of their viewers."

Nonetheless, Carroll suggested that a poll of 1,500 DVR users commissioned by Rainbow (which also operates WE, IFC and Sundance) offers some insight into how programmers and advertisers can collaborate to combat at least some commercial-skipping.

Results showed that 70% of people skip because they are tired of the same commercials playing so often; 60% suggested pods are too long; and 65% said the commercials are "boring."

But 73% said they do rewind and watch if something grabs them, while 69% said "if their favorite show were going to be canceled they would be willing to watch all the commercials to save it."

Carroll said the research offers suggestions for advertisers and programmers, which "will need to work more closely together" for mutual benefit. And there is an onus on each. Networks "will need to take a serious look" at possibly shortening pod lengths.

But, he said, "it seems clear that the commercials will need to appear more like shows -- perhaps with narrative story lines that carry through a campaign. [Or] customized to fit into the network or show they appear on, even utilizing network talent, with an average running time of 10 or 15 seconds."

Other data cited by Carroll revealed that consumers do stop and watch ads that speak to them, such as for tax preparation services before April 15, discounts at a favored restaurant or pulsating spots for films.

Commercials might also improve effectiveness if addressable advertising got more wind at its back, Carroll suggested. Rainbow sister company Cablevision is offering opportunities in the New York area, while Canoe Ventures is looking to do it on a national level.

It can "give advertisers the ability to subdivide the audience composition and make the effectiveness of a national cable [network] buy as targeted and trackable as any Internet provider."

And he hinted that Mayor Michael Bloomberg may take advantage of Cablevision's ability to target spots by households in the Bronx and Brooklyn as he runs for re-election.