TV Notes: TV advertising at risk as viewership declines

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Maybe they're outside in the garden. They could be playing softball. Or perhaps they're just plain bored.

In TV's worst spring in recent memory, a startling number of Americans drifted away from television the past two months: More than 2.5 million fewer people were watching ABC, CBS, NBC and Fox than at the same time last year, statistics show.

Everyone has a theory to explain the plummeting ratings: early Daylight Savings Time, more reruns, bad shows, more shows being recorded or downloaded or streamed.

Scariest of all for networks, however, is the idea that many people are now making their own television schedules. The industry isn't fully equipped to keep track of them, and as a result, networks are scrambling to hold on to the nearly $8.8 billion they collected during last spring's ad-buying season.

"This may be the spring where we see a radical shift in the way the culture thinks of watching TV," said Sarah Bunting, co-founder of the Web site Television Without Pity.

The viewer plunge couldn't have come at a worse time for the networks -- next week they will showcase their fall schedules to advertisers in the annual "up front" presentations.

The networks say viewership is changing, not necessarily declining. Some advertisers respond that they are no longer willing to pay full price up front to reach viewers that may not tune in later.

More bad news abounds. NBC set a record last month for its least-watched week during the past 20 years, and maybe ever -- then broke it a week later. This is the least popular season ever for CBS's "Survivor." ABC's "Lost" has lost nearly half its live audience -- more than 10 million people -- from the days it was a sensation. "The Sopranos" is ending on HBO, and the response is a collective yawn.

Events like "American Idol" on Fox and "Dancing With the Stars" on ABC are doing the most to prop up the industry. But still, in the six weeks after Daylight Savings Time started in early March, prime-time viewership for the four biggest broadcast networks was down to 37.6 million people, from 40.3 million during the same period in 2006, according to Nielsen Media Research.

Millions of missing viewers could translate into millions of missing dollars for the networks heading into the up-front sales season.

Advertisers don't believe that the drop in viewership is as dramatic as the numbers suggest, but they're no longer willing to spend what they once did in the spring market, said Brad Adgate of Horizon Media, an ad buying firm. Johnson & Johnson and Coca-Cola sat out the spring market last year -- betting they could get lower prices later -- and it's likely other companies will do the same this year, he said.

The early start to Daylight Savings Time has hurt ratings. Prime-time viewership traditionally dips then, as people do more things outside, and this year folks had a three-week head start. More network reruns during March and April dampened interest, too.

"We let them get out of the habit of watching television a little bit, and it's going to take some time to get these people back," said David Poltrack, chief researcher for CBS.

Strategic decisions to send some popular serial dramas on long hiatuses appeared to backfire. NBC's "Heroes," CBS's "Jericho" and "Lost" lost significant momentum when they returned.

There also are technical reasons that this apparent diminished interest in TV may be overstated. This year, for the first time, Nielsen is measuring viewership in the estimated 17 percent of homes with digital video recorders -- but it only counts them in the ratings of a specific show if they watch it within 24 hours of the original air time.

If you recorded "Desperate Housewives" this spring and watched it two days later, you're not counted in the show's ratings. And you're not counted by Nielsen at all if you downloaded a show on iTunes and watched it on your iPod or cell phone, or streamed an episode from a network Web site.

Since last year's Nielsen sample contained no DVR homes and this year's sample does, logic dictates that fewer Nielsen families are watching TV live this year, deflating ratings.

"People are not consuming less television, they're watching it in different ways, and the measurements haven't caught up," said Alan Wurtzel, chief research executive at NBC.

The numbers can be significant. When "The Office" aired on NBC on April 5, Nielsen said there were 5.8 million people watching. Add in the people who recorded the episode and watched it within the next week, and viewership swelled to 7.6 million, a 32 percent increase, Nielsen said.

Television has made billions based on how many people watch a show at its regular time. That idea may already be obsolete. So should the industry use DVR viewing when setting ad rates? If so, how quickly must people watch the shows -- within two days? A week? What about people who watch shows on their cell phones or on network Web sites, which Nielsen doesn't measure yet? Later this month Nielsen will begin measuring how many people watch commercials. Should those be used to compute advertising costs?

Right now, none of those questions has answers.


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