Commercial ratings during the broadcast networks’ premiere week were helped by increased DVR use, but were still down considerably from last year.
According to an analysis of Nielsen figures by David Scardino of ad agency RPA, broadcasters were down between 11% and 17% among various demographic groups, when measured using C3, the rating used to set advertising rates. Those figures were hurt by the fact that The CW didn’t launch its new shows during the traditional premiere week.
“As with last season’s numbers, C3 premiere week audiences continue to more than make up for the ad avoidance losses from Live Only program ratings to live only commercial ratings,” Scardino says.
According to Scardino, NBC was the only network to show a gain in C3 audience among adults 18-49 during premiere week, up 10%.
CBS was down 23% in C3, Fox was down 19% and ABC fell 16%.
Ad rates used to be based on live program ratings, but because of marketer concerns over the ad skipping made possible by DVRs, the industry switched to average commercial minute ratings in 2008. By including commercials watched over three days of DVR playback, the TV business was able to recover and sell some of the eyeballs otherwise lost as live viewing declined.
The C3 commercial ratings are available a couple of weeks later than the overnight program ratings, which include same-day DVR usage. Neither the networks nor Nielsen like to talk about C3, despite their important to the industry’s financial health.
Using the overnights, the broadcast networks were down 11% in the first two weeks of the season, causing alarms on Wall Street.
But in a new report, analyst David Bank of RBC Capital Markets says ratings declines at CBS in particular don’t necessarily foretell ad revenue shortfalls of similar magnitudes.
Bank says his research shows that ratings for adults 18-49 will likely be down 10% for the year. Given that, he expects that CBS’ network ad revenues will be up 3.5%, thanks largely to the Super Bowl, and down 1.5% excluding the Super Bowl. As a result he’s lowered his estimate for CBS’ 2013 earnings to $2.86 a share from $2.94 a share.
Why will CBS’ ad revenue decline be less than its ratings decline?
Bank says that upfront pricing is up about 9% and that CBS sold less of its ad inventory in the upfront than it did last season, which should mean it gets the higher CPMs often realized in the scatter market.
With ratings down at the other broadcasters except NBC, Bank expects supply to tighten in the scatter market, keeping upward pressure on pricing.
Having the Super Bowl and the AFC Championship games give CBS an opportunity to quickly soak up make goods it might owe upfront advertisers.
CBS’ guarantees to advertisers called for ratings to be 5% lower this season, Bank says.
“We think that CBS remains the closest thing to the only real pure play on TV content in big cap media and rather than seeing current season ratings pressures a structural shift on content monetization as some have suggested, we see it as simply nearer term pressure on advertising revenue,” Bank says.