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Economics

Economics

By the Project for Excellence in Journalism

Assessing network news economics presents a challenge. The networks do not release revenue data. Nor are there data on how much money it costs to produce network news programs. There are market researchers who do estimates on how much ad revenue each program generates, but those numbers are, on their face, questionable. Moreover, these data are just for revenue from television, and do not include money made from the Internet and wireless media.

What can be said with some confidence is that, despite declining audience numbers, network news continues to generate considerable ad revenue. This is particularly true in the morning, when what data are available suggest two news shows — the Today Show and Good Morning America — each collect roughly half a billion dollars a year in ad revenue.

Evening News Revenue

The only publicly available financial data on how much money news programs bring in come from TNS Media Intelligence, a research company that provides data to advertising agencies, advertisers and media companies

TNS’ methodology for estimating the ad revenue for each networks news program involves three steps:

1. TNS determines how much each news program charges for a 30-second advertisement. It generally receives this price from the network, but when it cannot, it collects this information from advertisers.

2. It counts the number of ads that appear in each news program.

3. It then multiplies the ad rate by the number of ads to estimate the amount of ad revenue each news program generates in a particular time period.

Television news executives — and even the ratings numbers — suggest that the TNS figures are not the full story. The programs with the highest revenues do not track with programs with the highest ratings. Some of this is because networks now bundle ads across multiple programs and even channels. And advertisers may cut deals with the networks.

What the TNS data do offer is, first, a sense of the financial trends for network evening news programming as a whole. Second, it also can offer some sense of scale of revenues, especially compared with other industries.

Looking at the three evening newscasts together, the data suggest slight declines in ad revenues. According to TNS data for 2006, the latest year with full data, the three evening newscasts together generated $478 million in ad revenue. That total is down 2% from 2005, when the newscasts collected a combined $489 million.

The three evening newscasts combined for $435 million in ad revenue through the first 11 months of 2007, a decline of 2% from the same time period a year before, according to TNS data.

And even with diminished ratings for network nightly news, these numbers indicate that the programs still generate significant revenue. And if, as network executives argue, the TNS estimates are incomplete, the revenue could be even higher.1

Morning News Revenue

The morning news shows are even bigger engines for revenue than nightly news, generating more than double, and perhaps, according to some estimates, nearly triple the money.

But the hard data again are illusory. As was the case with the nightly newscasts, we have analyzed ad revenue data from TNS Media Intelligence. Again, these estimates appear contradictory to what insiders privately have told the Project.

In 2006, the last year of full data, the three morning news shows combined for $1.4 billion in ad revenue, a decline of 2% from 2005 totals.2

How did things look through the first 11 months of 2007? The three morning shows were projected to collect a total of $1.3 billion in ad revenue during this time, up 4% from the first 11 months in 2006, according to TNS estimates.

Footnotes

1. Breaking the TNS estimates down by individual program raises more questions than it answers. For 2006 — and projections for 2007 — TNS puts CBS first in the lineup for ad revenue.

That lineup is almost certainly not accurate. CBS was third in ratings in 2006, and NBC first. And network officials privately told the Project this year that CBS was far from the revenue leader again. Usually, revenues and ratings track closely. Thus in 2006, NBC would have been the revenue leader, with figures higher than the TNS estimates. ABC would have been next. CBS would trail.

In 2007, NBC and ABC would be close in terms of ad revenue, perhaps with ABC ahead given its ratings lead for much of the year. But these are only guesses.

2. TNS data indicated Good Morning America generated the most ad revenue in 2006. But privately, executives tell us that NBC’s Today Show produces the most ad revenue. First, it has been the morning news audience leader since December 1995. Second, it is on the air one hour more than its competitors.