Today’s media world is changing and evolving at such a dizzying rate that marketers and consumers alike must make a concerted effort to keep up with the opportunities and choices. Broadcast television options, curiously, have remained relatively unchanged since the mid-1990s. Since that time there have been the “big four” networks (ABC, CBS, NBC, FOX) and the two fledglings (WB, UPN). In the course of the past few months, all that changed when two new networks, CW and MyNetwork TV, were formed.
Empower questions whether the impact of these new ventures will live up to the initial PR hype. While we applaud the executives at CW for crafting a network that may enjoy success, we don’t predict a measurable upset in the broadcast or cable industry. As for MyNetwork TV, we believe it will play a role in the syndicated market, but take a backseat in the broadcast arena. With these changes arise considerations that will impact how some marketers think about media mix, programming choices, and niche targeting options.
This article provides overviews of each network and relevant implications for advertisers.
CW Network – Best of Both Worlds?
CBS and Warner Brothers are combining UPN and WB to form a new network, the CW. CW will marry the strengths of both affiliates, targeting the profitable adult 18-34 segment. The change will take place September 5, 2006. Until that time, WB and UPN will continue to run their respective programs.
With the transition underway, the CW is now signed on with more than 115 stations, representing clearance in 76% of the country. The network predicts a clearance of about 96% by Q4 2006.
As of this writing, a final programming line-up for the CW has not been released, but early signs suggest that some of each network’s biggest hits will find its way to the roster. Probable inclusions are Gilmore Girls, Everybody Hates Chris, and America’s Next Top Model. There are also plans to develop new programs, including Palm Springs from the maker of Dawson’s Creek and Runaways produced by Darren Star of Sex in the City.
The merger is designed to allow the network to capture a greater share of the younger demo while garnering a larger piece of the advertising dollar pie. From the broadcasters’ perspective, it doesn’t sound like a bad strategy.
From a marketer’s point of view, however, the outlook is a bit more tenuous. While overall we believe this new network could offer a streamlined and strategic place to reach young demos, it’s critical to examine areas of apprehension. Because this is breaking news, it’s also important to help marketers understand how this change will, or will not, impact their media plans.
A result from the loss of one network will be less ad inventory and/or fewer rating points in the broadcast market. This dearth may make it difficult for advertisers to meet goal on younger demos. Together, UPN and WB played 23 weekly hours of original programming, while the CW will have only 15. This reduction will have implications for some advertisers, especially those who target the African American audience, one of UPN’s strong suits. As it stands now, only two black-oriented shows, Everybody Hates Chris and Girlfriends, are on the CW schedule.
Fewer programs and reduced inventory may increase the already steady migration to cable, for both advertisers and viewers. Viewers who enjoyed the unique programming options on UPN or WB may spend more time tuning into cable nets such as MTV, Comedy Central or BET. As such, expect some advertisers to allocate higher budgets to the cable arena.
Another result of network consolidation can be increases in pricing. Fewer players and less competition can sometimes mean a hike in rates. In this scenario, Empower MediaMarketing does not believe that significant increases will occur. Some cable nets, such as the MTV group, may capitalize on the influx of dollars and posture for higher CPMs. Although both CW and FOX, with its youth-oriented programming, may attempt to procure premium pricing, we expect impact to be minimal.
A positive outcome of this merger is the built-in affiliation with Warner Brothers Pictures and Paramount Pictures, which will give CW access to an expansive library of original movies. As such, there will most likely be content-synergistic opportunities with certain movie titles, including sponsorships.
The CW will take part in the national upfront, the time of year (usually May-June) when the networks sell a majority of inventory for the upcoming season (Q4 2006-Q3 2007). Empower will gather more information regarding market dynamics, specific programming, and pricing before determining how they will value this new venue.
On a local level, advertisers need to be very cognizant of how they approach 4th quarter in particular, when CW launches. For buys not yet placed, consideration should be taken in determining if and how much to buy on this network. For buys already booked in Q4, Empower suggests that marketers examine if and how to adjust current buys. Currently, Empower is exploring a number of options for their clients.
