The Sands of TIME are running out for the Dinosaur Media
Posted on 12/11/2007 5:00:19 AM PST by abb
Facing a severe ratings decline and disgruntled advertisers, NBC is taking the unusual step of offering cash back - rather than additional ad time - to compensate for the shortfall. When the major networks fail to deliver the prime-time ratings they promised advertisers, they almost always offer extra ad spots, or "make goods," as reimbursement.
But ad buyers said NBC is in a tough position because it is so far below its ratings guarantees. What's more, it doesn't have enough spots to give away after having sold much of its available inventory.
NBC's overall ratings for November "sweeps" slumped 20 percent from the year-earlier period, Nielsen figures show. The key 18-to-49 demographic was down 14 percent.
"NBC has no chance," said one ad buyer. "They are missing by so much."
The network is returning an average of $500,000 per advertiser, according to trade pub MediaWeek, which first reported the news. A spokeswoman for NBC declined to comment.
Such a move a few years ago would have been unthinkable. But NBC is a fourth-ranked network mired in a dismal fall season that failed to produce any breakout shows.
snip
(Excerpt) Read more at nypost.com ...
Published on NewsBusters.org (http://newsbusters.org)
NBC Ad Sales Refunds - More Dinosaur Media Woes
By Warner Todd Huston
Created 2007-12-11 03:04
The world of entertainment is in a world of hurt. With the massive diversification of entertainment offerings these days, older forms of media — like movies, TV and newspapers — are finding a dwindling number of customers as NBC is finding out this month. NBC has found itself in the lamentable position of giving their advertisers refunds because of poor performance in its ratings. The promised number of eyes that NBC promised that advertisers would reach didn’t materialize, so NBC has to refund their advertisers for the over estimate of viewers that might see the ads placed on their airwaves. Of course, NBC is trying to keep a lid on this damaging story, but the Genie is out of that bottle. We can surely say that the network’s News arms ain’t helpin’ sales a whole lot, in any case!
Adweek gives us the story [1]:
NBC has quietly begun reimbursing advertisers for fourth-quarter prime-time ratings shortfalls, averaging about $500,000 per advertiser, according to media buyers, marking the first time in years a network has taken such a step to compensate marketers for ratings deficiencies.
It was also reported in Adweek that new network CW has had a loss of ratings and an over estimate of ad revenue, as well. So has CBS, ABC, and Fox, all of whom are giving advertisers “make goods” wherein the networks give ad time in compensation for having overcharged the advertisers.
And what is the culprit?
The nets have blamed ratings softness on the conversion of the upfront sales metric this season from live program ratings to commercial ratings plus three-day DVR viewing (C3). But media agencies contend broadcast prime-time ratings are down significantly even when DVR viewing is added in.
We just might be living at the end of the era of dominance of entertainment by the networks and big entertainment empires. It will be very interesting to see where it all goes from here on out but several hurdles remain to be jumped before the new era of entertainment takes hold. Many questions remain.
Will the Internet shape up as a reliable device of delivery for entertainment? (It sure as heck isn’t a stable delivery system currently)
Will digital storage devices in the amounts of the mega terrabytes range that we all will need to store massive amounts of entertainment soon be cheaply available?
Will a new system of storage be developed to solve that problem, perhaps?
Will a loss of the big money behind the entertainment giants affect the quality of our entertainment?
Man’s ingenuity is a never emptying well, of course, so let’s not be too pessimistic. But, we might find more problems than we expect when the big media moguls collapse or scale downward in the near future.
One thing is sure, though. We have an opportunity to break the stranglehold the fringe left has on our forms of entertainment here. Let’s hope we can take advantage of this new era.
Source URL:
http://newsbusters.org/blogs/warner-todd-huston/2007/12/11/nbc-ad-sales-refunds-more-dinosaur-media-woes
ping
The Sands of TIME are running out for the Dinosaur Media
http://blogs.mediapost.com/on_media/?p=64
TV’s Rev Woes Reach Tipping Point
Posted December 11th, 2007 by Diane Mermigas
Wall Street is growing more uncomfortable with intensified TV viewer erosion, its permanent drag on ad revenues, and the waning of the DVD after-market. Equity research analysts and investors view these as irreversible blows to an already vulnerable entertainment sector. So it is not surprising that a second major equity research analyst has lowered his rating on the entertainment sector–not just because things are bad, but because they are likely to worsen.
