Television
Local TV: The other strike trouble spot
By Kevin Downey
Nov 9, 2007 - 8:45:52 AM

The writers' strike is disrupting national television schedules, with media buys upended by shows closing down and by ratings in some dayparts falling below those guaranteed by the networks.

But a bigger problem is looming for advertisers in local markets, where spot TV inventory is already tight. Prices are trending up, with political campaigns snapping up spots, and one buying agency warns that if the strike goes on much longer, stations could simply run out of inventory.

Media buyers would be forced to shift money into other media, notably radio and the internet.

The problems for local stations are numerous. But the biggest problem is that inventory is already so tight that there aren't enough available spots to give to advertisers to make up for ratings shortfalls.

If enough shows go into reruns because of the writers' strike, that will lead to a tumble in ratings, with the effect of further reducing inventory at the same time as it drives up demand. Advertisers will want more spots to compensate for the lower ratings in order to achieve their goals in those markets.

“What will set the tone is whether we need to buy more in order to get to the level that we’re supposed to get to, based on our specs,” says Kathy Crawford, president of local broadcast at MindShare, the huge media buying agency.

“That then creates greater demand on the inventory because you have to buy more.”

The big question is when all this might happen. The answer looks to be sooner rather than later.

It may be a few weeks for primetime, for which the networks have stockpiled original episodes.

But it will come far quicker for late night, which is already in reruns, and daytime, which is expected to run out of original episodes quite shortly.

A big unknown in all this, points out Crawford, is political advertising. Demand for political ads is always hard to predict, notes Crawford. Campaigns are notorious for rushing in at the last minute with big schedules that chew up inventory. A great flush of political ads coming in all at once would cause further havoc.

There's yet another worry spot TV buyers must contend with: ratings, or the lack thereof.

National buyers get daily ratings, so they'll be able to get a quick read on just how, when and where the strike is beginning to affect ratings.

Not so local TV buyers. Most markets still use the old diary system, where ratings are gathered a few times a year, during sweeps, and buyers don’t get the results until weeks later. They won't see November sweeps numbers until sometime in December.

Local buyers will have to fly by the seat of their pants and their best hunches, estimating the effects of the strike on local ratings based on national ratings.

But that's going to be particularly challenging because of the strike.

“You’re going to see so much juggling of the primetime lineup that it’ll be hard to attribute [ratings declines] to repeats because they’ll be moving everything around and bringing back shows that they weren’t intending to bring back,” says Charley Brough, vice president and group media director at Right Place Media in Lexington, Ky.

The big worry for TV stations is that advertisers will panic and pull their money out of spot TV, further hurting a market that's already suffering in this off-election, off-Olympics year. Ad spending in the top 100 spot TV markets was down 4.6 percent on a year-to-year basis for the first half of 2007, according to Nielsen Monitor-Plus.

Just why local spot TV is tight is due to a confluence of forces. There's been the early spending by political campaigns, of course, and by retailers heading into the holidays. Automotive has also been rising, after a long period in which carmakers were cutting back.

But another force has been the spillover from the scatter market for national TV spots, where inventory not sold in the upfront market is auctioned off through the year.

The scatter market has been tight for a number of months, with prices running well above those of the upfront, and the effect has been to push some national advertisers into local markets looking for cheaper inventory.