CBS’s Moonves Sees Advertising About-Face on DVR Viewers

Les Moonves, the chief executive officer of CBS Corp., said advertisers are having a change of heart about the value of viewers who record shows and watch them later, leading to a dramatic shift in ad buying.

About a fifth of CBS’s ad commitments this year will target viewers who watch shows as many as seven days after the original broadcast, Moonves said last night in a brief interview. That works out to at least about $570 million, based on the company’s ad projections. Most advertisers buy into audiences no more than three days after a show airs.

“A little less than 20 percent of the ad buys this time around will be for people who watch later,” he said after CBS’s so-called upfront presentation, where the network displays its new slate of shows to advertisers. That percentage will jump to about 85 percent next year, Moonves said.

CBS and the other networks are trying to persuade marketers to accept a change in audiences’ TV habits. As many as 25 percent of viewers are taping shows using TiVo-style digital video recorders and watching them later, according to an analysis from TVB, a not-for-profit trade association for the broadcast industry.

A TV program’s audience grows by about 4 percent between the third and seventh day after it’s broadcast, according to Brad Adgate, senior researcher for media-buying agency Horizon Media Inc.

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Getting advertisers to pay for those audiences is crucial for the four major broadcasters, which have suffered a collective 7.2 percent drop in TV viewers this season. Broadcast ad revenue is projected to fall about 2 percent this year to $16.9 billion from 2012, when sales were padded by political spending and the London Olympics, according to ZenithOptimedia, a research unit of Publicis Groupe SA.

Moonves presides over the most-watched television network in the U.S. and the only major broadcaster to increase viewers this year, with a gain of 1.4 percent as of May 12, according to Nielsen data. ABC and NBC are down about 6 percent, and Fox’s audience has declined 21 percent.

Moonves expects to increase ad commitments this year by a “high single-digit” percentage from last year’s $2.7 billion, he told analysts this month. That would amount to at least $2.9 billion in upfront advertising sales, according to Moonves.

Seven-Day Window

Audiences who view programs no more than three days after the first broadcast are put in a category called C3 by Nielsen. Broadcasters, including CBS, are now trying to get advertisers to move closer to the seven-day window, or C7.

“Some advertisers would be more accepting of that window than others,” said Chris Geraci, a media buyer with Omnicom Media Group’s OMD. “It’s not accepted across the board.”

Retail companies, for example, are less likely to buy advertising if they know audiences are going to be watching the shows later, he said. They tend to tout promotions, such as holiday sales, in a narrower time frame.

Even so, advertisers will have to come to grips with audiences watching shows on DVRs and online, Moonves said.

“More people are watching later,” he said. “That’s a fact.”

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