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Network TV

Intro

By the Project for Excellence in Journalism

After a tumultuous 2006 with shakeups among anchor and executives, 2007 marked a return to more stability for network news.

The evening programs, if anything, became more alike, much as they were before their makeovers of the last two years. CBS reined in its anchor, Katie Couric, to the point that she is operating even more conventionally than her rivals.

Efforts to expand the audience appear to have failed. In the evening, the total audience fell once again, continuing a trend that began with the advent of cable in the early 1980s. In 2007, the fight over this dwindling audience in some ways intensified. ABC News dethroned NBC for the first time since the summer of 2005, when its anchor, Peter Jennings, died, only to have NBC reclaim the lead in December.

The morning news audience declined too, for the third year running. While NBC kept its long-time lead, ABC managed to lose fewer viewers, and the gap between the two rivals narrowed.

Financially, the picture is more difficult to discern. Numbers are not broken out. But in 2006, the last year for which complete data are available, advertising revenue for both the morning and evening newscasts appeared to drop slightly.

Online, the networks appeared to be moving toward partnerships rather than building on their own, often with ventures that might bring in younger demographics. ABC News teamed up with Facebook, a popular social networking site, and CBS News signed on with Digg, a user-generated site with no reporters or editors.

And while the evidence suggests that overall staffing continued to drop, the three networks appear to be responding to the long-standing decline in foreign bureaus by re-staffing with one-person bureaus, bringing overseas bureau numbers back up to the mid-teens.

Content Analysis

By the Project for Excellence in Journalism

Network news in the last two years has seen a generational transfer in anchors, news bosses at two of the three networks, more declines in audience and further cutbacks in staff.

Does it show? In 2007, did the programs change? Do they differ from each other? And how is network broadcast news, night and morning, similar or distinct from what one would see on cable or elsewhere?

This year, the Project offers its most comprehensive study to date of network news. For the first time, the Project studied every minute of the three commercial networks’ weekday nightly newscasts, as well the “hard news” half hour (the first 30 minutes) for the weekday morning shows. That represents some 27,600 minutes of news in 2007. That analysis builds on snapshot studies we have conducted in seven previous years.¹

This larger examination, a “census” of every weekday rather than a snapshot or sample, finds:

• After CBS initially built more of its evening newscast around its new anchor, Katie Couric, she now plays in some ways a smaller role in her program than her rivals do in theirs. Most notably, she does significantly less of the signature interviewing for which she was known in morning television than do her evening rivals. In many ways, Couric’s role is more circumscribed than the other network evening anchors.

• In its news agenda, however, CBS, whatever its initial changes, now is quite similar to the other programs. There are differences in what the newscast covers versus the others, but those differences are now subtle.

• With all the changes behind the scenes, on the air the three commercial nightly newscasts are structured much as they were under the previous generation of anchors. Audiences seem to have resisted attempts to alter them, which is one reason that Couric’s innovations failed to increase her audience. The nightly newscasts are the last place in television news where the correspondent is a key participant in the newscast, which is built around their written, vetted, edited and produced story packages where words and pictures are carefully matched. Most other television news has moved toward more extemporaneous news delivery.

• Nightly network news continues to offer the broadest range and most traditional or “hard news” agenda on television, clearly distinguishable from that on cable.

• In the mornings, when a narrower slice of the news is presented, the agenda in 2007 was dominated by politics, the war, crime and disasters. CBS’ Early Show stood out for having a lighter news agenda than its rivals.

The Culture of Storytelling Continues at Night

When CBS hired Katie Couric from NBC’s Today Show to become its evening anchor, the network had her fill more of the airtime than her predecessor, particularly by conducting interviews.

The show’s producers apparently wanted to have her play more of the role she had in morning news, where the anchor is also the reporter in most segments, often formatted around one-on-one interviews.

When she took over in September 2006, live interviews were a significant part of the new program, and analyst Andrew Tyndall noted that she was filling a larger part of her newscast than her rivals.

Even as changes began to be made in that initial plan, Couric’s role was significant. In February 2007, in writing about a new set series of interviews on CBS called the American Spirit, in which Couric talked with inspiring Americans, New York Times television critic Alessandra Stanley wrote that Ms. Couric is “hoping to enliven the newscast with some of her trademark early-morning pep and pizzazz — the ‘Today’-ification of the ‘CBS Evening News.’ ”

By the end of 2007, with new executives in charge of the newscast, that reliance on Couric had been scaled back. In fact, the opposite was true. Looking at 2007 in total, interviews made up roughly half as much of the CBS Evening News with Katie Couric as they did on rival newscasts (178 minutes on CBS, 308 minutes on ABC and 371minutes on NBC).

That number might have been even lower, moreover, had CBS in early December not introduced its Primary Questions, a 10-part, favorably reviewed series of interviews with the presidential candidates. (Among the questions: “What one book, other than the Bible, would you bring the White House?”; “Besides your family, what are you most afraid of losing?”; “Who is the single most impressive person you’ve ever met?”— four Democrats said Nelson Mandela and four Republicans said Ronald Reagan.)

