NBC must see ratings improvement

September 20, 2007

This could be the year that NBC finally gets out of its ratings funk. They've got the remake of the "Bionic Woman." And its geek action comedy "Chuck" is generating a lot of favorable chatter ahead of its debut. NBC is all set to be cool again!

But wait. We've heard that before. The GE (GE)-owned broadcast network has been stuck in fourth place with overall viewers, and more importantly to advertisers, with 18-49 year-olds, for the past three seasons. And last year was supposed to be the year when NBC emerged from its ratings malaise.

That didn't happen. Although the network had a big hit last year with the comic book-themed "Heroes," and also enjoyed strong ratings on Sunday nights in the fall thanks to its broadcasts of NFL games, NBC still saw its ratings decline from a year ago. Hyped new shows like Aaron Sorkin's "Studio 60 on the Sunset Strip," "The Black Donnellys," "Kidnapped" and "20 Good Years" all bombed and did not make it past one season.

What's more, despite the fact that NBC's Thursday night sitcom line-up, which includes recent Emmy winner "30 Rock," is largely adored by critics, the four sitcoms airing between 8 and 10 EST have not been huge ratings hits, since they face brutal competition from CBS's (CBS) "Survivor" and "CSI" and "Ugly Betty" and "Grey's Anatomy" on Disney's (DIS) ABC network.

NBC, simply put, lacks a show with mainstream buzz and huge ratings ala "American Idol" on News Corp.'s (NWS) Fox, or"Grey's Anatomy."

So this is an important year for NBC. Within the past year, some Wall Street analysts and fund managers that own GE stock have urged GE CEO Jeffrey Immelt to consider selling or spinning-off the NBC Universal unit, which also includes cable networks CNBC, SCI FI, USA and Bravo as well as the Universal Studios movie business, if the media division continues to languish.

In the first half of 2007, GE reported that NBC Universal's sales fell 15 percent from the same period in 2006, and that operating profits were up only 4 percent from a year ago. Wall Street won't tolerate such sluggish performance for much longer.

But Gary Carr, senior vice president and director of national broadcast with TargetCast tcm, a media buying firm in New York, thinks that this (finally) could be the year when NBC bounces back a bit.

Carr said the NBC Monday night lineup, which will have "Chuck" preceding "Heroes" and time-travel drama "Journeyman" following "Heroes" has the potential to do well, and he also has high hopes for "Bionic Woman" even though it will face tough competition on Wednesday nights from "Criminal Minds" on CBS and the "Grey's Anatomy" spin-off "Private Practice" on ABC.

"NBC has a good base. Ratings should stabilize this year. All it takes is for one of these new shows to click," Carr said."They may still finish in last place but I think they can stop the ratings slide."

Harry Keeshan, executive vice president of national broadcast with PHD U.S., another media buying firm, added that NBC's Thursday comedies may lag the ratings of CBS and ABC but that the lineup, which also includes "The Office" and "My Name is Earl," is still attractive to many advertisers since these comedies tend to do well with more affluent viewers. And Thursday nights are a key night for marketers that are trying to promote their wares and services ahead of the weekend.

"Advertisers don't just look at ratings and take them at face value. You have to look at what makes up the audience and certainly these comedies are bringing in a more upscale crowd. That is a big selling point," Keeshan said.

But Lyle Schwartz, a managing partner with GroupM, another media buying firm, said it is crucial for NBC to show some ratings improvement on Thursday nights since it is such an important night for advertisers.

"To me, the Thursday schedule is where their fortunes will lie. More promotion never hurts and there are opportunities to increase the audience," Schwartz said. "But Thursday is a very very strong night on TV. It's going to be a war. America will decide if NBC has the armaments to stay up there. Their decision was to not change and stay the course and there's something to be said for continuity. But time will tell if that was the right choice."

Another media analyst sees some hope, even if NBC's new shows don't become monstrous hits.

Mark Fratrik, vice president BIA Financial Network, a financial and strategic consulting firm for the media and communications industries, said that NBC, in addition to other TV networks, will see a boost in political ad spending tied to the 2008 presidential race and other elections. That will particularly help GE's locally owned NBC stations.

Fratrik also pointed out that NBC will be airing the Summer Olympics from Beijing on the flagship broadcast network, as well as NBC Universal's cable stations. So that's also going to give NBC a boost. But he concedes that there are still some big problems at the once proud network.

"There is an intense battle among the networks for viewers and NBC is struggling to get an additional audience. It's important for NBC to rebound and find new hits. It is important for them to show a turnaround and ratings growth," Fratrik said.

NBC, to be sure, faces many challenges that are not unique to it. Ratings for many of the popular shows on the big networks, by and large, took a hit last season since viewers have both more ways to watch their favorite shows when they want, thanks to the Internet, as well as non-TV entertainment options, again largely due to the Internet, especially user-generated video sites like Google's (GOOG) YouTube.

The Peacock Network is taking some bold, risky moves to try and capture more online viewers.

The network, in a highly publicized spat with Apple (AAPL) will not renew its deal to have NBC shows on iTunes. The contract was set to expire in December but Apple decided to pull the plug on NBC's fall lineup since it would not make sense to offer shows from this season only from September through December.

Apple claimed NBC wanted to charge more money for shows. NBC countered that it was not happy with what it felt were lax anti-piracy controls on iTunes. Either way, you won't be able to catch up on "Friday Night Lights" on iTunes this year.

But NBC did announce on Wednesday that it was launching something called NBC Direct, a service that will let viewers download certain NBC shows for free. The videos will have ads in them. NBC is also taking part in a joint venture with News Corp. in the terribly named Hulu, an online video site and distribution network that will feature content from both the libraries of NBC Universal and Fox. And earlier this month, NBC said some of its shows would be available on Amazon.com's (AMZN) Unbox download service.

So who knows? Maybe the Peacock will finally have a reason to strut again this season. Of course, I think we said that last season as well.