Ad Revenue Warns of A New Future For Television
Here’s the good news for the television industry: You’re still very full of money. Here’s the bad: That might not be the case next year. All of the major U.S. broadcast networks have closed upfront advertising negotiations for the 2012-2013 season, and while revenue is up, it’s up so little that something is definitely going on …
According to the Hollywood Reporter, there’s somewhere in the region of $9.3 billion dollars already in play for the next season’s ad budgeting, with CBS the clear leader in terms of where those dollars are heading: That network is getting $2.7 billion in ad spending, with ABC close behind with $2.5 billion. Next up comes Fox, with $1.9 billion, then NBC with $1.7 billion, and all the way at the back, the CW with $400 million (Bear in mind that the CW also has far less original programming, essentially running only weekday primetime with other programming provided by local affiliates).
While all of that sounds like obscene amounts of money to the man in the street – especially considering these figures only account for around 70-80% of ad inventory for the year – it’s maybe enough to make TV execs nervous, because these numbers aren’t drastically different from last year’s; NBC has only risen $0.1 billion, for example, while CBS is up only half of that. It’s possible that this is course correction after last year, which saw double-digit percentage jumps in ad spending for some networks, but it’s just as possible that TV networks might want to prepare for the worst.
This supports the theory of Henry Blodget, editor-in-chief of Business Insider, who earlier this month predicted the collapse of the TV business as we know it because of ad spending trends:
[Television] user behavior has been changing for a while, and, so far, it has had almost no impact on the TV business. On the contrary, the networks and cable companies are still fat and happy, and they’re coining more and more money every year. But remember what happened in the newspaper business.
When the Internet arrived, user behavior started to change. It took a decade for this change in behavior to hit the business. But when it hit the business, it hit it hard–and it destroyed it shockingly quickly. And the same thing seems likely to happen to the TV business.
Such an event doesn’t mean the end of television, of course, just as the collapse of the newspaper ad market hasn’t actually killed the newspaper business (Just wounded it, terribly and almost irreparably, it seems). But it does mean the change of the television industry, and that’s something that networks may not be quite ready for, just yet.
We’ve already got alternatives to the network ad-sales model – HBO and PBS, on either side of a spectrum, waving their less-watched arms in the air hello, or the sponsored “limited commercial interruption” special shows on other networks, particularly basic cable – so it’s not as if there aren’t options out there for networks to be considering and learning from. But the problem may be that, whatever brave new world of television awaits us, just the act of getting there without it hurting too much. Should networks cut down on the number of traditional ads planned for the 2012-2013 season now? Should changes be considered for the 2013-2014 season? Will audiences be happy with whatever new format gets created? Is anyone really prepared to head into this particular unknown…?