If Couric’s strength was once considered, as Washington Post critic Tom Shales suggested the night of her CBS debut, “chiefly her ability as an interviewer,” CBS apparently believes that this did not work for her on the evening news.

That does not mean that Couric’s role has shrunk across the board. According to accounting by analyst Andrew Tyndall, Couric spent as much time as one of her rivals, Charles Gibson, as a reporter herself in taped packages (273 minutes over the course of the year).²

But that means that more of her time on the air than her rivals is circumscribed by editing. Even many of her interviews are now tightly edited. Her Primary Questions segments were taped and edited, making them, in a sense, a hybrid of interview and package.

At least one of the signature skills that Couric was imagined to have brought as an asset to evening news is now considered something to limit.

Story Format Night News by Network
Percent of Newshole

Were there other notable distinctions among the networks?

One that stands out, in contrast with the trend at CBS, is that NBC Nightly News with Brian Williams has moved away somewhat from a reliance on correspondent packages. Just slightly over three-quarters of the time on the NBC was made up in 2007 by these taped stories (77%), the lowest of the three networks.

We found a similar pattern on NBC’s cable sibling, MSNBC. It stood out even among cable channels for nearly abandoning packaged storytelling entirely (just 10% of time studies and a heavier reliance on interviewing (70% of all time studied).

What would explain this? It is possible that the sharing of correspondents between the two channels has contributed to less time for NBC correspondents to put together taped packages. If Andrea Mitchell is doing stand-up reports for MSNBC during the day, and even anchoring some daytime programs, she may be available for a two-way interview with anchor Brian Williams, but not to put an edited piece together.

Does the format matter?

We find evidence that it does. In studies of network nightly news in previous years, one finding was that the stories on these newscasts had a thoroughness of reporting not found in cable or on morning news (2005 State of the News Media). Much of that stemmed, we concluded, from the continuing reliance on taped and edited correspondent packages as the heart of the nightly newscasts.

And whatever the small differences among the three nightly newscasts, that reliance on correspondent storytelling persisted in 2007. It did drop some, and the role of the anchor and the reliance on the live interview and reporter stand-up grew slightly.

But compared to anything else on television news, the nightly newscasts is where viewers can see stories that have been checked and edited, where the words from the correspondents have been carefully written rather than spoken from quick notes, where producers and correspondents have discussed the content of the stories, and the pictures and the words have been carefully matched in an editing room.

In 2007, correspondent packages made up 82% of the time on the nightly newscasts down slightly from 86% in our 2004 sample. The reliance on anchor conducted interviews and reporter live stand-ups grew to more than 8% of time (up from 2% in 2004).

Format of Different TV News Programs
Percent of Newshole

These numbers still distinguish nightly news from morning, where interviews make up a third of the time, and even more so from cable, where the dependence on live programming that is harder to vet or correct makes up nearly 60% of time.

The interview and the use of the live stand-up, the latter a staple of local television news, are controversial in network nightly news. Time is more limited on these programs, which average 18.6 minutes of news each night. Live interviews tend to cede control to the interview subject, and live reporter stand-ups, if not handled judiciously, can simply repeat what is contained in a story.

Consider, for instance, the evening of October 2, a night picked at random. A view of NBC’s Nightly News with Brian Williams would have seen the program focus at the beginning with events of the day — first a news story about Blackwater Security’s president, Erik Prince, questioned in Congress, followed by a quick update of the third-quarter fundraising totals of the presidential candidates. Then came news about a court finding New York Knicks and its coach and president, Isiah Thomas, liable in a sexual harassment case, a quick tell story on housing sales figures and a story on the U.S. dollar.

A viewer tuning in to the closest thing to a newscast on NBC’s cable channel, MSNBC’s Olbermann program, would have seen a lead story on Democrats proposing a war surtax, a symbolic action that was not going to pass, followed by a follow-up interview about Democrats being unhappy with their party leadership. Then came a story and an interview about Blackwater’s ties to the Bush administration, calling the security firm “the armed wing” of the White House, followed by two stories about a controversy involving Rush Limbaugh.

None of the pieces on NBC Nightly news were live interviews. Three of the first six pieces on Olbermann were. Indeed, the three brief packages were setups to the longer interviews.

Differences among Nightly Newscasts in Topic Agenda

Beyond their differences in structure, the three commercial evening newscasts are in many ways even more similar in their news agenda — what they choose to cover and not cover each night.

Consider a few statistics.

• The three newscasts had the same lineup of the top six stories of the year, with one exception (NBC gave more time to following up Hurricane Katrina.)
• Over the course of the year, out of 2,303 minutes devoted on the three evening news programs to the war in Iraq over, they varied by just eight minutes (CBS 771, ABC 769, NBC 763).
• Each gave about the same percentage of time in 2007 to U.S. foreign policy, to disasters, to education, to government, and more.

The similarities are particularly true when looking at the two most popular programs, ABC and NBC.

