After the recent 11-day blackout of Disney and ABC TV networks on Charter/Spectrum cable that affected 22.2 million viewers, the winner of the situation could be radio – at least with advertisers. This comes as the decline in pay TV subscriptions shows no signs of slowing down.
MoffettNathanson blames two critical factors leading to the Disney blackout: rising sports fees and the best shows moving to streaming platforms. These “doom loops” led to an 11.5% year-over-year subscriber loss in Q2 2023, causing cable companies to focus more on broadband services over TV channels.
This shift is impacting advertisers as well. According to MRI-Simmons, the Spectrum blackout led to a 13.6% reduction in reach for national advertisers who relied on Disney networks. Nielsen Scarborough reports an even larger impact on local advertisers, with some markets experiencing over a 30% loss in audience reach due to the blackout.
Research from the Nielsen Commspoint media planning system indicates that shifting just 20% of a TV budget to radio could double the campaign’s reach. This week’s Cumulus Media/Westwood One Audio Active Group blog post examined a case study on IBM’s TV plan to that point.
In September 2022, IBM allocated $15.1 million to a network TV advertising strategy, with 58% of that budget focused on ESPN/ABC. If IBM were to implement the same media plan this September, they would lose 25 GRPs on ESPN/ABC due to the Spectrum/Disney service interruption.
Rather than accepting makegoods valued at $1,328,000, IBM could benefit more by redirecting that amount into AM/FM radio. A mere 9% reallocation of their total budget to radio could significantly extend their advertising reach.
Originally, IBM’s plan was able to engage 45.5% of the U.S. audience in September. By shifting the budget lost from the ESPN/ABC blackout to AM/FM radio, the reach could soar from 44.5% to an impressive 71.5%. This means that with just a 9% budget shift to radio, IBM could enhance its reach by an additional 57% without increasing the overall budget.
According to MoffettNathanson, “The erosion of the pay-TV business model forces media companies to move their best shows to their streaming services rather than their linear networks. This, in turn, causes entertainment viewers to defect from traditional pay TV to streaming.” The report also notes, “Amazingly, less than half of major cable companies’ customers take their video service,” and adds, “For advertisers, it means the next several years will see stunning erosion in cable audiences locally and nationally.”
