Rapidly Shrinking Market Poses Big Challenges for TV Networks

An interesting piece, from Brian Stelter, at the New York Times, "As TV Ratings and Profits Fall, Networks Face a Cliffhanger":

As the major television networks prepare to unveil their new fall lineups in New York this week, they face threats from seemingly every corner.

Prime-time ratings for the Big Four broadcasters — ABC, CBS, NBC and Fox — together are dropping more precipitously than ever. Even their biggest hits, like “American Idol” and “Dancing With the Stars,” are fading fast. Advertisers are moving more cash to cable, cutting into the networks’ quarterly profits. New technologies are making it easier to skip those ads, anyway.

That’s not all: there are more outlets for programming cropping up all the time, with Netflix and Amazon and dozens of cable channels competing for actors, producers and, most important, viewers. Government regulators want to take back some of the spectrum allotted to local television stations. And start-ups like Aereo are threatening to deprive the stations of subscription revenue, causing some broadcasters to talk of options that were unthinkable a few short years ago. Some have warned they might go off the air entirely.

The many pressures bearing down on the industry are casting a shadow over this week’s upfronts, an annual tradition in New York in which the new sitcoms, dramas and reality shows are previewed at splashy, open-bar events and the networks try to capture their portion of an estimated $9 billion in advertising commitments.

“The networks are getting picked at from every direction,” said Jessica Reif Cohen, the senior media analyst at Bank of America Merrill Lynch. “This year was the tipping point,” she said, “when the television ratings really fell apart.”

The broadcast networks have managed declining viewership for years, but executives by and large said they believed that they had escaped the punishing losses that digital media exacted on the music industry and newspapers.

Now, though, they say they are not sure; even the industry’s biggest boosters concede that the business is under assault, though they express confidence that the networks will adapt. While the challenges before them are numerous, said Gary Carr, who oversees ad-buying at TargetCast, “the networks are far from dead.”

More at the link.