The list of the topics on each of these two newscasts for the year does not deviate in order until topic No. 10. On NBC it is the environment, which ranked No. 15 on ABC. And that focus on the environment on NBC reflected in part a corporation-wide decision at General Electric to focus attention on global warming and energy use late in the year. All NBC newscasts devoted special time that week. That weeklong special also coincided with NBC retaking the lead in ratings over ABC.

There are slightly more difference with CBS’ newscast, which is last in ratings.

CBS devoted more time in 2007 to health topics and lifestyle topics (18% of its time) than did either ABC (15%) or NBC (14%).

But broadcast by broadcast, divided over 261 weekday nights (ABC evening was preempted on 3 nights, and CBS evening was preempted on 2 nights), these small percentage differences might be scarcely noticeable. (The difference in between NBC and CBS coverage of non-U.S. foreign events, for example, amounts to just 36 seconds difference a night.)

Were there distinctions in how different networks led their newscasts? Some. NBC led more often with the debate over Iraq policy, but less often with events on the ground in Iraq. ABC was more likely to lead with anti-terrorism issues at home and similar efforts abroad than the others.) But overall, those differences also paled in relation to similarities.

A more meaningful difference among the networks might be the overall time devoted to delivering the news. Of the 30 minutes these programs air, subtract commercials, and “teases” of forthcoming stories and the programs are not equal in size. ABC had 18.1 minutes of news, CBS had 18.7 and NBC had the longest newscast, 18.9 minutes (ABC evening was preempted on 3 nights, and CBS evening was preempted on 2 nights).

This also reflects another change, one we have noted in the past. The proverbial 22 minutes of news in a 30-minute newscast, in other words, has shrunk to an average of 18.6 minutes.³

This declining newshole has been documented in these reports before using data from ADT Research and analyst Andrew Tyndall. (State of the Media 2005)

Differences among Nightly Newcasts by Topic
Percent of Newshole

Totals may not equal 100 due to rounding.
Note: * Other Domestic Affairs includes such things as development, transportation, education, religion, abortion, gun control, welfare, poverty, social security, labor, aging, court/legal system, race and gender issues, etc.

Other domestic affairs includes such issues as development, transportation, education, religion, court/legal system, defense/military (domestic), race/gender/gay issues, poverty, social security, etc.

Top 5 Nightly News Stories

2007, by Network

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

The Network News Agenda Over Time

How has the news agenda on the nightly news changed?

Over the years, the Project has traced an arc in the content of the nightly newscasts. The definition of news shifted from a more traditional diet of what some used to call “hard” news in the 1970s and 1980s toward a clear softening of the agenda in the 1990s. For the decade of the 1990s, both Andrew Tyndall and Robert Lichter’s research found that crime, once a largely local story, was the biggest topic on nightly news in the decade, although the crime rate was declining. That raised questions about “tabloidization” in network television. That coincided with the end of the Cold War, and the decline in foreign coverage.

After 9/11, there was a brief but clear turn in the news agenda of nightly news toward foreign affairs again, with anti-terrorism efforts as a clear focus.

What is the agenda now?

The nightly newscasts in 2007 devoted more time to a range of domestic issues, especially health and medicine coverage, than in 2004.⁴ (The number for a host of issues at home rose to 24% of the stories, up from 21% in 2004 and the mid-teens for several years before that.) The newscasts all also devoted 75% more to disasters and accidents than three years earlier, a topic that has ebbed and flowed over the years. All told, they devoted 7% of disaster and accident stories up from 4% in 2004.

Coverage of government, meanwhile, shrank markedly, as it did on other media sectors, to just 5% of the stories on the nightly newscasts, down from 27% in 2004. That number is not unprecedented, but it matches the lowest we have seen in prior snapshots of network news topics.

To some extent, the time that might have been devoted to government activities was swallowed up by attention focused on the Iraq policy debate and the campaign for president. But that does not explain the entire decline. The uptick in coverage of crime (to 6% up from 2%), accidents and such domestic issues as health and medicine also account for part of it.

Does this suggest some lightening or shifting of the news agenda on nightly news, in particular toward medical coverage that is particularly attuned to an older audience that watches nightly news, or toward lifestyle stories about diet and other news you can use?

That judgment is premature. Numbers can move up and down in different years. But certainly features that were once branded staples of the network news, such as those that focused on government waste (NBC’s Fleecing of America), have given way to frequent special series on health.

Commercial Nightly News Topics, Over Time
Percent of All Stories

Totals may not equal100 due to rounding.
Note: *Foreign Affairs in 2007 includes much of Iraq policy debate, U.S. foreign diplomacy and non-U.S. involved foreign events.
#Domestic affairs includes topics such as health and immigration that in other charts are broken out seperately. +Other in 2007 includes media

Nightly News vs. Other Media

Whatever changes may have occurred in the topics in 2007, the three commercial nightly news programs still feature the most traditional hard-news-oriented agenda on commercial television, and in some way the broadest. While cable news has moved toward commentary, with a focus on a narrower range of topics often of a controversial nature, with a dose of tabloid crime and scandal mixed in, the nightly newscasts cover a wider range of topics.

