DTV Transition Will Hurt Broadcast Ratings: Turner Exec

12/10/2008 12:05 PM Eastern

New York—The broadcast networks are already having a “turbulent” TV season, shedding more than 2 million viewers, and the transition to all-digital signals in February will hurt the medium even more, a top Turner research executive said Wednesday.

Jack Wakshlag, Turner's chief research officer, says the DTV transition is sure to have a negative impact on broadcast network ratings.“The broadcast networks know. The broadcast stations know this is a significant, substantial challenge to their futures,” Turner chief research officer Jack Wakshlag (left) said.

At a year-end ratings press briefing here, Wakshlag also told reporters that Jay Leno’s switch to the 10 p.m. time slot next fall on NBC will present an opportunity for cable to pick up viewers.

During his presentation, Wakshlag said the six broadcast networks have lost 2.6 million households in primetime season to date, the equivalent of the Philadelphia TV market.

“It’s as if Philadelphia was wiped off the face of the earth,” Wakshlag said.

Year-to-date ad-supported cable’s primetime share of household viewing is up 3% versus last year, at 59%, according to a Turner analysis of Nielsen data.

In contrast, the Big Four have seen their share drop 6%, to a 32.9, despite NBC's having the Olympics this summer.

The Feb. 17 digital transition will add to broadcast’s woes, according to Wakshlag, who cited Nielsen data to make his case. As of November, roughly 20% of TV homes will be affected by the DTV transition, with 10.3% of homes “partially unready”—or have some TV sets that are not digital-ready—and 7.4% having “no-ready” sets.

Right now, nearly 13% of broadcast viewing comes from homes with “unready sets,” namely homes that only get broadcast stations, but viewing patterns change when households make accommodations to prepare for the DTV transition, according to Wakshlag.

In the homes that have made the transition from “unready,” about 37% have opted to get either cable or satellite service.

“That’s good for cable operators. That’s good for ad-supported cable networks,” Wakshlag said. “It’s a problem for broadcast networks. Instead of four channels or five, they’ve got 100, 200. It changes the dynamic.”

As a result, the share of viewing in those homes changes from 93% to English-language broadcast to just 41%, with 54% shifting to cable, Wakshlag said.

“They take advantage of the variety they’re now offered and spend more than half their time watching ad-supported, English-language cable networks,” he said “That’s why broadcast stations are very nervous about what’s going to happen.”

During a question-and-answer session, Wakshlag said that NBC’s announcement this week that Leno will move from late night to 10 p.m., when NBC has previously run scripted hits like ER, will present a nice opening for networks such as TNT, which has had a string of successful original dramas capped by The Closer. The hit series is in its fourth season is still the No. 1 ad-supported cable series of all time.

“Ten o’clock is a place NBC saw it could cut costs, and it’s a signal to us that broadcast networks are changing the way they’re going to operate. They’re faced with fiscal realities produced by a broken business model, and that creates opportunity for us,” Wakshlag said.

“How will Leno do against what the dramas used to deliver [on NBC] at 10 o’clock?” he asked. “I don’t think he’s going to sit there and say he can deliver the big kind of numbers that Law & Order would deliver. So the numbers aren’t going to go there, aren’t going to go up. And that’s an old-skewing show.”Turner's Wakshlag says Leno's move to primetime to provides an opening for original cable content.

Wakshlag said the Leno move validates TNT’s strategy of moving away from off-network shows, which are in smaller supply, in favor of originals like The Closer and Leverage.

“There are more comedies on the air today than there were 10 years ago. There are more dramas on the air than there were 10 years ago. And the answer is where?” he said “They’re on cable. America knows to change the channel.”

USA Network is on track to be the No. 1 rated cable network in primetime, according to Wakshlag, with a record 2.8 million total viewers. And this year 37 cable networks have had their best primetime numbers in the 18 to 49 demographic, he added.

In the all-news arena, CNN enjoyed a landmark on Election Night, Nov. 4, when it beat its rival broadcast and cable networks that night with its coverage, according to Wakshlag.

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