Veteran analyst Spencer Wang, at Bear Stearns, Monday lowered his rating on the sector to market underweight on the bet that the terminal free cash-flow growth rate for the group will drop from 3% to 2%. With digital revenues and international growth inadequate to offset the economic risks to their anchor television networks and film studios, media conglomerates will have less profit to offset cyclical and permanent revenue losses.
The difference from past cyclical downturns is such incremental risks to 2008 earnings that are now part of the entertainment and media industries’ new economic reality–to which they are struggling to adjust their legacy infrastructures, costs and expectations. They just haven’t adjusted their legacy infrastructures, costs and expectations.
Wang said the industries have reached a “tipping point” that poses a key question: Whether broadband is killing the TV star. “In our view, there are emerging signs that growing online usage is beginning to cannibalize core television viewing,” he said.
Until now, flat-to-rising household TV usage was no real threat to earnings. “However, recent data points on TV viewing and HUT are more disturbing,” Wang said. In calendar 2007, HUT is down 1.2% from 2006 for the first time–without a change in the Nielsen measurement sample. TV’s core selling demographic (adults ages 18 to 49) has seen HUTs drop 2.5% from a year ago, even when adjusting for the new live, same-day and DVR ratings, that collectively underestimate the erosion. “We find it more than coincidental that declining TV usage is occurring in tandem with broadband Internet penetration reaching mass market levels” of more than half of U.S. homes, he said.
Broadband’s mass-market adoption is why there are no guarantees that former advertiser spending and viewership levels will ever be restored or sustained. “As usage declines, media companies have fewer units to sell to advertisers, which offsets unit price increases,” Wang explained. Historically, traditional media have simply suffered losing share as a percentage of total ad spend. Today, the steady growth of emerging online media is increasing its share of overall ad spending at the expense of more traditional media. That means any decline in TV usage now could permanently reduce its share of ad budgets as those dollars shift to new media.
Although the impact of this negative swing will be blunted by increased ad spending driven by the Beijing Olympic Games and the presidential election in 2008, the fundamental changes in consumer and advertiser support across all media are set in motion.
If that weren’t enough, the media conglomerates are about to sustain a major blow with the waning of the home video business, which has been the single biggest revenue and profit contributor to filmed entertainment growth during the past decade. Wang estimates the home video typically accounts for 50% of a studio’s total revenues, and an even higher portion of profits, given 60%-plus cash flow margins and most of the related marketing costs going to the theatrical exhibition window.
In fact, it is ironic that the DVD market is undergoing the same decline and shift phenomenon that is beginning to roost in network television. DVD hardware has close to 90% penetration of U.S. TV households, making it a mature market. Fewer new DVD homes and a steady decline in existing ones will inevitably put pressure on unit pricing as consumers shift spending to new content alternatives. High-definition DVDs are not likely to re-accelerate growth, since Hollywood remains fiercely divided on a format, which causes more consumer confusion and defection. As a result, Wang estimates that the $24 billion domestic home video market will decline as much as 4% annually over the next five years. Wang estimates that U.S. consumer spending on home video through the first three quarters of 2007 declined 3.5%, totaling about $15 billion for the major studios combined.
Another important dynamic that makes this economic downturn different is that sources of future growth revenues are not yet geared up enough to compensate for losses. Recent moves by film studios and television networks to widely disseminate their content on the Internet won’t offset slowing growth in their core businesses.
Wang points out that digital revenues are minimal compared to overall sales, and not likely to move the needle in the next several years. Generating digital ad sales for repurposed content online “has not materially changed the top-line growth rate, given the conglomerates’ large base of legacy revenues,” Wang said. Even as digital revenues grow annually at a compounded rate of 20%-plus, entertainment companies will strain to achieve an overall 5% to 6% annual growth rate over the next five years. For instance, newspaper companies have successfully grown their digital revenue base, yet have been unable to offset erosion in their core print advertising business.
Moreover, the international expansion that entertainment and media companies are working on is not materializing fast enough, given the higher risks of execution and competition. While international revenues currently account for about 26% of the total revenues for the four major media and entertainment conglomerates (with News Corp. as the most prominent presence), the rate of annual growth remains modest, Wang said.
All things considered, the entertainment group is selling at an average 8.2 times earnings multiple, with the entire entertainment sector lagging the overall market, he said.
