Soft Market, New Tech Could Narrow Cable Ad Gap

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The TV world's Big Four — CBS, NBC, ABC and Fox —have all seen huge declines over the past year, thanks largely to evaporating ad revenues. Cable, especially top-tier channels like CNN, ESPN and general entertainment channels like FX and Bravo, has been encroaching on broadcast's audiences for years.

That's what frustrates David Levy, president of Turner Entertainment Sales and Marketing. He points out that the days of Seinfeld's 30 million viewers are long over. Right now, a show like TNT's The Closer averages about 7 million viewers. That's great for cable, and perfectly respectable by broadcast standards.

But why, Levy wonders, can NBC demand almost twice as much ad money during Lipstick Jungle, a show that brought in only about 4 million viewers before it was canceled?

"Broadcast networks have been rewarded, really, for past performance in shows that appeared on networks five, 10, almost 15 years ago," Levy says.

Levy adds that lots of people can barely tell the difference between cable and broadcast anymore. Television analyst Derek Baine, of SNL Kagan, agrees. He says TiVo and other DVRs are also affecting advertising: An ad for a movie shown during 30 Rock on Thursday night, for instance, loses value when viewers put off watching the NBC show until after the peak moviegoing days of the weekend.

When old-school broadcasters like CBS and ABC are posting millions in ad revenue loss, a consortium of cable networks is developing new ways to target consumers. The hope is they'll be better ways, too.

"Our research shows about a third of the ads you're seeing today are ads you probably shouldn't be seeing in the first place," says David Verklin, whose Canoe Ventures group includes such heavy hitters as Comcast and Time Warner.

In the not-too-distant future, Verklin promises, software could filter TV ads for dog food only to households with dogs, for example.

Baine says such innovation may, in conjunction with the economic downturn, help cable compete with broadcast when it comes to advertising. Some in his industry predict broadcast ad sales could fall as much as 20 percent in the next year.

"A lot of the national networks have been very stubborn and held pricing firm," Baine says.

At the least the Big Four aren't asking for a government bailout.



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