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TV networks are uneasy about declining advertising

One analyst forecasts a 15% decline in prime-time ad revenue, leading CBS to unleash a marketing blitz to boast that it is the most-watched network and NBC to unveil its fall lineup two weeks early.

May 04, 2009|Meg James

The bugle call marking the start of the TV advertising sales season began a little early this year.

On Sunday, CBS Corp. unleashed a marketing blitz to tell advertisers, viewers and Wall Street that CBS stands out because it draws more viewers than any other network. This morning, rival NBC plans to unveil its fall prime-time schedule -- two weeks before the traditional kickoff of the television "upfront" season and two weeks before the other networks announce their fall lineups.

These early-bird moves underscore the uneasiness in the television industry.

Network executives are preparing in the coming weeks to negotiate sales of their commercial time to advertisers for the coming year. Executives are worried because during last year's "upfront" market, the economy wasn't in such a bad state. But the last year has been filled with bad economic news, turmoil in the auto industry (a major television sponsor) and other companies cutting advertising spending.

One prominent analyst estimated that the major broadcast networks could be down as much as 15% to $7.4 billion for prime-time advertising sales for the fall season. During the crucial upfront market, which typically takes place in late May and June, networks sell as much as 80% of their prime-time commercial inventory for the coming season.

"While network sellers remain publicly adamant that they intend to hold the line on price, we expect to see year-over-year declines," Barclays Capital analyst Anthony J. DiClemente recently wrote.

CBS faces other challenges, prompting its promotional push. And CBS is different from its rivals because it has a good prime-time story to tell -- it is the only major broadcast network to increase its ratings compared with last season.

For years, CBS has been the steady eddie of broadcasters, generating solid ratings for its signature shows, including "CSI: Crime Scene Investigation," the comedy "Two and a Half Men" and the Navy forensic drama "NCIS," but little Hollywood sizzle.

Meanwhile, investors during the last nine months have punished CBS' stock. CBS shares, which closed Friday at $7.19, are down more than 50% during the last year. The company is more vulnerable in a recession than more diversified media companies because advertising makes up two-thirds of its overall revenue. CBS plans to report its financial results this week.

Despite all the financial gloom, CBS has watched its ratings climb, thanks in part to its runaway fresh hit, "The Mentalist." Its prime-time audience is up 12% compared with the previous season, with more than 20 programs posting increases in viewers. CBS also has notched gains in a key demographic group. The network boasts more prime-time viewers in the 18- to 49-year-old age group than Walt Disney Co.'s ABC or NBC Universal's NBC -- a point of pride for a place long derided as the network for geezers.

"We've been steady, dependable and confident -- but times are different," George Schweitzer, president of CBS' marketing group, said to explain why the network launched its "Only CBS" marketing campaign.

"It is important for us to stake our territory and make sure our constituents know that their investment is best placed here," Schweitzer said. "We're taking the offensive rather than waiting for people to figure it out."

In addition to buying newspaper ads, the network plans to promote itself in its news programs, golf coverage and comedies and dramas. The message will go out on CBS' other media outlets, including CBS Radio stations and the company's websites.

"We are putting our mouth where our mouth is," Schweitzer said.

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meg.james@latimes.com

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