Wang is not alone. In September, Goldman Sachs analyst Anthony Noto downgraded the entertainment sector to cautious, betting that a greater-than-expected domestic economic slowdown will negatively impact advertiser spending and corporate debt. His recession risk scenario anticipates as much as a 10% decline in advertising revenues–which would hurt all entertainment companies, and especially players like CBS, with a 70%-plus revenues dependence on traditional advertising. For those still wondering how bad it can get, consider this: Neither analyst’s report factored in the potential hit to revenues and profits that entertainment companies will sustain from a protracted writers’ strike.
$500 grand here and $500 grand there....pretty soon it adds up to real money
I know this is not on subject but I just wanted to comment on MSNBC. I do not like the Foxs and Friends format. Too much touchy feely for me. I went to Morning Joe and liked it for a while. Now, it has morphed into the left wing rag all of the network is. Micka (I can’t spell her name but her dad was Carter’s security advisor) looked at Joe with some condensension when the NIE came out. She was right all along. It is similiar to Obama saying he was against the Ieaq war from the beginning. How is God’s holy name did either of them have enough information to make a judgement. It reminds me of a broken clock having the right time twice a day.
Have patience, AZFolks. The bastards are dying. Slow, miserable, painful, suffering and agonizing. But they’re dying. Enjoy the show...
Too bad that the technology is so spectacular, but there is so little of quality to watch. It’s like having a top-of-the-line Lexus and nothing but dirt roads..........
....”Recent moves by film studios and television networks to widely disseminate their content on the Internet.....”
OK, lets just say there’s a movie I want to see on the net....how do I get it from the computor screen to my big screen TV so everybody can see it?...do I have to drag my computer next to the TV and plug it in some way?....Can I do this easy or do I have to wade thru another perplexing owner’s manual?....I already got a kitchen drawer full of them now.
I’m no computer geek, so I can’t tell you how to do this. But I’m sure it can be done. And it will get more user friendly in the future.
Can't happen too soon -- the very survival of our society depends on it...
With the writer's strike, we're getting used to re-runs.
ping conservatism_IS_compassion: Note Boriss' designation of journalism as entertainment.
That giant sucking sound you hear is the formation of the unified InterTainment industry. And it’s taking down newspaper, TV news, and Hollywood jobs with it 12/9/07
Posted by Steve Boriss in InterTainment.
trackbackAs the Internet continues its spectacular growth, it has been revealing some shocking truths never before known or long denied. One of them that many will not want to hear is that journalism is entertainment. News, like other forms of entertainment, is almost purely about giving us diversion from the worries of our day-to-day lives. Political happenings give us a sense of belonging to something bigger than ourselves. Sports, entertainment, and human interest features allow us to imagine living more thrilling, glamorous, or emotion-laden lives. Gossip about the troubles of the wealthy, sexy, and successful help us even-up the score with those we envy, feeding our pride to make our own mediocre lives seem more acceptable. And murders, sex crimes, and car accidents quench our all-too-human thirsts for lust and morbid curiosity. Just like all other forms of entertainment, virtually none of what we see in the news has any direct impact on our personal lives - that’s because the Old Media’s falsely-marketed “news we can use” drills-down no deeper than the few interests we have in common with everyone else in our metropolitan areas.
By placing all forms of entertainment, including news, on the same medium, the Internet has launched a Darwinian struggle where the news, entertainment, and video game industries are now direct, head-to-head competitors for the distraction of audiences from their daily concerns. Crueler still, they must also now compete against mere amateurs, talent around the globe, blogs, porn, and also their former selves — their own archives of older articles, older movies, older programs, and older games never before available. That’s why audiences are plunging and pink slips are flying across all media - newspapers, TV, and Hollywood. The emerging, unified Internet entertainment, a.k.a. “InterTainment,” industry is now just one big happy family - but only if you happen to be a member of the audience.
Yes. Some now lost blog gave me the impression that Microsoft is working on a better solution.
Slingbox isn’t bad. You can transfer any telecast, movie, etc. to a computer. Even take it on the road with you.
Also, many DVR’s have a USB out. You can hook it up to a computer with Windows Media Center and download stuff direct to the computer.
Yes. And this re-run is kinda like "Casablanca" or "Patton." You can watch it over and over and it's still good entertainment!
Big media sees reversal of fortune
Slowing DVD sales, ad forecast erasing sector’s first-half gains
By Georg Szalai
Dec 11, 2007
STRIKE ZONE: LATEST NEWS AND UPDATES
Wall Street continues to turn sour on media and entertainment stocks heading into 2008, even though several sector biggies already are seeing their stocks near their 52-week lows.
After gains in first-half 2007 for many sector biggies, the second half has brought a reversal for many, with Sony and Viacom the big exceptions among the conglomerates.
