Broadband Cable Association of Pennsylvania


November 14, 2012

Some television executives have blamed use of digital video recorders as a reason for sharp declines in "live" viewing of most major broadcast networks this fall. But data capturing a full week of delayed viewing through DVRs reveals nearly identical audience declines. The data are likely to underscore concerns about traditional television viewing, suggesting that people are either watching broadcast television shows through on-demand services, or are turning to alternatives such as online video.

In the first four weeks of the broadcast season that began Sept. 24, News Corp.'s Fox had 25% fewer viewers who watched on a DVR up to a week after a show aired, according to Nielsen. That's the same decline as Fox recorded for viewers watching shows "live" when the show aired. (News Corp. also owns The Wall Street Journal.) A broadly similar trend is evident for other networks. Walt Disney Co.'s ABC, for instance, saw an audience decline of 7% up to a week after a showed aired, slightly better than the 11% decline in live viewership. CBS Corp.'s namesake network had a 10% decline in viewership measured up to a week after a show aired, compared with 12% for live viewing. Comcast Corp.'s NBC, which has spent several years in the doldrums, saw a bigger improvement on a delayed basis. While its live audience was up 10%, ratings were up 14% when viewers who watched up to a week after the initial broadcast are included.

To be sure, the actual audience watching up to a week after broadcast was bigger than on the night of initial broadcast, by an average of 30%. Media executives said as recently as last week that DVR usage was part of the reason for "live" ratings declines. Asked on a Nov. 8 conference call about the decline in broadcast ratings, Disney Chief Executive Bob Iger said "the greater penetration of DVRs and the greater usage of DVRs...have shifted the rating."

CBS CEO Leslie Moonves, speaking on his Nov. 7 conference call, said "people are watching more programming than ever, but they are increasingly timeshifting that content through the DVR streaming and video on demand." Mr. Moonves argued that advertisers should take into account viewership delayed up to seven days when making ad buys. Right now advertisers only use ratings figures that include three days of delays. "We're pushing to get it to be to seven days," he said last week. "And we think that's going to happen within a relatively short period." Even if DVR use boosts ratings, networks won't necessarily get paid for it. Brian Wieser of Pivotal Research Group estimates people skip 40% to 50% of commercials when watching shows on DVR-meaning those viewers are far less valuable to networks.

The DVR-adjusted ratings figures don't explain why major networks have seen such sharp declines. Mr. Iger cited a lack of "buzzworthy" hits. Mr. Moonves pointed to the presidential debates airing during the early weeks of the new season and National Football League games appearing on Thursday nights. Analysts say the sharp audience declines are a puzzle. "It's a bit of a head scratcher," said Todd Juenger of Sanford C. Bernstein. He points out that Nielsen data suggest the number of households watching TV has been essentially steady recently, but that many big cable networks such as Viacom Inc.'s Nickelodeon and NBCUniversal's USA have also lost viewers in recent weeks. One possibility is that fewer individuals in any given home are watching TV. "You could theorize that now the high school kid isn't watching the TV anymore," Mr. Juenger said, adding that another culprit could be video on demand, which isn't captured in time-delayed ratings. Wall Street Journal

The Federal Communications Commission appears to be close to adopting rules that would relax a longstanding ban on ownership of both a newspaper and a television or radio station in large metropolitan media markets.

Julius Genachowski, the F.C.C. chairman, has circulated to the agency's four other commissioners a proposal "to streamline and modernize media ownership rules, including eliminating outdated prohibitions on newspaper-radio and TV-radio cross-ownership," said a spokesman for the commission, Justin Cole, in a statement. The order is likely to be taken up at the F.C.C.'s December meeting.

This would be the third time in a decade that the F.C.C. has tried to loosen the rules, which have long prohibited the ownership of multiple media outlets in one area. Supporters of the rules say they are necessary to provide for a diversity of voices in a community. The F.C.C.'s last effort, which began in 2007, was overturned by a federal appeals court last year. The court ruled that the commission had not provided adequate notice and opportunity for public comment before instituting the rules. In June, the United States Supreme Court declined to hear the case. But the media landscape has changed significantly in recent years. With increasing numbers of people obtaining their news online, newspapers have suffered financially, and many have shut down. Supporters of a relaxed ownership rule believe that broadcasters might offer financial support to newspapers in some markets if the two could share resources.

The F.C.C. outlined new proposals in December. Media companies have been furiously lobbying the agency since then. It is not known how Mr. Genachowski's current proposal differs, if at all, from the December outline. And the new proposal could change based on comments from other commissioners. The December proposals would provide for exemptions from the ban on combinations between stations and newspapers in the top 20 media markets. Combinations in smaller media markets would still be limited, as would mergers between any of the four largest broadcasters in a given market and a newspaper or radio station. Mergers would be allowed only if there remained at least eight "major media voices" in that market. "While the media marketplace is in transition," Mr. Cole said in the statement, "broadband and new media are not yet available as ubiquitously as traditional broadcast media, and certain protections therefore remain important to promoting competition, diversity and localism." New York Times

News Corporation is close to acquiring a stake in the YES Network, the New York-based cable channel that broadcasts Yankees baseball and Nets basketball games, among other regional sports, a person briefed on the discussions said Wednesday.

The companies are still in negotiations, but a deal could be finalized soon, possibly as early as Friday, according to the person, who could not comment publicly because the talks were ongoing. Partly owned by the Yankees and available in more than 15 million homes, the YES Network - short for Yankees Entertainment and Sports - would add significant heft to News Corporation's already large portfolio of regional sports assets and fits into the company's strategy of building its sports television business. Last month, Yankees officials said they met with Fox executives in New York to discuss the media company's interest in acquiring a stake in YES Network. The team's holding company, Yankees Global Enterprises, would maintain its 34 percent stake. News Corporation would likely buy a stake in YES from the Yankees' equity partners, which include Goldman Sachs and Providence Equity Partners, among others.

A News Corporation spokeswoman declined to comment, as did a spokeswoman for the Yankees. The price of the deal was not disclosed, but overall the YES Network, one of the most watched regional sports networks in the country, is worth an estimated $3 billion. Rupert Murdoch's son, James Murdoch, the company's deputy chief operating officer, sits on the board of Yankees Global Enterprises. James Murdoch has recently amassed greater domestic responsibilities at News Corporation, where he now oversees the Fox broadcast channel, regional sports networks and National Geographic channels, among other television assets. News Corporation has stockpiled cash, the result of its abandoned bid to acquire the portion of the British satellite provider BSkyB that it did not already own. The company closed its fiscal year with $9.6 billion in cash on hand, prompting analysts to predict upcoming acquisitions. New York Times