In 2007, one was twice as likely to see coverage of events from abroad that did not involve the U.S. on nightly network news, for instance, than on the several hours a day of cable studied in our sample. There was about half the percentage of crime coverage on nightly news as on cable (6% vs. 13%), more than twice the percentage of economic/business coverage (7% vs. 3%), about a fifth of the celebrity and entertainment coverage (1% vs. 5%).

Topics on Different Media
Percent of newshole

Totals may not equal 100 due to rounding.

The distinctions with mornings are somewhat less pronounced but similar (see Morning News for a more detailed comparison).

Morning Shows

Morning network television programs are markedly different than their evening brethren, so much so that the time slot makes much more difference in determining what viewers see than the network they choose.

For these comparisons, we examine the first half hour of morning news, the “harder news” portion of the programs, the portion most like a “news” program. We examined every weekday of morning news and every minute of evening network news for the year (13,212 minutes for morning network, and 14,455 minutes of evening network).

In 2007, morning programs devoted significantly more of their time than evening news to the presidential campaign (13% vs. 8%). Only cable news and talk radio devoted more of their time to the campaign. Often this coverage had a decidedly different flavor than one might see at night.

Top 5 Stories on Network Morning vs. Network Evening News

2007

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

Take, for instance, the CBS’ Early Show’s Candidates Unplugged, series. The one on December 5 was an interview with a Republican presidential candidate, Mike Huckabee, in which the candidate talked about liking iPods (he owns two), the Rolling Stones and the rocker John Mellencamp. On the CBS Evening News that night, by contrast, the network reported on Hillary Clinton firing a staffer who had sent attack e-mails against her opponent for the Democratic nomination, Barack Obama, and about a new attack ad by another Republican candidate, Rudolph Giuliani, and Couric did one of her Primary Questions, segments, asking the candidates about their biggest mistakes.

But morning news also devoted more of its time to crime, disasters and celebrity, key ingredients in a more emotional, or what some critics would call a more tabloid news, agenda than nightly news. The morning shows devoted more of their time to crime (10% vs. 6%), celebrity and entertainment (4% vs. 1%) and more to accidents and disasters (11% vs. 7%). Collectively, about a quarter of the first half-hour of morning news programs was devoted to these three, 77% more than on the nightly newscasts. The crime and disaster segments tended to focus on the feelings of the families and victims.

Consider how evening and morning news covered a tornado in Alabama on March 1, 2007. The NBC Nightly News did three stories, a package about the tornado’s destruction, a live report about current conditions in the town, Enterprise, and another live report about meteorologists tracking tornadoes.

The next morning, the Today Show covered the same story by running an interview with two students who were in the school when the tornado hit.

“First of all we are all very happy you are both all right, especially in the wake of what we’ve seen, this destruction,” Matt Lauer began. “Marissa, let me start with you. I think you were in the science hall when this tornado struck. Were you with some other students? Did you hear some sirens? What kind of warning did you get?” And then he asked, “Can you describe, Marissa, what it was like when the twister actually hit the school?”⁵

On October 1, as an example, ABC’s Good Morning America devoted seven minutes in its lead half-hour to the story of a police search for man who taped himself molesting a three-year-old girl. The program covered the story first as a package and then by interviewing the suspect’s ex-girlfriend, who, anchor Chris Cuomo said, “is now struggling to reconcile the images on that tape with the man she thought she knew.” The police search was never covered as a story on the network’s evening news program.

Topics in the News: Commercial Network Morning vs. Evening News
2007, Percent of newshole

Totals may not equal 100 due to rounding.

Another comparison also helps explain the difference in the feel of the programs. In total, 11% of the morning shows' first half-hour was devoted to the war in Iraq over all, versus roughly 16% on nightly news.

Differences by Network

Were there measurable differences in the news agendas of the three network morning shows in 2007?

Our analysis suggests the answer is a qualified yes, and again it was the CBS network that stood out. CBS’ Early Show offers viewers a different, and some might say lighter, selection of news in the first half hour.

More of the CBS program during the time studied was devoted to the trio of celebrity, crime and disasters news than on the other networks. Fully 31% of the hours studied of the Early Show (1,267 minutes) were devoted to these subjects, versus 22% on GMA (954 minutes) and 22% on Today (1,013 minutes).

The Early Show also devoted less of its time in the hours studied to more hard news staples such as government and politics. Fully 14% of its time (or 571 minutes) was devoted to those two general topics, compared with 18% on ABC (802 minutes). NBC’s Today show (22%) was the most focused on government and politics (1,035 minutes).

Those numbers highlight another difference in choice that viewers might find among the three morning programs. In general, at least in the first half-hour, NBC’s Today show probably offered the most traditional hard-news-oriented agenda of the three, although it would be a stretch to say it was broad-based. Even on Today, three topics — U.S. foreign policy (mostly the war in Iraq), politics (mostly the election) and accidents/disasters -- made up 41% of the airtime studied.

Topics in the News: Commercial Morning Network News
2007, Percent of Newshole

Totals my not equal 100 due to rounding.