Bear Stearns’ Spencer Wang on Monday became the latest analyst to turn bearish on the sector as he cut his rating on the overall industry from “market weight” to “market underweight,” citing slowing DVD sales and slipping TV usage of younger demographics.
The DVD malaise along with lowered advertising market expectations have been key factors that have driven media and entertainment stocks lower in recent weeks.
“The biggest problem is slowly eroding expectations” across the industry, said Lawrence Haverty, portfolio manager at Gamco Investors, pointing to the ad and DVD concerns, as well as a reduced likelihood of big buyouts amid the global credit crunch.
Shares of Time Warner, News Corp., Disney and CBS Corp. have all declined during the second half and are close to their year lows.
Smaller firms with a pure-play entertainment focus also have suffered.
For example, Lionsgate shares closed at $11.03 on June 29, but finished at $9.55 on Monday — down 13.4% since the midyear point and off the $10.73 price as of the end of 2006.
Similarly, DreamWorks Animation’s stock finished the first half at $28.84, down slightly from its 2006 closing price of $29.49. But since the midyear point, it has declined 12.3% to $25.29.
Not all stocks have been depressed though. Sony’s American depository shares are up 6.7% to-date in the second half. The stock has benefited from a continued turnaround in the conglomerate’s electronics business, a strong boxoffice and a recent investment from Dubai. And Viacom shares have bounced higher amid Wall Street confidence that the company’s cable networks are gaining ratings momentum.
Goldman Sachs analyst Anthony Noto was one of the first on Wall Street to downgrade the entertainment sector in the fall. He established a “cautious” rating on the industry in September. He followed that up with a report last month that said there have been numerous company and macro-economic data points since then that have only strengthened his conviction that this was the right call.
A decline in DVD sales momentum is one negative trend that observers have pointed out as of late, and things could get worse from here.
“The DVD market is rolling over and is down 3.5% year-over-year through the third quarter,” Wang noted in Monday’s report. “With little traction on HD so far, pricing pressure and less penetration opportunity left, we believe that the decline in the DVD market will accelerate in 2008 and beyond.”
Pali Research analyst Richard Greenfield echoed Wang’s bearishness on the DVD market in the U.S. In a blog post Monday, he said that his prediction that 2007 would be the first year of decreased consumer spending on DVDs “appears to be coming true.”
Hollywood had hoped the strength of this summer’s boxoffice would boost DVD trends, but “we believe the failure of several key fourth-quarter DVD titles (such as “Spider-Man 3” and “Shrek the Third” among others) will result in a modest decline in 2007 consumer spending on DVDs,” Greenfield said.
Overall, the standard-definition DVD business has matured, catalog sales are “now falling rapidly,” plus TV-DVD sales, which had so far been a pocket of strength, “have reached a plateau,” he added.
Wang also fears that TV networks will start losing more audience reach. “Erosion is more pronounced in the younger 18-49 demo, likely due to broadband penetration now exceeding 50% of U.S. homes,” he said. “This could negatively impact ad spend on TV over time.”
Beyond the DVD and TV usage concerns, the sector also has been thrown into disarray by other factors, including the writers strike.
Longtime media analyst Hal Vogel said the strike could lead to a further disintegration of the ad market. “It may play havoc with the upfront market and opens the possibility that loyalty of viewers will be diminished or lost” further, he said.
This month, key advertising forecasts for 2007 and 2008 already were reduced amid talk of a possible recession in the U.S. and challenges in the local ad market (HR 12/4).
The Beijing Olympics and U.S. presidential election will in 2008 “put a bit of a floor under advertising spending, (but) there will likely be a notable (underlying) reduction anyway, especially from banks and mortgage providers on local TV,” Vogel said. “My guess is ad spending overall will be up only slightly and will be close to flat in real terms.”
Links referenced within this article
STRIKE ZONE: LATEST NEWS AND UPDATES
http://www.hollywoodreporter.com/hr/content_display/news/e3i7b442387433f415da0fc3a4160ca133a
Find this article at:
http://www.hollywoodreporter.com/hr/content_display/business/news/e3i673a8f2e7c46c211f9ba331bcef2e14d
The Xbox360 game system will show video on your TV. It can stream DivX, WMV and Quicktime videos from your computer. It also has a video download store and supports Windows Media Center, so you can record shows with a TV capture card on your media center computer and play them on the 360.
It’s not a dead simple solution, but it works quite well.
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