December 11, 2007 / 12:25 AM / 11 years ago

NBC refunds advertisers as ratings plunge

NEW YORK (Media Week) - Fourth-ranked broadcaster NBC has quietly begun reimbursing advertisers an average of $500,000 each for failing to reach guaranteed ratings levels, the first time a network has taken such a step in years, media buyers said.

The main entrance to the NBC television network studios is pictured in Burbank, California, October 11, 2007. Fourth-ranked broadcaster NBC has quietly begun reimbursing advertisers an average of $500,000 each for failing to reach guaranteed ratings levels, the first time a network has taken such a step in years, media buyers said. REUTERS/Fred Prouser

Networks usually offer make-goods — free advertising slots — in the event of such shortfalls. But NBC has none to give. In fact, no broadcast network has much ad inventory left between now and year’s end — except for, perhaps, a handful of units the week between Christmas and New Year’s, and that doesn’t do much for advertisers chasing holiday shoppers.

CBS, ABC and Fox also are doling out make-goods, primarily for the first quarter. They have blamed softness on a new ratings formula, but media agencies disagree. None of the networks would comment.

The networks’ problems emerged even before the Writers Guild of America went on strike November 5. The networks had enough first-run shows to get them through November, and repeats and replacement programming will not begin in earnest until January — when their problems will likely start to worsen.

Among the Big Four networks, NBC has the most serious ad shortfall, as its primetime ratings are down most dramatically. Meanwhile, none of its new series this season have caught on with viewers. Compounding buyers’ angst about NBC is the network’s plan to schedule more reality shows, including “Celebrity Apprentice” and “American Gladiators.”

“We’re trying to understand NBC’s recent moves,” Starcom Entertainment exec vp Laura Caraccioli-Davis said. “We are concerned that it might be thinking about adopting a programming strategy like some of its sister cable networks. ‘American Gladiators’ and even some of the shows they have in development, like ‘Knight Rider,’ are remakes being dusted off rather than coming up with new creations.

“NBC used to be the upscale, quality network,” she added. “We have come to expect quality, iconic programming. Maybe they are searching for the reality hit they don’t have, their own ‘American Idol.’ But too much reality just doesn’t play well with advertisers.”

NBC program planning president Vince Manze countered that the network will air more scripted shows in the first quarter than it did a year earlier, so the perception that NBC is moving more heavily into reality is wrong.

“We will have about 85 hours of original, scripted, first-run programming in the first quarter,” Manze said, citing the return of dramas “Law & Order,” “Law & Order: Criminal Intent” (which previously aired on NBC’s sister cable net USA Network) and “Medium.”

In February, NBC will premiere midseason drama “Lipstick Jungle.” It also has first-run episodes of “Law & Order: SVU,” “ER,” “Chuck,” “Friday Night Lights,” “Las Vegas,” “Scrubs” and “My Name Is Earl” yet to air.

Magna Global audience analysis exec vp Steve Sternberg said he saw no problem with NBC airing a reality block on a low-rated night like Saturday or even during the week if the production values were high or if it replaced other reality programming. However, “if it replaces midweek scripted hours, it could have a negative impact” on ratings and audience quality, he said.

Reality programs featuring high production values, including Fox’s “American Idol,” CBS’ “Survivor” and “Amazing Race” and ABC’s “Dancing With the Stars” and “Extreme Makeover: Home Edition,” draw sizable audiences each week.

Still, one network executive charged that audiences for those shows are “borrowed” viewers. “A majority of those viewers come in for that show and then leave,” the executive said.

Added MediaVest senior vp group director Ed Gentner: “No one (advertiser or agency) wants to see too much reality programming on TV. But broadcast television has changed, and reality is part of today’s landscape.”

Reuters/Hollywood Reporter

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