CBS Sets High Bar For New TV Season Amid Recession
May 22 2009 - 2:46PM
Dow Jones News
CBS Corp. (CBS) made an aggressive push this week to profit from
its ratings strength and win favor from advertisers, but the
broadcaster could face harsh judgment from investors if financial
success eludes it for another year.
More than other TV networks, CBS laid it on the line during the
so-called upfronts - annual gatherings held this week in New York
where TV networks showcase their upcoming programming lineups in an
attempt to lock down big, advance commitments from advertisers.
Those deals are expected to be harder to negotiate this year
because advertisers are looking to save money; as a result, talks
could drag into the summer.
Nonetheless, CBS set a high bar for itself, thanks to an
unprecedented marketing push, dismissive comments toward
competitors, outspoken confidence about its programming lineup and
an aggressive financial forecast. All of which occurred against the
backdrop of an economic recession and lingering questions about the
future of the network television business model.
"[Broadcast TV is] not dead," CBS Chief Executive Les Moonves
said. "You just need a couple of hit shows, and you're alive and
cooking."
His comment was a not-so-veiled jab at rival broadcast network,
NBC, after its chief executive, Jeff Zucker, said last year that
the business model for broadcast TV is breaking down.
"There's a difference between the model being broken and not
having any hit shows for years," Moonves said to laughter and
applause at the CBS upfront presentation at Carnegie Hall this
week.
NBC, which has lagged in the ratings for years, did away with a
traditional upfront presentation this year in favor of an evening
comedy show featuring Jay Leno, who is leaving "The Tonight Show"
and hosting an hour show at 10 p.m. ET Monday through Friday,
cutting an hour of scripted programming out of NBC's primetime
lineup. It's a controversial move that rivals have portrayed as a
cost-cutting measure and an opportunity for them to gain
audience.
Jeff Immelt, chief executive of General Electric Co. (GE), which
owns NBC, recently called the move its "big gamble" and said Leno,
who has pledged to make the show an "advertising-friendly" format,
has received early support from Madison Avenue.
In general, advertisers are enthusiastic about comedy this year
as audiences look for lighter fare to distract from depressing news
headlines.
"Leno will not work for everybody, but he will work for some
people," said Elizabeth Herbst-Brady, president of Magna, a media
investment strategy unit with Interpublic Group of Cos. (IPG). "NBC
will be very creative in how they utilize that time period, and how
they utilize him."
Moonves, though, has offered to accept bets that its CSI crime
dramas will beat Leno's ratings. CBS moved the hit show "The
Mentalist" to 10 p.m. Thursday to match up against Leno. It also
trumpeted CBS' position as the most-watched TV network and the only
broadcaster to improve its ratings in the current season, going so
far as to launch an ad campaign on its own media platforms
highlighting its successes.
Magna's Herbst-Brady said CBS offers a "very stable schedule,"
which should appeal to advertisers this year as they become less
willing to take chances with their budgets.
Moonves also laid out an optimistic case for a rebound in ad
markets this year, saying there are signs that "the clouds are
lifting" even as unemployment rises and certain economic indicators
continue to deteriorate.
His comments echoed similar optimism from other media chiefs,
but CBS has backed up its outlook with a full-year forecast that
some analysts have deemed aggressive and reflective of an
advertising market better than currently perceived.
Merrill Lynch analyst Jessica Reif-Cohen recently said she
expects a 13% decline in this year's broadcast primetime upfront
spending, but she said CBS "appears to be in the strongest position
due to its outperformance on the ratings front."
CBS needs a strong performance to help an ailing stock price
further recover. After losing almost three quarters of its value
last year, shares have almost doubled in price in recent months as
anticipation builds for an advertising market recovery.
-By Nat Worden, Dow Jones Newswires; 201-938-5216;
nat.worden@dowjones.com