• by Steve Sternberg , Featured Columnist, April 3, 2015

In May, the broadcast networks will be unveiling their new programming and prime-time schedules for next season. But in March and April, cable networks try to persuade advertisers they are the best among the many cable networks that get virtually the same number of viewers.

If you look at season-to-date C7 18-49s prime-time ratings for the broadcast networks, there is about three-tenths of a rating point separating first-place and second place – a small difference. in the cable world, this same small gap is considered massive. The No. 3 and No. 25 ranked ad-supported cable networks are separated by just three-tenths of a rating point. 

Why is this marginal rating difference so big for cable?  

Every cable network (except ESPN and Adult Swim) averages less than half a rating point among adults 18-49 in prime time. When ratings are so small, even modest disparities become big percent differences. Unlike broadcast, cable network ratings are analyzed using two decimal places instead of one.  Otherwise, there would be too many networks with identical ratings for buyers to rank — and we know how network buyers, sellers and researchers like to rank things.  

Do Rankings Matter?

When trying to project next season’s performance, however, there is no difference between a network that gets a .33 and a .27 rating this season. Those numbers could easily be reversed next season. Since the switch to C3, this is more likely than ever.  Instead of averaging 60 minutes for an hour-long program, for example, you’re averaging maybe 15-20 minutes. 

This can only add to the statistical bounce when dealing with such small ratings and small sample sizes.  The .33 rating will rank 8^th among 18-49s while the .27 (which is just six-hundredths of a rating point lower!) will rank 14^th. Yet most people will think the network with the .33 rating is much better positioned and will get more viewers next season.

Having recently worked at a cable network where we went from ranking 14^th one season, to 8^th the next, to 11^th the next (with average ratings that were essentially unchanged), I can attest to how crazy this is. Industry perception of our performance changed significantly despite our consistent performance.

If actual rankings based on ratings don’t matter much — at least among the top 20 or so cable networks — what does?

Original scripted series have been key in branding and re-branding several cable networks. They often create buzz, improve the network’s reach and have more engaged program viewers than any other genre.  More than half of all viewing to original scripted cable series is time-shifted via DVRs. In 2010, there were only two original scripted series on cable that had 50% or less live viewing.  During the 2013/14 broadcast year, the vast majority of original scripted cable series had less than 50% live viewing.

Live viewing matters. Whether you believe C3 or C7 take fast-forwarding through commercials into account (they don’t), the best research I’ve seen on the subject (and not just because I conducted the study) showed brand message recall to be three times as great for prime-time series viewed live than those time-shifted via DVRs. (There was virtually no difference in program engagement.) That’s all that needs to be said on the value of live viewing.

Median age is a secondary measure.  Audience size should trump audience skew.  In other words, if your target is adults 18-49 and if two networks have the same number of those viewers, why does it matter that one network has a median age of 48 and the other has a median age of 52?  There seems to be some mystical value still pegged to anything under 50, which is simply ridiculous, particularly when the size of the audience is similar.

Median Income is valuable but misleading. If you’re looking at adults 18-49 $100K+, it’s really the household income of those adults 18-49.  For 18-24s, that is often their parents’ income.  Any income measure should start with 25 at the youngest. 

It also does not take household size into account. A 45-year-old couple with three kids and a household income of $100,000 probably does not have as much disposable income as a single 35-year-old with a household income of $75,000. 

Someone with a household income of $100,000 in New York City, doesn’t have as much spending money as someone with the same household income in Omaha. When I was at Magna Global, I had Nielsen include income by region in NPower.

While there is some directional value in median income analyses, people should be careful how they use it. At the very least, it should be merged with household size.