Americans less mad for March Madness
Declining TV ratings may be bad news for CBS and Time Warner.
Ratings for the NCAA Men's Basketball Tournament, which is being shown on CBS (CBS) and Time Warner's (TWX) Turner Networks, have been lackluster.
If the tournament doesn't rebound -- pun intended -- this could spell trouble for CBS and Time Warner, which signed a 14-year, $10.8 billion deal to secure the tournament's television and Internet rights in 2010. Much of the commercial time for the games is sold in advance, as with most TV shows, based on guarantees that networks provide advertisers for a certain minimum audience. If a show fails to meet the thresholds, advertisers are entitled to "make-goods" -- essentially, free commercials. Spokesmen for the networks couldn't be reached for comment.
For most broadcast TV networks, business continues to be tougher than making a winning three-point shot with the game clock set to expire. According to Kantar Media data cited by Advertising Age, News Corp's (NWS) Fox was the only major English-language broadcaster to increase advertising revenue in 2011, and that was because the network aired the Super Bowl. Ad revenue declined 2% overall despite record football ratings and the World Series going to seven games. The figures mark a change from 2010, when revenue of all broadcast networks was up.
"At the time, advertisers were untying their purse strings and rushing to get back into the market after suffering from consumer ennui during a severe recession," the publication says. "In 2011, it would seem, marketers felt less certain about increasing their ad commitments."
The 2012 U.S. presidential election and Olympics will bolster the networks' bottom lines, though it is likely that this good news is already priced into media stocks.
Jonathan Berr is more of a baseball fan. He doesn't own shares of the companies listed here.
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