But viewers might not have entirely noticed, at least not if they were taking their cue from the lead stories each morning. Here, ABC’s Good Morning America tended to look a little more traditional.

GMA tended toward leading with foreign and economic news, especially the war, more than its rivals. Of the big stories of the year, the war, foreign events and the economy were the lead story nearly a quarter of the time on GMA (22%), substantially higher than the 13% on Today, and somewhat higher than 17% on the CBS Early Show. Thus even though Today was somewhat more oriented to hard news in the hours studied, it often led with other topics, and moved to those traditional news topics next.

Top 5 Stories on Network Morning Shows

2007, by Network

Design Your Own Chart

Source: PEJ, A Year in the News, 2007

The other difference is in structure. In the mornings, GMA tends to rely more on taped packages and less on interviews, at least in the first half hour of the newscast. NBC’s Today Show, in keeping with what we found in nightly and on cable, leans most heavily on live. Here, CBS fell in the middle.

Story Format Network Morning Shows
Percent of newshole

Audience

By the Project for Excellence of Journalism

In 2007, five key trends stood out regarding the audience for the three commercial broadcast networks with newscasts, ABC, CBS and NBC.

• The total number of evening news viewers fell once again, and the rate of decline accelerated in 2007. As a new generation of anchors has failed to attract more viewers, it may be that the three nightly newscasts are now left to compete for a shrinking pool of viewers.

• For much of the year, ABC’s World News With Charles Gibson increased its audience and overtook the NBC Evening News with Brian Williams for the top position in nightly news, although by year’s end, after some retooling, NBC was again on top. CBS, meanwhile, fell farther behind, dropping by double digits for the year.

• The audience for the morning news shows fell for the third year in a row, dropping 2% year-to-year. The total audience for the morning news shows is now at its lowest point since 1999.

• Of the three morning programs, Good Morning America experienced the smallest drop and narrowed the difference between it and the long-time leader, the Today Show, to half a million viewers.

Nightly Newscasts

In 2007, the first full year of new anchors, the steady decline in audience accelerated rather than ebbed.¹ When the three networks were taken together, all three measurements of audience saw declines over a year earlier and, in two, the declines were steeper than in the past.

According to data from Nielsen Media Research, the networks averaged 23.1 million viewers a night, a drop of 5%, or 1.2 million viewers compared with data from 2006.²

Evening News Viewership, 2006 vs. 2007

Design Your Own Chart

Source: Nielsen Media Research, used under license

Over the past 25 years, the audience has fallen around 1 million per year, making the decline somewhat steeper in 2007.

Ratings, which measure the number of television sets in a market tuned to a particular program, was 8.1 for the three networks in 2007. This was a drop of 6% compared to 2006, according to Nielsen data.

The third measuring stick for audience is share, or the percentage of television sets in use tuned to a particular program. In 2007, the share for the three newscasts was 30, identical to the 2006 average, according to data from Nielsen.

After years in which an unchanging cast of anchors saw their numbers gradually fall, everyone in network news wondered whether a generational change might attract new audiences. The past year, 2007, was the first in which that new generation was in place for an entire 12 months.

One of those newscasts, the CBS Evening News with Katie Couric, also made significant efforts initially to change and in some ways lighten the content in a way that was designed to distinguish it and appeal to new audiences. That failed to happen.

It appears, for now at least, that the structural problems facing network evening news may have more to do with competing technologies and the limitations of a dinner-hour timeslot than the personalities of the anchors.

To get a sense of the extent of decline over time, consider 1980, the year that CNN began, and U.S News & World Report asked “Is TV News Growing Too Powerful?” That year, ratings for network news were 37, with a share of 75.³ Since then, as of November 2007, ratings have fallen 54% and share 56%.

Much of that has occurred in the last decade. Since 1997, ratings have dropped 34% and share 33%, November to November, according to Nielsen data.

(For a more detailed discussion of the reasons for network’s long audience decline, see the 2004 State of the News Media Report.)

Evening News Ratings, 2006 vs. 2007

Design Your Own Chart

Source: Nielsen Media Research, used under license

Evening News Share, 2006 vs. 2007

Design Your Own Chart

Source: Nielsen Media Research, used under license

In many ways, this decline in network news viewership reflects not so much a reaction to news as it shows a structural slide in the audience for the networks themselves. The audience for everything the networks offer — sports, soap operas, prime-time entertainment, etc. -- have all suffered long-term declines, a process that began in the 1980s with more choices on the dial. That decline continued in 2007 as well. According to data from Nielsen Media Research, the combined prime-time television audience at the four broadcast networks — CBS, ABC, NBC and Fox — fell 7 percent in 2007 compared with the same time period in 2006.⁴

Viewers are also increasingly recording television programs and watching them at their own convenience, often several days after a show first aired. According to 2007 research conducted by the Leichtman Group, a research and consulting firm, 20% of U.S. households have DVRs, up from 8% in 2005.⁵

With that comes an argument that Nielsen is missing a new, important segment of the audience. In response, Nielsen has made changes over the past two years to update its methodology to more accurately reflect television’s viewing audience.⁶

In January 2006, Nielsen introduced its first ratings data that combined live viewing with those who had watched a recorded version of the show within seven days after it first aired. By March 2006, the data showed that the new rating system elevated the audience for most of the 25 most popular shows, with some receiving as much as a 4% increase in total audience.

