Networks Better Start Caring About Declining Ratings

Both the broadcast and cable networks have traditionally cared much more about their ranking compared to their perceived competition than whether or not their actual ratings went up or down.

Sounds strange I know, but why should they care about ratings? 

Wall Street and the press tend to focus on who's first, who's last, and whether the standings have changed.

For years, ad-supported cable has been siphoning broadcast network viewers, but their combined audience remained remarkably stable.  Separate upfronts have created artificial supply and demand, enabling the broadcast networks to get more money from advertisers for declining ratings at the same time that half a billion dollars shifted to cable every year.

The audience going from broadcast to cable each season was so splintered that no single network got too close to any of the Big Four Networks.  So the broadcast networks were able to correctly claim that they still far outrated and outreached cable, while the cable networks were able to claim that in aggregate, cable was higher rated than broadcast. 

There was a time, not long ago, when there were "must buy" programs on the broadcast networks and "must buy" cable networks.  At the height of Cheers, Friends, Seinfeld and E.R.'s success, everyone wanted to buy a limited number of NBC Thursday night slots.  If you wanted news viewers you needed CNN, teen and young adults you needed MTV, kids you needed Nickelodeon (as much for the environments as for the actual viewers they provided).  Today, only fractions of rating points separate the top four broadcast networks, no single series will again get a 30+ share of viewers, and there aren't any must buy blocks of programming. 

MTV is not the cultural touch point it once was, CNN competes with multiple news networks and has long ago lost its cache as industry leader, there are several kids networks, and so on.  ESPN is one of the only remaining must buy cable network (although some might say Walking Dead makes AMC a must buy).  TNT and USA, because of their diverse lineups of strong original scripted series, are also in this category.

Cable networks are still allowed to sell ROS schedules (basically, all of primetime as a single entity) rather than individual series, letting them continue airing multiple low rated (and profitable) programs held aloft by a few stronger rated shows that advertisers actually want.

I’ve worked at large media agencies and a network, so I’ve seen these dynamics from both the buy and sell sides of the aisle. 

If you were to ask any broadcast network whether they would rather lose 5% of their audience next season but move into first place (because everyone else declined more) or gain 5% but slip into third or fourth place, they would all rather be in first place. 

Likewise, if you asked every cable network that currently ranks outside the top 10 among adults 18-49 and 25-54 if they would rather gain viewers and stay where they currently rank or lose viewers but move into the top 10, they would all choose to lose viewers. This, despite the fact that less than half a rating point separates 20 or so cable networks.  At ION, we went from being in the top 10 to ranking 13th despite virtually the same ratings.  Management acted like it was the end of the world.  I had to figure out how to position this to media buyers, who would now think we weren't as desirable to advertisers.

Traditionally, viewers and money shifted around the TV pie, but the pie remained the same size.  But now the pie is starting to shrink.

I’ve been saying for years that the short-term strategy of only thinking about where you rank could lead to long-term disaster.  Welcome to the long term. 

Broadcast ratings continue to slip, and now non-ad-supported TV/video is siphoning viewers from cable. 

In addition to HBO’s original programming (it leads in the recent Emmy nominations), Showtime, Starz, Cinemax, DirecTV, and other premium cable services have more and more original scripted series.  Netflix subscriptions continue to grow by leaps and bounds, Hulu continues to draw viewers, and Amazon Prime is making some headway as well.

But we may be reaching a tipping point, where the way buyers and sellers see the television marketplace starts to fundamentally change.  The transition of the Cabletelevision Advertising Bureau to the Video Advertising Bureau may have signaled the beginning of this shift.  But we’re not there yet.  It remains to be seen whether they really start behaving as if they are allies rather than sworn enemies.

Broadcast networks still stubbornly refuse to promote one another as cable networks have done so effectively for years.  In today’s media world is there really any broadcast network executive who believes his only competition is one of three or four other broadcast networks?  I would not have known when one of my favorite shows, TNT’s The Last Ship was returning if I hadn’t seen it advertised on CBS (and in movie theaters).  Another show I used to watch with my wife, Rookie Blue, came back on and I had no idea (because we haven’t watched any ABC this summer).  We may catch up on demand, but we may not.  Until this changes, the largest group of potential viewers in which to promote broadcast network programming will remain untapped, and their ratings will continue to drop.

Until the marketplace dynamics and industry perceptions that continue to make audience rankings more profitable than audience size change, we'll be analyzing rankings of continually declining audience bases. 

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