Analysts are starting to wrap their minds around an idea raised by CBS’ Les Moonves (here) and Disney’s Bob Iger (here) in recent earnings calls in response to questions about broadcasters’ disturbingly soft ratings in the new primetime season: With DVRs and time-shifting becoming more popular, they said, it’s time to sell ads based on the number of people who watch them up to seven days after they first air (C7, in industry jargon), up from today’s Live+3 days (C3). But the early verdict seems to be that a change would only help broadcasters a little, if at all — and won’t happen quickly. With DVRs’ ability to speed through commercials, “The problem is not ‘when’ people choose to watch particular content, it is that they are not watching advertising at all when they watch that programming,” BTIG’s Rich Greenfield says this morning. “You can try boosting viewership via C7 or even C14, but the ads are simply not being watched.” His suggestion: Networks should offer more shows on VOD, and fill them with fewer ads that are targeted to viewers’ needs and interests. The shift to that kind of model, including through TV Everywhere initiatives, “has simply been far too slow and we are being kind,” he says.
RBC Capital Markets’ David Bank is a little more optimistic about C7 ad sales, although he says the idea probably won’t catch on in time for the Spring 2013 upfront market. Broadcasters would have to develop a two-tiered pricing system: One for advertisers such as movie studios and retailers that need to reach a lot of people quickly, and another for companies that are less time-sensitive including those that sell consumer products and financial services. Advertisers also would insist on a drop in the networks’ rate for each viewer reached to compensate for the additional viewers in the C7 pool. The networks would end up making a bet that the growth in the number of people who time-shift shows four to seven days “will be faster than the trade-off in pricing,” Bank says.