TV's Recession Hope

Last week, while the financial world was focusing on the Fed's bailout of Bear Stearns, a less-publicized temporary rescue was going on in the television world. But TV's hero wasn't on Wall Street, it was on Main Street.

Last week offered the first real test of whether viewers would watch their favorite shows when they returned with new episodes after the writers' strike.

The good news: CBS comedies came back bullish on Monday night, and everyone in network television enjoyed a collective sigh of relief. If the shows had tanked, then between stockbrokers and network execs, “windowsill diving” may have become an Olympic sport just in time for Beijing.

The networks are anxiously watching to see if the positive trend continues with other scripted shows returning in coming weeks. They're also banking on one important thing. The economic downturn shows no signs of reversing, but if TV can avoid a post-strike ratings crash of its own, the recession could actually play right into networks' hands. Less money to spend could lead to more TV-watching.

If you've read this column, you know my financial guy is CNBC's Jim Cramer. I don't know if he's actually that smart, but he doesn't have much hair and he's constantly flying off the handle, so we have a lot in common.

So I called Cramer to ask how screwed the economy is and if we're already in a recession.

“I think we are,” he says. “It's just not getting any better.”

Great. It's not like my wife is about to pop out another crying, pooping money vacuum next month or anything.

But this news could work to the networks' favor; when people have less disposable income, they may be less inclined to spend on things like movies. Plus, gas prices may keep people home more.

Not everyone in TV may benefit. Premium channels like HBO and Showtime could take a hit from subscribers who decide to keep their 13 bucks a month until things get better. So it's not a great time for HBO to be in a slump.

The advertising outlook is a bit tougher to call. The Olympics and the election will prop up numbers this summer, but what happens after that? Will advertisers cut back?

There are two schools of thought. One is that if you need to make your numbers, cutting back your marketing budget is easy.

Conversely, a soft marketplace is when you can steal market share. We'll probably see many blue chippers step up to try and do so, and TV is still the biggest weapon.

“People I talk to, especially in consumer products, say if they intend to build share in this tough time, it's through television,” Cramer says.

Another side effect could be a toughening marketplace for the networks to find ad dollars for digital initiatives. It would be a shame if some good digital ideas come and go as a result.

The other interesting arena to watch is mergers and acquisitions. While big deals may be fewer given the credit crunch, Cramer says the on-the-block Weather Channel could provide its most important forecast to date.

“If the Weather Channel goes for $5 billion, then suddenly it's 'game on,'” he says. “If it gets a good price, then there will be more deals. If it doesn't, we'll see.”

This week at a Hollywood Radio & Television Society luncheon at the Hyatt Regency Century Plaza Hotel in Los Angeles, Jordan Levin, CEO of entertainment company Generate, is going to lead a panel discussion entitled “Where Do We Go From Here?”

Unfortunately, TV doesn't have a Fed to swoop in, snap its fingers and artificially inflate Nielsen numbers. So networks are praying that viewers will return and help fight the ratings recession—and give them a better shot at weathering the real one.

E-mail comments to ben.grossman@reedbusiness.com