Ratings weren’t the only thing that plummeted during the recent writers’ strike. A study released this week by TargetCast, a New York media agency, found that during first quarter, when the effects of the strike began to be seen in primetime, the average price for a spot on the Big Four networks slipped 12 percent compared with last year, from $142,824 to $125,634, based on upfront and scatter data. That came after a 3.7 percent year-to-year rise for fourth quarter 2007 prices, from $136,319 to $141,376. NBC was hurt the most, with its average price slipping 24.7 percent, from $103.449 to $77,893. “American Idol”-fueled Fox led at $237,237, followed by ABC at $122,509 and CBS at $112,641. Meanwhile, first-quarter adults 25-54 ratings for the Big Four networks combined fell 20 percent, after a 14 percent decline in fourth quarter, based on live viewing. C3 ratings, the currency being used for upfront negotiations, held steadier, down 2 percent in first quarter and 1 percent in fourth. Gary Carr, senior vice president and director of broadcast services for TargetCast, talks to Media Life about the impact of the strike, makegoods and why buyers may have some leverage this year.

 
What did you find most interesting or most surprising about this study?
 
The interesting thing is people have to understand that cost-per-thousands are going up, but unit costs really aren’t. That’s a function of less ratings points available to buy. There’s fewer and fewer national ratings points available.

Why did NBC see such a big impact on its primetime ad pricing during first quarter compared with the other networks?
 
Well, my feeling would first be the strike, so ratings were obviously down. But also, since NBC’s in last place in the network rankings, they probably had a lot of liabilities for the past season and fourth quarter to take care of.

They’re paying advertisers back on past guarantees. So when you average in those no-charge units with paid units, the average price goes down.
 
You found that the cumulative ad price drop for the Big Four was 12 percent. Was that smaller, bigger or about what you would have forecast?
 
I think it’s three factors. The strike lowered ratings, but they all probably also had audience liabilities from fourth quarter because ratings were down before the strike anyway. 

And then also I think some people moved money because CPMs had gotten so high. Instead of buying network prime, they moved money to more efficient media.
 
This is based on SQAD, the media cost forecasting firm, which collects data for about 45 percent of spending on national broadcasting.

My feeling is it’s reasonably in the ballpark of what we'd expected.

What do these numbers tell us about the impact of the writers' strike?
 
When deals were made in the upfront, everyone was worried that C3 would lead to lower ratings overall and higher costs.

What happened was that C3 wasn’t as bad as expected, but live-to-live was down to begin with, and the erosion continued. So once the strike started it didn’t have an immediate effect except in late-night. It didn’t start to affect broadcast prime until mid- to late January.

Repeats meant ratings went down even more, which meant networks owed more, meaning they'd have to give away more. One thing fed on another.
 

Season to date, what sort of impact has the writers' strike had on pricing?
 
Well, season to date, according to what we’ve found, pricing was down about 4 percent. But it was up about 4 percent in fourth quarter and then down 12 percent in the first. In first quarter the strike accelerated under-deliveries.

Why has ABC held up relatively well compared with the other networks? It’s the only network season-to-date without a price decline.
 
Well, there’s still a lot of demand for their shows, and they’re strong with females. That’s my guess. They have a pretty consistent schedule with “Grey’s Anatomy,” “Desperate Housewives,” and some other shows that have loyal audiences.

In fourth quarter, ABC was up 7 percent in pricing but in first quarter they were down 10 percent because they were running repeats.


What's the most important thing media buyers and planners can get from this study?
 
That’s an interesting question. What can we take away? Just seeing the dynamics and trying to understand what effect it has on pricing, it gets me thinking.

When you look at these things, I think it helps you understand the whole process of how things work and what the basis of pricing is. It gives you an idea that when the networks tell you how great they’re doing, but cost is actually down, maybe we have some leverage this year.

If you understand what goes into these numbers, it helps you understand the process and it could help in network selection and negotiation.
 
The more knowledge you have, the better negotiator you are.