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American broadcasting
The not-so-big four
Broadcast television is declining at an accelerating rate
“IT’S amazing how little has changed around here,” says a character in the final episode of “E.R.”, which aired in America on April 2nd. Indeed, it seemed like old times for the hospital drama: 16m people tuned in, not many fewer than it drew a decade ago. But the impression of good times is no more real than a stage set. For programmes like “E.R.”, and for broadcast television itself, much is changing.
The recession has been cruel to a business that depends almost entirely on advertising. Local television stations, many of them owned by or affiliated with national broadcasters, have seen advertising revenue fall by as much as 40% as car dealers and other retailers cut back. Later this month the national networks will test the market for advance advertising.
It should prove better than the local market, but still difficult. And this painful cyclical problem coincides with a bigger, structural one: the audience for the “big four” broadcast networks is eroding (see chart).
It is not that people are watching less television. In the last quarter of 2008 the average American took in 151 hours per month, an all-time record, according to Nielsen, a market-research firm. The trouble is the growth of choice. More than 80% of American households now get their television via satellite or cable. To them, the broadcast channels are just items on a menu containing hundreds of dishes.
The networks can still produce hits. “American Idol” and “CSI”, respectively an amateur singing competition and a forensic-science drama, routinely attract more than 20m viewers—three times as many as the most successful cable shows. But occasional triumphs do not add up to a sustainable business model.
Chris Silbermann, president of International Creative Management, a talent agency, says the big change is that mediocre television now struggles to attract a healthy audience. The ratings seem to back him up. Between the first 12 weeks of 2005 and the first 12 weeks of this year, the audience for the top-rated broadcast show (often “American Idol”) fell by 9%. But the number watching the tenth most popular show was down by 17%, and the audience for the 20th in the list was 18% smaller.
So far, the big broadcast networks have been able to persuade advertisers to spend more for each eyeball they reach. Although they can no longer round up huge audiences, they are still the best way of reaching very large ones. And advertisers tend to see broadcast television, with its consistently wholesome quality, as a safe place to promote their products. Cable is still viewed as a rather wild frontier populated by wrestlers and televangelists.
Yet this, too, is changing. Last year’s Emmy awards were dominated by cable shows. “Mad Men”, which is set in an advertising agency, was voted best drama. It was the first time the award had gone to a show on basic cable (it is shown on the AMC channel) as opposed to a premium network, such as HBO. Such acclaim changes attitudes to cable generally. Bruce Rosenblum, the head of the television group at Warner Bros, reckons the growing profile of original cable shows may gradually erode the huge premium that advertisers will pay for broadcast.
Cutbacks are already under way. The networks have commissioned fewer pilot shows than usual this year, many of them relatively cheap half-hour comedies. With its broadcast network faring poorly, NBC plans to run Jay Leno, a talk-show host, five nights a week at 10pm—the slot where dramas such as “E.R.” once reigned. Some broadcast networks look enviously at cable channels, with their steady streams of income from distributors, and ponder getting out of broadcast altogether.
Such a radical change would involve difficult negotiations with local stations. In the meantime, the broadcast networks should be able to drive harder bargains with both local stations and cable companies. Television producers will find new markets abroad. But the good times appear to be over. Sometimes an industry can withstand pressure for many years, and then collapse abruptly. Just ask a newspaper proprietor.