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12.01.2008
Originally featured on BroadcastEngineering.com
Broadcast networks ponder radical business changes

Collectively, the five major broadcast television networks were down 13 percent last year in viewing among adults age 18 to 49. That was before the collapse of the three big automakers — some of the top advertisers who supported prime-time programming.

Now, the advertiser-supported networks — all facing dark times ahead — are asking some hard questions about whether they can survive in a world increasingly dominated by pay-television services. “This day was going to come,” a major television executive, told “Daily Variety.” “I don’t think the business can be sustained without real change at this juncture. We have a gun to all of our heads.”

The Nielsen ratings, the industry trade newspaper reported, have plunged to the point that it’s tougher than ever to determine what’s a hit and what’s a miss on network television.

In reaction, the networks are considering several scenarios. One is to drop an hour of prime time (from 10 p.m. to 11 p.m.) and give that time to affiliate stations. With the population waking up earlier and going to sleep earlier, broadcasters have been eyeing such a move for years. It would obviously save programming costs.

Another idea is to run fewer original programs and offer more reruns of those originals. One more idea is to farm out low-rated programming blocks (Saturday or Friday night, for example) to outside entities — such as production companies or advertisers. This could result in more infomercials.

The hot potato is an idea first proposed by former NBC CEO Robert Wright a decade ago. The idea is to abolish the network model entirely and turn the networks into pay-TV channels. Of course, such a move would destroy the network-affiliate system, and many local broadcast stations would probably go out of business without network programming.

The local TV station business isn’t nearly as robust as it was a few years ago, “Daily Variety” noted, and one or more of the networks might be willing to sell its affiliate stations and get out of that business.

“At what point does the audience get so small that advertisers won’t show up?” asked FOX Networks Group chairman Tony Vinciquerra in an interview with “Daily Variety.” “I don’t think we can predict what will happen next. The law of unexpected results will take place here.”

However, the chief executive of a network, who refused to speak on the record, speculated that radical change may be ahead for the networks. “We’ve had these conversations in the past,” he told the magazine. “But as much as the writers strike constituted the perfect storm, this economic crisis constitutes the ultimate perfect storm.”


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