With ratings down and the ad market weak, some programmers —particularly on cable— are packing more commercials into their shows in order to keep ad revenue from falling further.
"The ratings 'losers' are taking desperate measures to shore up near-term margins— but at the long-term risk of further pushing away viewers and reducing advertiser ROI," said analyst Todd Juenger of Sanford C. Bernstein, author of one of two research reports that came out Wednesday morning.
Michael Nathanson of MoffetNathanson Research found that the total number of spots on broadcast was down 2% in the fourth quarter. But Fox packed 15% more spots into its programming, nearly offsetting declines at the other nets.
On cable, Nathanson said, the number of spots was up 7% in the quarter. Viacom had the biggest increase— a 13% jump-followed by a 10% hike by A+E Networks and a 9% rise at Discovery. The smallest increases were registered by Disney-owned networks, independent channels and Time Warner.
"Networks can offset ratings challenges and pricing weakness with more inventory, however, we worry that it is a dangerous long-term game that ultimately devalues the consumer experience and reduces ad efficacy," Nathanson says. "As we saw with radio, once the increased commercial load genie is out of the bottle, it is nearly impossible to put it back in."
Despite the increase in spots fourth-quarter ad revenue is expected to decline. According to Nathanson's estimate, fourth quarter domestic national TV ad revenues for the big media companies will be down 1.4%, with broadcast down 1.5% and cable off 1.4%.
"One wonders why the agencies let the networks get away with the ad stuffing," added Juenger.
Juenger also looked at the amount of original programming the media companies are airing.
"Generally speaking, the ratings winners (Disney, 21st Century Fox, Scripps Networks) are increasing investment in original content (and not abusively increasing ad loads), whereas the losers (A+E Networks, Viacom, NBCUniversal) and the neutrals (Discovery, AMC Networks) are decelerating investment in original content and stuffing more ad spots into their shows," says Juenger.