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Network TV – Summary Essay

Network TV
By the Project For Excellence In Journalism
Summary Essay

Heading into 2009, there were some small signs of promise in network news. Viewership of the evening newscasts actually rose in the November, December and January following the 2008 presidential election. It dipped in February and March 2009, but was up again in April.

Was it the economy and a sense among viewers that they needed the synthesis of taped packages they couldn’t get on cable talk shows? Or was it enthusiasm and curiosity about the incoming president? Or some new shift caused by DVRs or the popularity of network websites bringing people back to the networks?

Whatever it was, time wouldn’t sustain it. By May, the audience spikes dissipated. For the year, network news audiences had fallen 500,000 more from the year before, less of a drop than in many years but nevertheless a continuing decline. Most of the losses came at ABC’s World News, down 444,000 viewers year to year. NBC Nightly News actually grew by 65,000 viewers. CBS Evening News remained in third place. The year ended with a change at the ABC anchor desk, with Diane Sawyer replacing Charles Gibson. As usual, the new anchor attracted a sampling of curious new viewers, increasing audience numbers, however briefly. Sawyer’s arrival meant that, for the first time, two of the three nightly network newscasts were anchored by women.

What is occurring in network evening news now is not something apocalyptic. The loss in 2009 was half what the average has been for the last two decades and comes after an even smaller drop a year earlier. The situation, as one industry observer described it, is glacial, not tectonic. An erosion, not a collapse.

And some programs are growing. The late-night news program Nightline saw audiences increase 9%.

There are new worries about the networks’ morning news programs, which are now following the trend of the nightly newscasts. For years after evening numbers began to fall, morning shows were a bright spot, audiences growing for several years and then stable for several more. That is now changed. In 2009, morning news audiences fell for the fifth straight year. The biggest drops, again, came at ABC for Good Morning America.

The problems in morning news are important. The morning shows have represented a growing share of network news revenue thanks to the greater number of hours of morning news – two to four hours, depending on the network — produced each day.

For all the erosion in network TV news audiences, an average of more than 22 million Americans still tune in to the three commercial network news broadcasts each evening, five times the number of people watching the three cable news channels at any given moment in prime time, when far more people are home at in front of their TV sets. And another 1.2 million watch the PBS NewsHour.

A little less than 13 million people watch the three network morning news programs.

Furthermore, the broadcast networks are news leaders on the Sunday morning talk shows, when they compete directly with the Fox News Channel and CNN. ABC’s Nightline has grown in popularity as a news alternative to the entertainment talk shows after the late local newscasts, with a 9% year-over-year improvement. In primetime, CBS’ 60 Minutes continues to be a proven ratings winner as the pre-eminent hour-long news magazine, with an average audience of almost 12 million.

The economics of network news are challenging but the problems may be more tied to the structure of the financial model than to ratings. Broadcast network revenues come almost entirely from advertising, while cable channels get half their revenue from subscription fees from cable operators. By our reckoning, two of the three news divisions could claim a profit for 2009, ABC and NBC, though all three network news divisions instituted cutbacks in costs and personnel, and ABC’s cuts are becoming increasingly steep.

NBC News is a profit center for NBC Universal, but its earning power now comes from its multiplatform structure. On paper, the news division derives more revenue from cable news channels than from the broadcast. About two-thirds of news revenues come from MNSBC and CNBC.

ABC News and CBS News, by contrast, have no such multiplatform systems.

Over all, including entertainment programs, the three broadcast networks saw ad revenue fall 10%, according to market research estimates. Yet that was not nearly as much as most of the other media sectors studied in this report. (click here to see how network television revenue compared with other media sectors) But we estimate that the revenue declines for news at CBS and ABC could be much higher.

And the cutbacks in news investment continue.

ABC announced several rounds of cuts in the last 12 months. The most recent was the most brutal. On February 24, 2010, ABC announced it would reduce the size of its news division by 300 to 400 employees, somewhere between 20% to 30% of its roughly 1,500 news staffers worldwide. And those 2010 cuts come on top of about 55 cuts in the U.S. in 2009. The 2009 cuts, we estimate, amount to a percentage cut in double digits of domestic news staff, which is in sync with estimates of decline in revenues for news amid the recession.

CBS News, which managed to hold staffing relatively stable in 2009, also instituted cutbacks in early 2010, with estimates of 100 news staff members, or roughly 7% of the total, dropped.

And NBC News experienced double digits cutbacks in 2009, by our reckoning and press accounts. So far in 2010, no further rounds have been announced.

The problem the networks have now is one that is hard to escape as long as they are bound by the confines of the network broadcast model. And if the networks lean on local stations to share some of the revenue they receive from cable operators for carrying their programming, there is a limit to what can be gained. Sooner rather than later, other platforms like the Web or video streaming will need to become a more integral part of the networks distribution and revenue strategy, a strategy NBC has already largely developed and reaped benefits from.

As of 2009, NBC News stood alone as the only American broadcast news division to actually have built a true multiplatform organization. Overseas, BBC News has accomplished the same feat. Now NBC News’ move away from its broadcast roots is likely to be accelerated by the pending arrival of a new owner, the Comcast cable operator. Regardless of what assurances come as mergers or sales occur, history suggests one fact about corporate life is unavoidable. As former CNN president and former Los Angeles Times publisher Tom Johnson once said, “The single most important element in the life of a media company is who owns it.”

In the face of these difficulties, there was renewed speculation in early 2010 that ABC and CBS were looking to ally with existing cable news channels.1 Both have explored partnerships with CNN in the past.2 The likeliest partnership now, according to press reports, would be between CBS News and CNN; CNN correspondents regularly appear on the network’s 60 Minutes.

For its part, ABC News in 2009 strengthened ties to business cable channel Bloomberg. ABC reporters began appearing on the cable channel, and the two organizations are reported to have jointly hired one or more employees. Bloomberg also gets content from the network’s affiliate news service.

Yet, unless there is new revenue attached to such alliances the impact might be minimal. Without it, ABC News and CBS News have reached a point of seemingly inescapable maturity, with large audiences but a revenue model for their content that is not as lucrative as their competitors, with only one broadcast platform to deliver that content on, a platform that is slowly eroding.


Footnotes

1. Brian Stelter and Bill Carter, “News Units at ABC and CBS Try to Navigate Uncertain Times,” New York Times, February 28, 2009.

2. Brian Stelter and Bill Carter, “News Units at ABC and CBS Try to Navigate Uncertain Times,” New York Times, February 28, 2009.