Ratings and the Electronic Media

Arbitron= radio and local markets; Nielson= TV networks

Getting the Ratings for Network Shows

      1. Nielson uses 4000 people meter homes and "matched sample" (demographics) of 2400 diaries.
      2. Rating point = 1% of total TV households - currently 994,000.

        3. Share point = 1% of TV households currently tuned in

      3. Ratings yield CPM ([advertising] cost per thousand [viewers]) - [the modern trend to call it CPT]. but advertisers also look for certain types of viewers (by age and sex largely)
      1. Ratings vary statistically + or - 4%
      2. Overall participation is dropping & diaries are off - low return rate (55%) and viewer fatigue and faking results.
      3. audimeter and people meter check in - Who is really there? esp. children and seniors
      4. Sweeps period manipulations (quarterly) Oct. Feb and May.
      5. Missing persons (channel flipping, College students, motels, bars)
      6. Under-representation of ethnic groups: blacks and hispanics, esp.
      7. 2 year household commitment fatigue problem
Economics of TV (Big 3 pay Nielson about $10 million/yr)
    1. Gross revenue based on ratings minus costs yield net revenues that are disproportional to number of viewers. (see production costs handouts )

A "FICTIONAL" ILLUSTRATION

Average number of Viewers / network

CBS - 13.2/22 = 12,447,600 viewers

ABC - 12.4/20 = 11,693,200

NBC - 10.9/18 = 10,278,700

= difference 2.17 mil viewers (17%) between CBS and NBC

 

 

 

 

 

Net Revenues per Half Hour
based on 12, 30"ads/half hour @ a CPM of $4.80

CBS - $60,000/ad----> $720,000 ----- $600,000---------- = $120,000

ABC - $56,000/ad----> $670,000 ----- $600,000---------- = $ 70,000

NBC - $49,000/ad----> $590,000 ----- $600,000--------- = ($ 10,000) [ loss]

Thus, an 17% difference in viewers --> 108% less profits

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last updated 3/5/2001