TV Decline Q2

Analyst: Broadcast Took a Pounding in Q2

DVR playback not enough to offset ratings declines

By Anthony Crupi

Despite the lift from time-shifted viewing, network television appears to be on the ropes, losing nearly 10 percent of its demo deliveries in the second quarter of 2012.

Broadcasters have suffered a second straight quarter of significant prime time ratings declines, according to Nielsen C3 ratings data, which blend live viewership of a program’s commercial load with three days of time-shifted deliveries.

“There is no way to sugarcoat this: broadcast took a beating in Q2,” Nomura Equity Research analyst Michael Nathanson wrote Monday in a note to investors. All told, the Big Four saw 9.4 percent of their prime time 18-to-49 deliveries disappear in Q2, averaging 9.03 million members of the target demo in C3 versus 9.96 million in the year-ago period.

Only CBS posted year-over-year gains, averaging 2.17 million adults 18-to-49 in prime, an improvement of 8.4 percent per Nielsen C3 data. Fox, which won the demo outright, took the biggest hit in the quarter, dropping 19.3 percent in the demo (2.54 million versus 3.13 million in Q2 2011).

Meanwhile, an already precarious situation at NBC deteriorated even further. The Peacock in Q2 averaged just 1.86 million adults 18-to-49 in prime, a drop of 17 percent from the year-ago 2.11 million.

ABC was off 16.8 percent to 2.46 million.

As Nathanson pointed out, the 9.4 percent decline in C3 ratings marks the most severe drop in broadcast deliveries since the currency was adopted in 2007. (The analyst discounted the two instances in which ratings were marred by a year-to-year comparison with an Olympics quarter.)

A major shift in genre preference may be broadcast’s biggest problem, as the drama is rapidly becoming devalued currency. While one-hour dramas remain the biggest magnet for GRPs, their hold over viewers is deteriorating at a steady clip. In the 2006-07 season, dramas accounted for more than half (51.3 percent) of all prime time deliveries; this season saw that share fall to 39.3 percent.

On the flip side, comedy in 2011-12 accounted for 18.1 percent of all GRPs, up from 10.1 percent five years ago.

The drama drain is most evident at 10 p.m., a time slot that has all but surrendered [1] to DVR playback and cable originals. Of the 11 new broadcast dramas that premiered in 2011-12, only three (NBC’s Smash and ABC’s Revenge and Scandal) were renewed for a sophomore run. So lonely has the 10 o’clock hour become that NBC has capitulated to the zeitgeist altogether, ceding its storied Thursday night drama slot to the newsmagazine Rock Center With Brian Williams.

While C3 helped stanch the bleeding in the short term—live viewing in Q2 was actually down 15.2 percent—another encouraging trend is beginning to emerge. “Viewers continue to skip fewer commercials with their DVRs in each passing year—for both broadcast and cable,” Nathanson wrote. Indeed, as DVR penetration/usage grows, the percentage of skipped commercials has declined from 58.8 percent in the inaugural year of C3 to 46.7 percent in 2011-12.

Cable hasn’t enjoyed the same rate of improvement. In 2007-08, viewers avoided 52.8 percent of the advertising on network cable; since then, the needle has crept a few degrees to 50.4 percent.

Upon application of C3 data, the cable networks in Q2 were down slightly (-0.4 percent), averaging 20 million adults 18-to-49 versus 20.1 million in the prior-year period. When taken together, broadcast and cable deliveries were off 3.3 percent to 29.1 million.