Then, in September 2007, Nielsen announced plans to triple the size of its household sample to better estimate television viewing behavior. By 2011, Nielsen plans to sample 37,000 homes, up from 12,000 in 2007.

“Increasing the size of the sample audience is really important to measure the audience with the precision that our clients want and need,” said Sara Erichson, Nielsen executive vice president for client services.⁷

Despite these methodological adjustments, advertisers are increasingly relying on data that count how many people are watching the commercials aired during a program rather than the number watching the television program.

In the end, if the problems of network news can be mostly attributed to the decline in the overall audience of broadcast network television generally rather than something having to do with the newscasts in particular, then the survival of the networks’ news divisions in some ways may well depend on their liberating themselves from the broadcast television platform on which they were founded — and even perhaps from the networks themselves. If ABC News, CBS News and NBC News are to survive, it may be as video newsgathering organizations whose products are available on demand on many platforms, only one of which is broadcast television. And the measure of their potential for that future, as is true for other media, may be in their total audience across multiple platforms — from Web sites to podcasts, to viral online distribution to mobile networks.

Nightly News Audience Demographics

Another challenge for the evening network newscasts is attracting not only more viewers, but younger ones especially. In 2007, the audience appeared to grow older.

The median age of nightly news viewers was 61 years, according to data provided by Magna Global USA, a media services firm. That figure is up from the past few years, when it was roughly 60 years of age. There were virtually no differences across the three networks.

Younger viewers are important to the network news programs because marketers generally pay higher ad rates for them, specifically those in the 25-to-54 demographic.

As the age for audience for network news television programs has hovered around 60 over the past several years, there is evidence that the networks' Web sites may be attracting a younger audience. For instance, the median age for CBSNews.com was 49.3 in the winter of 2008, according to data from Nielsen Online.⁸

Median Age of Nightly News Viewers

2002, 2004-2007

Design Your Own Chart

Source: MagnaGlobal USA

The Race Among the Networks

The evidence, heading into 2008, suggested that the competition among networks during the evening is for share of the existing pool of older viewers, with the only change being in how it is divided up.

Even then, the stakes can be significant.

According to network sales executives, each 0.1 rating point — or roughly 100,000 viewers -- a newscast drops can translate into a loss of anywhere from $5 million to $6 million in revenue annually, the New York Times reported in May 2007.⁹

In that contest, ABC appears to be gaining, with NBC and, to a greater extent, CBS losing.

Over all, the average audience for ABC’s World News Tonight with Charles Gibson in 2007 was 8.38 million viewers. That represented a gain of roughly 300,000 viewers over the year before, some 3.8%.

It also, as an annual average, put ABC 88,000 viewers ahead of the NBC Nightly News.

NBC averaged 8.29 million a night, according to data provided to us by Nielsen Media Research, a drop of 5.7%, or 500,000 viewers, from the year before.

By the end of 2007, however, NBC was narrowly on top again, with 9.1 million viewers a night in November and 9.3 million in December.

CBS, amid all the fanfare and controversy surrounding Couric, remained a more distant third, with an average nightly viewership of 6.43 million viewers. With that average, CBS fell 13.4% year to year, or 996,000 viewers.

When measured in ratings, ABC and NBC tied at 2.9, and CBS was 2.3, according to Nielsen’s 2007 data.

And in share, or the percentage of viewers watching news on television during the half-hour, ABC and NBC were at 11 for the year, and CBS 8.

To put this into perspective, NBC began the year with a 560,000-viewer lead over ABC. It soon fell into second place and trailed ABC much of the year. But by November, it was back on top.

But the story of the year in nightly news cannot be told entirely in the final numbers. There is actually something of a horse-race narrative here.

Early in February, ABC’s World News surpassed NBC News for the top spot, attracting an average of 9.7 million viewers a night, edging out NBC’s 9.6 million. Its claim of the top spot for the week of February 5 marked the first time since August 2005 — the week after Peter Jennings died — that ABC led, according to data from Nielsen Media Research.¹⁰

ABC held onto the top spot for the next eight months, until relinquishing it in November. At year’s end, ABC averaged 8.9 million viewers and NBC attracted 9.3 million, according to December data from Nielsen.

For NBC, which had been at the top for 26 months (December 2004 through January 2007), second place was an unusual position. When asked about its fall from first place, NBC anchor Williams seemed unfazed: “It is predictable. This is why I haven’t allowed any champagne toasts in the newsroom when the ratings have been flawless and spectacular and joyous. This is a back-and-forth dogfight.”¹¹

But in early March, NBC News reassigned its executive producer, John Reiss, and promoted Alexandra Wallace to the executive producer role, making her the first woman in a decade to head an evening newscast. Wallace had been the news division’s vice president, and before the announcement there had been reports of disagreement between Williams and Reiss, the Associated Press reported in March.¹²

What accounts for the increasing competition between NBC and ABC?