MyNetwork TV – Where “My” Equals Affiliates
In an attempt to cash in on those stations left out in the cold after UPN and The WB merged, News Corp (parent company of Fox), and Twentieth Television recently created a sixth “network” called MyNetwork TV. At this time, MyNetworkTV is clearing in approximately 63% of the country, including top markets like New York, LA, and Chicago. Approximately 96 stations have crafted a deal with MyNetwork. News Corp executives predict they’ll sign enough affiliates by September to reach 90%.
Empower contends that MyNetwork TV is not a bonafide network, and many other industry experts concur. Essentially, it is a syndicated model designed to be extremely affiliate-friendly. The syndicated group offers a favorable inventory split of nine minutes of local advertising time and five minutes of national time per hour. For perspective, the other networks offer their local stations three minutes each hour. Ad time will be sold by Twentieth, which is a company that sells traditional syndicated programming fare.
The one element that sets this business model apart from other syndicated programming is that MyNetwork will air its content in primetime versus other syndicated shows like Oprah, Jeopardy, and Dr. Phil, which run in non-prime dayparts. We find it interesting that MyNetwork’s model is based on one that has been attempted, unsuccessfully, in the past. Marketers may recall that in the late 80’s/early 90’s many independent stations filled their primetime line-up with syndicated shows such as Star Trek and Xena.
18-49 demo, which means tough competition since this is the primary target of the big four networks. Compare this strategy with that of the new CW which is going after the younger 18-34 viewer. As such, we anticipate MyNetwork will generate low ratings, comparable to non-prime syndicated programming. However, Empower forecasts that the network will endeavor to garner a higher CPM for its fare.
Initial programming will consist of 12 hours per week airing M-Sa from 8-10p. First up in September will be two novelas –English-language versions of the Spanish novella, titled Desire and Secret Obsessions. These will run in a strip (Monday-Friday) fashion. Slated for 13 weeks, these shows will be replaced by a variety of reality, magazine and other inexpensive content. Other potential shows include Celebrity Love Island (think Surreal Life meets Temptation Island) and Catwalk (think America’s Next Top Model).
Since novelas have been a huge success on the Hispanic-targeted Univision and Telemundo networks, Empower believes the inaugural airings of Desire and Secret Obsessions will provide an attractive way to reach acculturated, English-speaking Hispanics. And since the casts will be multi-ethnic, African-Americans may tune in as well. Of course, if MyNetwork over prices, the potential benefit will be lost. And, if the programs that replace the novelas don’t retain the ethnic viewer, the strategy fails.
MyNetworkTV touts they will be successful because the slated shows are, quite simply, very cheap to produce. Unfortunately, Empower believes the limited and seemingly disconnected line-up could be the kiss of death for the network. Even with all of the vehicles available for cross promotion, like Myspace.com and other Fox media properties, we feel there’s not enough depth or strategic focus to ensure success.
As of now, Empower plans to place MyNetwork in the traditional syndicated “bucket,” and will evaluate it on the same criteria in regard to quality, pricing and coverage. Pending final coverage figures, its conceivable Empower would evaluate
MyNetwork alongside cable networks. If the network ends up with, for example, 65% coverage, we would then analyze it in the same manner as smaller cable nets like WGN or Oxygen.
The creation of CW and MyNetwork could create one more very interesting market dynamic. In brief, there are some stations that will not convert to either of the new networks. It’s not clear yet how many will ultimately fall out, but what’s clear is this: these stations will likely become classic independent stations. And although the programming fare could range greatly in quality, there may be an important place for these stations in some marketers’ plans.
Moving Forward – Should marketers Care?
At the end of the day, the shift in network offerings will not result in monumental changes in the market. Regardless, Empower believes it’s important to understand how specific market nuances impact how we think about the media environment from a more global viewpoint. Today, nearly all media vehicles – old, new, niche, broad- are fluid and more complex, adjusting to attract the increasingly choosy and often fickle consumer. With a solid understanding of the vast list of entertainment and media options available to consumers, marketers will be well armed to develop a suitable and effective media mix to reach them.
