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Network TV
Economics
Three key trends stand out in the economics of network news:
Evening News Revenue
In the first three editions of this report, we discussed the difficulty of obtaining revenue and profit figures for network news divisions. They are small units inside large corporations, and there is no public reporting of their numbers. And even fewer Wall Street analysts track those units than once did. One way to assess the economic health of the news divisions is to examine the ad revenue data for individual programs. Even those numbers, however, must be viewed cautiously, for networks often bundle advertising dollars across different platforms. At NBC, for example, marketing dollars from one advertiser may be allocated to MSNBC, MSNBC.com, the morning newscast, a magazine show and the evening
newscast.1
Indeed, the publicly available numbers raise several questions. In particular, the number totals and the ranks are probably not accurate. Every indication we have from industry insiders, for instance, is that NBC Nightly News is the ratings and profit leader. Yet in the data available from market research, that is not the case. It is best, probably, to consider the figures that are available as useful for the trends they indicate, not the totals they offer.
Those trends suggest that after a year of slow growth or in some cases none for the evening newscasts in 2004, ad revenues rebounded at all networks in 2005, the latest year with full data. Growth appeared strongest for ABC.
For 2005, figures from TNS Media Intelligence show that revenues for ABC’s World News rose 11%, to $168 million. That meant that World News’s ad revenues had rebounded every year since 2002 and were now, according to TNS, back to where they were at the beginning of the decade. So despite the small decline in audience (1 percent), revenues at ABC do not appear to be shrinking.
CBS Evening News, meanwhile, rose 9% over the year according to TNS data, to $162 million in ad revenue. That figure was also a 14% increase from 2000.
NBC Nightly News, according to TNS, saw the smallest revenue gains in 2005, just 3%, to $159 million. And the TNS data hint at a possible negative trend. They show NBC Evening News revenues down from where they were in 2000 by some 8%. It is simply impossible to know if that reflects an actual decline or a change in the way the network accounts for the numbers.
Privately, however, insiders tell PEJ that NBC is No. 1 in revenue and pre-tax earnings for its evening newscast. Being No. 1 in ratings typically translates into the ability to charge a premium for advertising on a program.
What about 2006? Preliminary data through mid-summer suggest more modest growth across the board. TNS estimates that CBS enjoyed a boost from rising ratings with Bob Schieffer, with revenues up 3% for the first nine months of the year. NBC Nightly News was flat. ABC World News was down slightly.2
But all of those preliminary figures came before the arrival of new anchors.
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Source: TNS Media Intelligence/CMR unpublished data, www.tnsmi-cmr.com |
The Prime-Time Component
As of late 2006, CBS and ABC were No. 1 and No. 2 in prime-time programming, with NBC third. For the 2006 fall season, CBS remained the most-watched network every week, and had four top 10 shows, according to rankings released in late November by Nielsen Media Research.
ABC, meanwhile, has had much success the last couple of years with entertainment programs such as Lost, Desperate Housewives, and Grey’s Anatomy. And its celebrity reality show, Dancing with the Stars, provided the lead-in when ABC News was the most-watched network on election night.
At NBC, on the other hand, 2006 was another sobering year. Until 2004, it had held the top spot for 17 of the last 20 years, boosted by such shows as Cheers, Seinfeld, and Friends. Since then, the network has fallen from first to fourth place and has struggled to find a hit to replace those programs. According to Broadcasting and Cable, NBC’s primetime ratings for the audience of 18-to-49-year-olds fell 15% in consecutive seasons since Friends wrapped up in 2004.3 And in October, it was reported that despite an increase of 6% in GE’s profits, its overall performance was weakened by NBC, where profits declined 10% in the third quarter of 2006 compared to the same period in 2005.
Morning News Economics
The morning news shows are still, for now, growing financially. In the latest full year for which there are data, 2005, all three programs saw growth in revenues, but for two of the networks, growth was much less than in earlier years.
At ABC and NBC, the morning news shows essentially bring in twice the ad revenue of the evening news, with half as much audience and a less serious diet of news. The basic reason is that they are on four times longer, turn over their audience several times during their two hours (three on NBC) and pack a lot of commercials and promotions into their shows. They also serve as a significant revenue stream to local stations and affiliates owned by the networks through the local news inserts of headlines and weather.
In 2005, the most recent year for which we have complete data, ABC’s Good Morning America was up 12% over the previous year to $591 million in ad revenue, according to data provided by TNS Media Intelligence.
NBC’s Today Show is an hour longer than its rivals and the ratings leader, but in 2005, before Katie Couric left, it showed signs of slowing down. Ad revenues grew, according to TNS data, by just 1% (TNS estimates to $555 million). A year earlier, in 2004, ad revenues were up 18% year to year. Again, however, this number is almost certainly higher, given that Today is the ratings leader and is on for an additional hour in many markets.
TNS estimated ad revenue at CBS’s Early Show to be up 6% ($264 million in 2005). A year earlier, TNS estimated revenue had grown 14%.4
That trend of robust growth at ABC’S Good Morning America, with slowdowns at Today on NBC and the Early Show on CBS, appeared to be continuing in 2006, according to the TNS data. Through the first eight months of 2006, Good Morning was up 12% to $426 million in ad revenue, Today revenues were estimated to be down 11% to $341 million and CBS morning revenues were flat at $182 million). But again, the figures should be evaluated cautiously because of bundling, and with anchor reshufflings occurring after figures for the eight months were collected by TNS Media Intelligence.
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Source: TNS Media Intelligence/CMR unpublished data, www.tnsmi-cmr.com Footnotes 1. Notably, there does not necessarily seem to be a direct relationship between who generates the largest audience and who collects the most ad revenue. Again, that must be looked at somewhat skeptically because bundling may be more prominent at a particular network. 2. CBS Evening News collected $115 million in the first eight months of 2006, a 3% increase over the previous year. In the same period, NBC Nightly News generated roughly $109 million in ad revenue, virtually the same as a year before. Meanwhile, figures for ABC World News were available only for the first seven months. According to figures provided by TNS Media Intelligence, the evening newscast collected $92 million, down 5% from the same time a year ago. Projecting through the end of the year, CBS News would collect an estimated $172 million; NBC, $164 million; and ABC, almost $158 million. 3. “NBC U: More With Less,” October 23, 2006, Broadcasting & Cable 4. As we have noted in previous years, internal numbers from the networks are different from those provided by TNS, and again, bundling across programs may affect a morning show’s total ad revenue. 5. “Online Papers Modestly Boost Newspaper Readership,” Pew Research Center For The People and The Press, July 30, 2006 6. John Consoli, “ANA: TV Execs Must Be Open to Advertisers’ Needs,” Mediaweek, March 22, 2006 7. Saul Hansell, “TiVo Is Watching When You Don’t Watch, and It Tattles,” New York Times, July 26, 2006 8. Erik Saas, “Jupiter: TV Revenue at Risk From New Platforms,” Media Daily News, September 26, 2006 9. John Lafayette, “Next Ad Debate: Pod vs. Average,” TV Week, November 13, 2006 10. Communications Industry Forecast 2006-2010, Veronis Suhler Stevenson
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