According to Andrew Tyndall, a network television analyst and contributor to this report, the reason the gap between NBC and ABC had narrowed was more likely because of Gibson’s performance as anchor than anything NBC had done or not done. The veteran Gibson, said Tyndall, had brought much-needed stability to the network, which, after Jennings' death, experimented with dual anchors until early 2006, when one of those anchors, Bob Woodruff, was wounded in Iraq.¹³

Other experts point out the importance of the audience from the lead-in program. If the program that precedes the evening newscast, such as Oprah, attracts a large audience, this may ultimately boost the number of viewers who watch the news on the same network.

Meanwhile, it was another rocky year for the CBS Evening News and its host, Katie Couric. Heading into 2007, CBS had lost 26% of its audience since her debut in September 2006. Although there was further erosion in 2007, the rate of decline of 13% for the year represented a slowing of the loss, according to Nielsen’s figures. While that was happening, CBS was also retooling Couric’s newscast, changing its content and some of the personnel, including those behind the scenes.

First, the network scrapped the initial incarnation of Couric’s newscast that involved fairly noticeable differences from the traditional newscasts. That effort began in earnest when CBS News replaced Couric’s first executive producer, Rome Hartman, with Rick Kaplan, the well-traveled producer who had 35 years of news experience with ABC, CNN, MSNBC and CBS.

Kaplan’s mission, according to the New York Times, was to bring more consistency to the CBS newscast. “When people tune into CBS News I want them to know what they’re going to get,” he said.¹⁴ Privately, CBS insiders say, the intention was to make the newscast more hard-news oriented, which would also make it more like a traditional nightly newscast.

Publicly, Couric conceded that a return to more traditional news was necessary. “The biggest mistake we made is we tried new things,” she told New York Magazine.¹⁵

But underneath the public statements there were murmurings of discontent.

In April 2007, in a much-discussed article, television news correspondent Gail Shister reported in the Philadelphia Inquirer that Couric might leave CBS after the 2008 presidential elections to take on another position at the network.¹⁶

The report was denied. In May, Sean McManus, president of CBS News, offered this response: “Three years, four years, five years; that is the time frame that I think, realistically, you need to evaluate where the broadcast is and where CBS News is.”¹⁷

The news wasn’t all grim for CBS. Couric continued to attract women to the newscast. Through the first quarter of 2007, the Evening News was up 6% among women 18 to 49, according to the Chicago Tribune.¹⁸ And in the first week of 2008, the newscast was tied for first among women 18 to 49, Media Life magazine reported.¹⁹

How much does all that behind-the-scenes maneuvering matter? Do viewers notice the changes in content, or do they just react to the personality of the anchor?

It is impossible to say for sure, but there is some evidence to examine. First, as noted in the content section above, at least when it came to the topics covered, there were only negligible differences among the three nightly newscasts for most of 2007.

Thus, any differences among the networks that viewers are detecting may not be in what was covered. They therefore must be in how — the quality of the correspondent packages — or in the affect and manner of the anchor who links the stories and the program together.

Which is it? Again it is hard to say. What is certainly the case is that the most obvious difference among the networks is the face that fronts the broadcast. Even if people subtly sense more value in the way stories are done on one network over another, they may not be able to articulate it. According to a June 2007 survey conducted by the Pew Research Center for the People & the Press, 74% of Americans said the three evening newscasts were “pretty much the same.” ²⁰

But the changes of 2007 and the horse race that now exists for the top spot make something clearer than before. Changing the content of the programs, switching anchors and spending more on promotion all have failed to expand the pool of nightly news viewers. The three newscasts are now probably looking at a permanent future of fighting for a shrinking pool of viewers at the dinner hour over broadcast television. To expand that audience, the networks may have to define themselves as something more than network TV broadcasters.

PBS

At PBS, the audience for the NewsHour With Jim Lehrer continued to show somewhat more stability than the commercial networks, but also some weakness.²¹

The NewsHour, an hour-long broadcast that began in 1983 and now seen each weekday on more than 300 PBS stations, attracted approximately 2.2 million viewers a night during the 2006-07 season, according to data from the NewsHour research department. That number remains unchanged from the previous season.

But the program’s cumulative audience -- the number of different people who watched across the course of a week -- fell slightly during this time, from 6.3 million to 6.1 million each week.²²

What accounted for the drop? According to Beth Walsh, director of PBS research, there are two factors that influence the audience for the NewsHour.

First, like all media, PBS has felt competition from alternative sources of news, particularly cable.

Second, she said, the fortunes of the NewsHour are also tied to non-news programming. “Many of our programs have been down just a bit and our prime-time average has been sliding," Walsh said. "In general, when PBS has a few ‘hits’ on the schedule, it raises everything, and when we have ‘status quo’ programming, we tend to slide.”

