Audiences booming for TV events - ad rates next?
NEW YORK/LOS ANGELES
NEW YORK/LOS ANGELES (Reuters) - From the Super Bowl to the Winter Olympics, major TV events this year have drawn blockbuster ratings that could give broadcast networks the confidence to start hiking advertising rates.
CBS, Fox, ABC and NBC should be in a position to start raising rates by around 10 percent for premier sports or award shows, advertising and broadcast sources say. That could add another $15 million to $25 million in ad revenue for a broadcast like the Super Bowl, which already commands nearly $3 million for a 30-second commercial spot.
It is not just sports that are drawing huge audiences. The Oscars, for instance, drew more than 41 million U.S. viewers, the biggest audience for the Academy Awards in five years. The Grammy Awards attracted its largest audience in six years.
"This now gives them license to raise rates," said Brad Adgate, senior vice president of research at Horizon Media.
The ratings bonanza comes as most regularly scheduled TV programs, such as prime-time dramas, continue to struggle with viewership declines amid competition for audiences posed by everything from video games to online social networks.
In that context, even stable viewership for the big TV events would be a hard-fought victory for broadcasters.
Experts said it would have been far-fetched to think that audience size could significantly increase for a big TV event -- until February, when 106.5 million people watched the Super Bowl football championship, making it the most-viewed TV show in history and heralding the run of big ratings for sports and award specials.
"Give me the big events because they're not going backwards. We've seen it for the Grammys and the Academy Awards, anything special," said Tim Leiweke, chief executive of AEG, which owns or manages several sports teams and stadiums, and whose venues host such events as the Grammys and Emmys.
"Even as we dilute distribution and go from four channels to 100 channels to 800 channels to 10,000 channels, which is where we're headed, big events are still unique." he added.
Until recently, sports championships and awards ceremonies had shown signs of audience deterioration, suffering from the same problems as the rest of the business. The Oscars, Emmys, Golden Globes, World Series, NBA Finals and NCAA Basketball Championship had smaller audiences in 2008 than in 2000.
Advertisers stuck with the events, partly because they are often watched live rather than with digital video recorders that let audiences to skip commercials. Still, advertisers were demanding, and often getting, lower prices.
That's likely to change.
"I think we'll be able to see robust growth because literally what you see there is supply and demand," said Jamie Davis, president of Versus, a network owned by Comcast Corp that broadcasts sports including the Tour de France.
"As we have more people interested in advertising, we only have so many slots. We're able, therefore, to raise rates."
Experts attribute the audience increases to several factors: High-definition has improved the viewing experience; award shows have been streamlined and better produced; and, perhaps most surprising, social networks like Twitter or Facebook have created buzz around special events.
Another factor is the shaky economy. It has meant more people staying home, watching TV rather than heading out for dinner or shopping, said NBA Deputy Commissioner Adam Silver.
"People have fewer discretionary dollars to spend on other entertainment options, so that leads them to watch more television," he said.
That may not help ratings for everyday shows -- in part because audiences are spread across hundreds of cable channels -- but it does contribute to ratings for special events.
Higher ratings could come at a cost for TV networks, however. Sports leagues and award committees will surely point to audience growth when negotiating broadcast rights fees.
"You will see sports rights take off," predicted HBO Sports President Ross Greenberg. HBO is owned by Time Warner Inc.
Some complain that rights are already too costly. After spending a record amount for the 2010 and 2012 Olympics, NBC said it would lose about $250 million on the Vancouver Olympics, the second-most watched Winter Olympics in history.
Still, the Vancouver Games had benefits that are hard to measure in dollars and cents. For one thing, they produced much-needed goodwill for NBC, which was caught in a public relations nightmare surrounding Jay Leno's "Tonight Show." They also reintroduced millions of viewers to NBC's regular TV shows through promotions.
Those intangibles -- along with the more formulaic ratings numbers -- won't be lost on rights holders, experts say.
"What you see in television is the classic example of supply and demand," said David Hill, chairman of News Corp's Fox Sports. "Yes, rights fees will keep going up. And, yes, ad fees will keep going up."
(Reporting by Paul Thomasch; Editing by Richard Chang)