Higher Ratings, Uncertain Future

The Big Four networks have been pulling in more viewers -- but not enough to support the notion that their long, slow slide is over

By Ronald Grover

Are the TV networks really back? It sure looks that way when you consider a total of 51 million folks were glued to their TVs on May 25, watching either Carrie Underwood warble her way to winning Fox's American Idol competition or that poor raft collapsing on ABC's (DIS ) surprise blockbuster Lost.

Fifty-one million is a major audience, and it wasn't even a fluke. (Of course, ratings are traditionally higher during sweeps, when the networks pull out all the stops to grab eyeballs.) According to ratings service Nielsen, viewership for the recently ended season increased for the Big Four networks, ABC, CBS (VIA ), Fox (NWS ), and NBC (GE ). Granted, the uptick was slight, less than 1%, to an average of 30 million homes a night, but the arrow is finally going in the right direction.

That was enough to get the network brass celebrating. After nearly three decades of watching viewers flee to cable, satellite, and more recently to DVDs and video games, the networks delight in any stop in the erosion. Even more exciting, the number of viewers ages 18 to 49, the group that advertisers will pay a premium to reach, also rose by a small amount. That demo has traditionally served as a leading indicator for the direction in which future ratings will go.


  Indeed, the numbers looked so strong that analyst Tom Wolzien of Sanford C. Bernstein & Co. told The Wall Street Journal that "the 25-year slide of broadcast television networks is coming to an end."

Pardon me while I hold the champagne. A single year does not a trend make, even though folks are watching more TV this year. According to a study by Time Warner's Turner Broadcasting unit (TWX ), viewers watched an average of 32 hours a week of TV this year, up from 30 hours a year ago.

Why's that? For starters, the networks were blessed this year with some true phenomena, namely an out-of-nowhere smash in Desperate Housewives, a titillating possible sex scandal for American Idol, and a last-episode celebration for Everybody Loves Raymond. Indeed, the popular sitcom pulled in almost twice as many viewers for its swan song than it had averaged every other week of the season.


  At the same time, it looks as if cable TV's period of relentless growth may have ended. Of the top 10 cable channels, both TBS and ESPN lost viewers, and MTV dropped 13% of its 18-to-34 audience, according to an analysis of Nielsen's numbers by Turner. And in the most recent sweeps, the Big Four actually saw more growth than cable. Network ratings were up 4.8%, while cable's audience rose only 2% -- a disappointment after growing 22% over the prior three years.

The question for network execs: Can they again make the same kinds of shows that exploded into the public consciousness this year? At the risk of being a killjoy, let me point out that their batting average isn't great. Instead of trying to figure out what works and why and learn from it, they wring every last drop out of each show.

For example, a few years back, ABC had a huge hit with the Regis Philbin-hosted Who Wants to be a Millionaire?. Instead of capitalizing on the buzz from Millionaire to develop new shows, the Disney unit put Regis & Co. on several times a week. Within less than two years, the show was toast, and the network had fallen from No. 1 to No. 3.


  The Apprentice, a bona fide water-cooler sensation 18 months ago, isn't the ratings guarantee it once was. NBC's solution? Instead of facing the reality that reality isn't doing much for it -- although, mercifully, it has axed boxing-themed The Contender -- the Peacock Network not only is bringing back The Donald but also will be airing another version of The Apprentice, starring ex-con and homemaker extraordinaire Martha Stewart.

And, of course, some of the networks' boost this year came from good old-fashioned stunting. CBS got plenty of mileage out of the countdown to the finale for Everybody Loves Raymond. Unfortunately for the Big Four, not many sitcoms are around that have the longevity and ratings to give a network a boost.

Think anyone is going to flock to the tube when it comes time for NBC's Will and Grace to do its victory lap? Or ABC's According to Jim? In the last few seasons, the networks have all but abandoned the search for new sitcoms, turning instead to the reality shows that may have run their course.


  Certainly the network biggies understand this -- just as they understand that their business is about finding the shows that get folks buzzing. Despite finishing this year as the top-ranked network by the number of households tuned in, CBS has torn up five nights of its schedule and will have six new shows -- including a sitcom with The Fonz, Henry Winkler, called Out of Practice.

But does NBC have a hit in its highly anticipated sitcom My Name is Earl? Will ABC's sci-fi show Invasion be another Lost? Indeed, it's too early to know about any of the 25 or so new shows the networks will trot out this summer.

But just because I'm not ready to break open the bubbly doesn't mean I don't wish the networks well. They finally have some momentum in the battle for the hearts, minds, and eyeballs of America. Now if they can keep the momentum going -- that will be something to celebrate.

Grover is Los Angeles bureau chief for BusinessWeek. Follow his weekly Power Lunch column, only on BusinessWeek Online

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