I'm tired of hearing that something is wrong with network TV because ratings are down. I'm even more tired of hearing that the networks are financially scarred because ratings are down.
Every time a network wants to show the world how much it's hurting, it points to its share. Remember that a share is "the percent of households or persons using television at the time the program is airing and who are watching a particular program."
For instance, on Wednesday, Aug 3, 2005 the six broadcast networks combined for a 34 share during the 8 o'clock hour. If three TVs were turned on during that hour, then one of those three TVs was tuned to ABC, CBS, Fox, NBC, UPN, or WB. The other two TVs showed other programming.
Now let's look at a Wednesday night 15 years earlier. On Aug 8, 1990 the four broadcast networks combined for a 63 share during the 8 o'clock hour. If three TVs were turned on during that hour, then two of those three TVs showed ABC, CBS, Fox or NBC.
Networks say "That's awful!" There are more networks and half as many TVs are tuned to these networks. Our companies are dying.
I say "Shenanigans!"
Today almost every TV station--network or cable--is owned by one of five conglomerates. NBC-Universal. Viacom. Time-Warner. Disney. News Corp. And last I checked the cumulative share for stations owned by these five conglomerates is at least 90%. That's right. If ten TVs are turned on, nine of these TV sets are tuned to a station owned by one of these five companies. Over the last 10 years, these companies competed to purchase and/or start cable channels to get their fair share of TV sets. Broadcast viewership may be down, but corporate-wide viewership has changed very little.
Let's look at a different metric for broadcast TV--revenue per household hour. (Remember that a household hour is the equivalent of a single household watching TV for one hour.)
- 1990: Households watched ABC to the tune of 9.32 billion household hours. That year ABC/Capital Cities reported revenue of $4.28 billion for its broadcast group. That means ABC reported revenue of $0.45 per household hour. If you watched ABC in 1990, then ABC made an average of $0.45/hour while your household watched for free.
- 2004: ABC captured only 4.35 billion household hours for the year--more than a 50% decrease from 1990. But Disney reported revenue of $5.37 billion for its broadcast group. Even though viewership was down, ABC increased revenue per household hour to $1.23.
And we can't forget about cable. In 2004, Disney reported broadcast revenue of $5.37 billion and cable network revenue of $6.41 billion. Yes, you read that correctly. Disney reported greater revenue for cable than for regular broadcast TV.
Now you see why I have a hard time feeling sorry for these companies when they complain about smaller broadcast audiences.
As I went through this analysis, I had a thought. What if ABC let viewers pay them to watch commercial-free shows on an ala carte basis? We just need to know how much revenue comes from advertising.
Let's use ''Desperate Housewives'' as a proxy. Last year first-time ''DH'' broadcasts averaged 16.2 million households. The ad rate for ''DH'' was about $0.3 million for 30 seconds. If we assume 18 minutes of commercials for an hour telecast, then ABC earned about $10.8 million/hour for ''DH'' from ad revenue. Combine those two figures and you find advertisers paid about $0.67 per household hour--just over half of the total revenue. That means if you watched an episode of ''DH'' last year, advertisers paid ABC $0.67 to let you watch the show for free.
Would you be willing to pay ABC $1 to watch an episode of ''DH'' without commercials? Imagine this. ABC feeds two video streams during commercial breaks. If you don't pay ABC, you see commercials. If you pay ABC $1, you see outtakes and special features instead of commercials. Viewers get what they want and ABC probably increases total revenue.
other data sources:
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