TV Paradox Continues: Medium Flourishes Despite Odds

Once again, the TV paradox is in fine form. Outside the nadir of a recession every 10 years, multiple trends may suggest ad dollars will decline and the reverse is reliably the case.

Magazine salespeople are jealous. Their colleagues in other categories, too.

Companies now are reporting second-quarter earnings and CEOs across multiple industries have been offering some pretty jarring comments about a bumbling economy, notably Coke CEO Muhtar Kent saying that even "many middle-class consumers" are "still feeling somewhat confused and fragile."

Also, with some exceptions such as NBC's "America's Got Talent," ratings appear to be on an inexorable decline.

And digital video continues to grow, which would seem to be primed to grab TV cash. At a MediaPost event Monday, Horizon Media executive vice president Donnie Williams said some clients shifted a major chunk of dollars that way recently.

Yet, TV is simply a triumphant medium.



Of all the concerns a network may have, the declining ratings would seem to be the most troublesome. But the medium has an exceedingly valuable resource in time.

Unlike some businesses, it can absorb considerable failure after failure - cancelled show after cancelled show, plus veteran hits losing strength -- because the ad money keeps coming in, allowing time to wait for the transformative hit.

So the sector, as Nomura's Michael Nathanson writes, is weathering the ratings troubles - in the second quarter, "C3" numbers at the Big Four broadcasters were down 5% in the 18-to-49 demo - because of "the laws of supply and demand."

"There are too many ad dollars chasing a smaller inventory of viewers," he writes in a new report.

Nathanson writes that there has been a recent slowdown in the scatter market, which propels the demand, but that's normal this tiime of year considering the focus advertisers' have had on the upfront and mid-summer is a slower period, save for the movie category.

He also writes that corporate balance sheets look solid and categories such as autos, technology and telecom have new products to sell. Apple must have a chunk to spend after a hugely successful second quarter.

So, Nathanson concludes things look rosy going forward.

When it comes to TV, that's hardly a surprise.

1 comment about "TV Paradox Continues: Medium Flourishes Despite Odds".
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  1. Ron Stitt from Fox Television Stations, July 20, 2011 at 5:44 p.m.

    There's really no paradox. TV was and is the best (only really) way to accrete effective reach quickly (not to mention being the most powerful/persuasive medium). Although it is the currency of media transactions, focusing on average audience ratings misses the point. The real strength is cume. When this "reach advantage" goes, you'll see the sea change digital people always seem to be waiting for with baited breath. But that is not imminent by a long shot. Yes, digital/on-demand is more measurable/targetable and that's a great selling point, and TV will take on more of those characteristics, but it's not a substitute for reach/impact. So stop looking at it as a zero-sum game and expecting TV to lose and you won't continually be stumped by this "paradox".

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