Ad revenue impact on US TV networks not too bad

NEW YORK: The US-Iraq conflict has hit ad revenues of US television networks but if media reports are anything to go by, matters are not as bad.

Reports in US newspapers indicate that while television lost between $150 million to $ 200 million, it is not as bad as what could have been. The loss would have more than doubled, had the networks completely done away with their normal programme schedules and dished out war news around the clock.

Having said that, however, the effect of the Iraq war on the programme line-up is still being felt. More news translates into a fewer number of commercial slots. ABC is said to be asking producers to create alternative versions of episodes that are two and a half minutes shorter. This will free up space for news updates. The bright side is that less prime-time ad slots could increase ad rates for those entertainment shows that have a decent pull regardless of the war, claim the reports.

Leading news broadcaster CNN has taken a more pragmatic view of the situation. Noting that advertisers were not so averse in continuing a certain level of presence this time as opposed to the Gulf War which took place at the start of the previous decade, CNN is running TVCs albeit on a limited basis. Over half the advertisers are willing to show visibility, which is a sharp contrast to the 20 per cent figure at the time of the Gulf War.

Fox News Channel ad sales chief Paul Rittenberg has been quoted in the report saying that the network lost about $four million in ad sales since the conflict began as the network chose to go largely ad-free.

While some advertisers want to stay completely out of the picture for the time being, others are willing to be seen in programmes that have nothing to do with the ongoing conflict. The CEO of a media-buying arm at one of the world's biggest agencies has foreseen a major problem happening if the war continues till the middle of next month.

The problem with a long-term war is that advertisers will get caught in a jam, thanks to the rather cheerless mood prevailing in the country. On the one hand, one cannot have ads with a humourous message or catchy music. On the other hand, if one goes down the patriotic route then there is the risk of the viewer perceiving this as being opportunistic.

The ad community however would do well to take note of a USA Today report which states that viewers are very set in their patterns. They can be affected for a few days, but by and large they stick with what they normally do. They know that if something dramatic happens, they will be told about it.

Whatever the duration of the war, one thing is certain. The Iraq conflict will hit Viacom, Fox and Disney's profit targets for the first quarter of the year. Not only do they have to cope with reduced ad spends, there are also significant costs involved in covering the conflict.

In television advertising, it is the "upfront" market that sets the tone for the $54 billion industry's upcoming year. This year's selling period may have the misfortune of colliding with a prolonged conflict in Iraq. The upfront sales season starts 12 May, selling network and cable ad time from October 2003 through September 2004. The report states that last year's upfront sales season sold $8 billion worth of network spots and another $6.6 billion in commercials for cable and syndicated television. That was up 15.9 per cent from the 2001 season.

The silver lining here is that if a lot of ad time inventory during the upfront season is unsold then the networks could be able to sell it at higher prices later on. This will again hinge on the extent to which the economic and geopolitical circumstances improve, the reports point out.

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