The Sked: Why Are the Networks Upbeat about the Upfront with Such Declining Ratings?

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We may all be looking at the wrong ratings.

Each day, attention is paid to the previous night’s television ratings, generally the “Live+Same Day” ratings measuring any viewing of a program live or via DVR playback within that night’s prime time or late night hours.  But ratings measurement does not stop there.  DVR playback continues for days after the initial broadcast, and the following week, Nielsen releases ratings for Live+3 Day and Live+7 Day viewing, among other “streams” of data.  However, very little attention is paid in the press and online to those numbers, because everyone is focused on the Live+Same Day ratings.  (We at ShowBuzzDaily are as guilty of this as anyone.)

But remember, the economics of network TV are largely based on viewership of commercials, and most advertisers don’t care whether their commercials are being viewed live, as long as they’re being watched.  For advertisers and network sales departments, the most important ratings measurement is that of commercials (as opposed to the entire program) viewed over a three-day period after the initial telecast.  All commercial time is bought and sold on this “C3” rating, and when we look at this season’s television ratings on this measure, the outlook for the broadcast networks is not nearly as dire as the daily “Live+Same Day” ratings would suggest.  It actually looks pretty good for the industry.    

Let’s start by looking at network  television viewing in the broadest sense: all programs in prime time (whether they are entertainment, sports or news programs; original episodes and repeat telecasts; and regularly-scheduled series and special programs such as the Super Bowl or Academy Awards), combining the ratings of the major broadcast networks (ABC, CBS, FOX and NBC).  This season to date (September 19-April 29) the four networks combine for an 8.27 rating when we look only at Live viewing (either in homes without a DVR — still the majority of households — or in DVR homes that are simply choosing not to use the device at that point).  When we add in same-day DVR playback (until the very early morning hours after prime time), the combined rating increases to a 9.62 rating (a 16% lift from the Live only rating).  Add in DVR playback viewing over the course of the next three days, the combined rating rises to a 10.98 (a 33% lift from the Live only rating), and a full week after broadcast the combined network rating tops out at an 11.35 rating (a 37% lift over the Live only rating).   

                      Prime Time Ratings
                Adults 18-49 — Season to Date
        Combined Broadcast Networks (ABC, CBS, FOX, NBC)
                         All Programs

                      Live     Live+    Live+    Live+
                             Same Day   3 Day    7 Day

PROGRAM Ratings       8.27     9.62     10.98    11.35
Change vs 2010-11     -4.8%    -2.9%    -0.2%    +0.3%

Source: Nielsen People Meter, Sep 19, 2011-Apr 29, 2012 vs Sep 20, 2010-May 1, 2011

On a Live + Same-Day viewing basis, a comparison of this season to last season at this point may look alarming.  The Live rating has fallen a very significant 4.8% (the decline jumps to 7.5% when we look at the more recent January-April period when ratings have become really soft), while the Live+Same Day rating has fallen 2.9% over the September-April season (and Live+Same Day is down 5.2% over the January-April period).  Those are the numbers we generally think of when we look at broadcast television — an industry in perpetual decline on the order of 5% or much more a year. 

But look at those year to year changes when viewers have a few days to catch up on their favorite shows.  When DVR viewing within 3 days is included, the broadcast networks are basically flat with last year (down a scant 0.2%), and actually up marginally (+0.3%) when 7-day viewing is included.  (Even in the recent winter/spring period from January-April, the combined broadcast network viewing is down a more manageable 2.3% for Live+3 Day ratings and down 1.7% for Live+7 Day.)  


Clearly, the DVR audience (about 43% of Adults 18-49 in the Nielsen sample have one) is becoming increasingly comfortable with the technology and the concept of time-shifted viewing.  People are generally watching just as much television — they’re just moving it from the day of broadcast to a few days afterward.  

Ah, you ask — but what about commercial viewing?  With the trend toward time-shifting, surely viewing of commercials must be vanishing at an alarming rate, because of all the fast-forwarding on those DVRs?

That’s the amazing part.  A very significant part of the audience — even with DVRs — still watches commercials (or at least allows the commercials to play as they watch the recorded program).  The table below looks at the same data streams but the ratings are only for the commercial minutes within programming.  The Live rating for network commercials, as you might expect, is very close to the overall program rating — an 8.09 commercial rating versus the 8.27 program rating we saw previously.  This translates to a 98 index (the commercial rating is 98% of the program rating).  But even when we include DVR viewing, the commercial index only drops to the low 90s or mid 80s.  We can’t say if the commercials are actually being viewed and paid attention to but the spots are being played back at significant levels.   

                      Prime Time Ratings
                Adults 18-49 — Season to Date
        Combined Broadcast Networks (ABC, CBS, FOX, NBC)
              Commercial Minutes in All Programs



                      Live     Live+    Live+    Live+
                             Same Day   3 Day    7 Day

                                        “C3”

COMMERCIAL Ratings    8.09     8.84     9.54     9.73
Change vs 2010-11     -3.9%    -2.4%    -0.1%    +0.3%
Commercial Index        98       92       87       86
  (vs Program Rtg)

Source: Nielsen People Meter, Sep 19, 2011-Apr 29, 2012 vs Sep 20, 2010-May 1, 2011

Even more important, the trends in commercial ratings versus last season are following exactly the same pattern as the overall network program ratings: significant declines in Live and Live+Same commercial viewing, but almost exactly flat audiences year to year for network commercials when DVR playback is included.  The “C3” rating — the currency of the television advertising marketplace — is the 9.54 combined broadcast rating in the table above.  And that -0.1% change from last season (which is to say, no real change at all) provides a huge sigh of relief for the network sales teams as they prepare to sell time in the upcoming television season.  

The demise of the broadcast networks has been predicted for decades, ever since cable–and then the VCR–and then the Internet–and then the DVR–nibbled away at ratings that were once gloriously high in the days of oligopoly.  The model will continue to evolve and the pressures will continue to mount.  But for this upfront at least and probably the next few, network viewing is not collapsing, merely shifting. In fact, compared to other viewing and entertainment options, broadcast television remains remarkably resilient.  

So on to the Upfront Presentations in New York mid-May when the fall schedules are unveiled and the new series are previewed.  Stay with ShowBuzzDaily for coverage of the Upfront, our exclusive ratings forecasts for each network and each night, and our reviews of the new shows based on the trailers and ultimately the completed pilots themselves. 

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