Evening News Looks Long-Term

Evening news can make money despite audience declines

The cold statistics of TV suggest that the replacements for the Big Three nightly news anchors may never enjoy their predecessors' stature because the evening newscasts aren't as vital as when Peter Jennings, Tom Brokaw and Dan Rather first took their anchor chairs.

Charlie Gibson and Elizabeth Vargas are expected to help fill the chair that has been left vacant by Jennings, at least temporarily. But the future of news is what is on the minds of network executives. And the question that's been kicking around the TV business for years—“Is the end of the evening newscast at hand?”—seems to finally have an answer.

Yes, evening news audiences have plunged, as viewers tune into Seinfeld reruns and catch the news on cable or the Internet. Momentum in TV news right now is in the morning shows, which generate far more money than their evening siblings. Plus, the TV-news audience is aging and becoming less attractive to advertisers. And it's hard to imagine that the 18-34s surfing Google News will suddenly start watching the NBC Nightly News.

Yet things aren't quite that dire. The financial story is not as bleak as the Nielsen ratings might suggest. And executives are looking to take advantage of new distribution methods—digital broadcast, broadband Internet and cellphones—to spread the expenses of newsgathering across more sources of revenue, softening the blows to the evening newscasts.

“Hard to be No. 3”

While the demise of the nightly news has been predicted for many years, the money is actually not bad for the No. 1 and No. 2 newscasts, says a network executive, but “it's awfully hard to be No. 3.” Today, that distinction falls to CBS. Perhaps the network might make more money by dropping its evening newscast and giving that precious time back to its owned-and-operated stations for an extra half-hour of local news.

But CBS News President Andrew Heyward believes reports about the death of evening news are exaggerated.

Says Heyward, “You're not going to see any network dialing away from the evening news, even as the morning news becomes more important.”

The evening newscasts still command a sizable audience, and all of them are at least marginally profitable. Furthermore, they help support the bigger moneymakers in the morning. Says Heyward, “Evening news is not only viable, but critical to the mix.”

The evening newscasts are far from the institutions they were before the age of cable TV and the Internet. In the 1960s and '70s, the newscasts, along with a handful of major newspapers, had the ability to set the nation's news agenda.

No more. According to Nielsen Media, back in the '70s, 35% of all households tuned into Walter Cronkite or John Chancellor on an average night. A decade ago, the evening news' share was still 24%. Today, just 18% watch Bob Schieffer on CBS and Brian Williams on NBC.

In recent years, the evening-news audience has sunk 3% to 4% annually, falling from 32 million per night in 1996 to 25.8 million today.

But while the audience has plunged, revenues have not. Despite the shrinking audience, broadcast networks each year generally coax more money out of advertisers for the viewers who do tune in.

Even the weakest newscast, CBS Evening News, reaches about three times the audience of Fox News Channel's highest-rated show.

Nielsen Ad-Monitor estimated that evening-news ad sales totaled $466 million last year. That's just $10 million less than the $478 million in 1999 estimated by the Project for Excellence in Journalism's annual State of the News Media report. Network executives say those numbers are a bit high, but correctly note that there's been no big downturn.

And despite the rise of the morning shows, evening-news shows account for an even higher portion of broadcast news revenues than in 1999. That's because prime time newsmagazines—once a thriving billion dollar business—have largely been displaced by reality shows. So the evening news now generates around 22% of broadcast-news revenues, up from 19% in 1999.

All eyes are on ABC's and CBS' choices for new anchors and, at CBS, a new format for the show. But if you want to see the long-term future, study NBC. That's because NBC News has the structure that every network finance executive envies.

Thinking Long-Term

Forget that NBC is No. 1 in both the evening and morning. That, presumably, will change someday. What won't change is NBC's long-term advantage—spreading newsgathering costs across so many viable outlets, including the broadcast shows, MSNBC network and online, CNBC, Telemundo and, to some degree, its O&Os.

CBS and ABC missed out on cable news networks. That's a big reason they're aggressively trying to start new networks distributed by other means, such as broadband and digital broadcast. If they can make those meaningful sources of revenue, then that will be one more place over which to spread the cost of those Middle East correspondents. Spreading those costs is at the heart of the talks CBS and ABC have periodically conducted about combining with CNN.

One thing is clear: Network executives need to think forward, to build a newsgathering operation rather than take the typical path to short-term profits: cut, cut, cut.

E-mail comments to jhiggins@reedbusiness.com