PBS expected that the 2007-08 season would be a better one for the NewsHour, thanks to the Ken Burns’ documentary “The War,” the most-watched PBS series in 10 years, which aired in the fall of 2007, but will be counted in the upcoming year’s audience figures. The documentary, along with political coverage of the 2008 presidential election, should attract more viewers to regular programming.²³

Morning News

For the third consecutive year, the total viewership for the morning shows news declined.

And with that, a smaller network news audience in the morning now appears to be a trend.

It may be that the challenges for the morning shows are now similar to what they are for their counterparts in the evening: shifting work patterns and more competition from the Internet and cable television.

In 2007, total morning viewership averaged 12.7 million, down 4% from 2006, according to data from Nielsen Media Research.

Ratings were 4.5 in 2007, down 4% from the year before, and share stood at 33, down 3% year-to-year.

The audience leader in 2007 was NBC’s Today Show, which finished first for the 11th consecutive year. Although the show remained comfortably ahead of second-place ABC’s Good Morning America, the difference between the two narrowed in 2007.

For the year, the Today Show averaged 5.38 million viewers each morning, down 6.9% or some 397,000 viewers from 2006, according to data from Nielsen Media Research.²⁴ Using November to November data, often cited by the networks, this was the fourth consecutive year of decline.

The Today Show averaged ratings of 1.9 and a 14-point share for the year. Compared with 2006, ratings were down 10% and share fell seven percent.

Good Morning America also lost viewers in 2007, but considerably fewer of them. For the year, it averaged 4.77 million viewers, down 1.5%, or about 74,000, from 2006.²⁵ Ratings averaged 1.7, the same as 2006. And share was 12, unchanged from the year before.

In third, perennially, was CBS’ Early Show, which averaged 2.5 million viewers each morning, according to data from Nielsen.²⁶ This average was virtually the same as it was in 2006. Ratings were 0.9 and share, at 7, were both unchanged.

Morning News Viewership, 2006 vs. 2007

Design Your Own Chart

Source: Nielsen Media Research, used under license

But the implications of smaller morning news audiences may concern network executives more than a decline in evening news viewership. Morning news shows have long been network news’ cash cows, with as much as three times the ad revenue generated from evening news programming, given the greater number of hours of programming. If that franchise, which over all had held somewhat steady, begins a gradual erosion, the effect on network news economics could be significant.

Morning News Ratings by Network, 2006 vs. 2007

Design Your Own Chart

Source: Nielsen Media Research, used under license

Morning News Share, 2006 vs. 2007

Design Your Own Chart

Source: Nielsen Media Research, used under license

Morning News Demographics

For now, the median age for the morning news shows remains younger than what it is in the evening. But for two of the three morning newscasts, the median age climbed a bit in 2007.

According to data from Magna Global USA, CBS’s Early Show got younger in 2007, attracting viewers with a median age of 52.8 years. The audience for NBC’s Today Show got slightly older (53.4) while ABC’s Good Morning America remained the oldest, at 55.3.²⁷

Median Age of Morning News Viewers

2003-2007

Design Your Own Chart

Source: MagnaGlobal USA

Morning Show Personnel

There were a fair amount of personnel and programming changes at the morning shows in 2007, as well as in the evening, some of which may have a bearing on audience trends.

September 2007 marked the one-year anniversary of co-anchor Meredith Vieira’s tenure on the Today Show. During Viera’s first year, the show never lost a week to its rival, Good Morning America. But according to data from Nielsen Media Research, the Today Show lost 360,000 viewers (or 6.2%) on the average weekday since Viera, who co-hosts with Matt Lauer, joined the program. What is more, the show was down 12% among women 25 to 54, a demographic group much prized by advertisers.²⁸

It was also at this time that the Today Show added a fourth hour of programming in the fall season. The fourth hour, however, is not hosted by Viera or Lauer but rather by Ann Curry, Natalie Morales and Hoda Kotb.

The move was regarded as somewhat of a risk for NBC. In 1999, the network sought to expand programming to three hours with Later Today, but before long the show was canceled. And though it generated higher ratings after it added a third hour once again in 2000, the show’s audience reportedly drops off significantly after the first two hours.²⁹

There was also concern from NBC’s local affiliates, which were hesitant to surrender air time that had been allocated for syndicated programming. The network, however, convinced its affiliates there would be ample opportunities for local news and, by mid- 2007, 90% of the affiliates had made room for all of the Today Show.³⁰

For ABC, Good Morning America saw the first full year with co-hosts Robin Roberts and Diane Sawyer at the helm, after longtime host Charles Gibson left the show to anchor ABC’s World News in June 2006.

The show did endure several challenges in 2007. In late July, Roberts announced she had been diagnosed with breast cancer and would have surgery in early August. Roberts returned to the show just 10 days after her surgery.³¹ In mid-January 2008, Roberts finished chemotherapy, some of which was videotaped for the ABC News Web site.³²

Earlier in the year, Good Morning America also lost its longtime film critic, Joel Siegel, to cancer. Siegel, who died in June, had been with the show since 1981.³³

At third-place CBS, things were much less stable in 2007 and early 2008.

In late 2006, the Early Show, which uses a four-anchor format, saw the departure of host René Syler, who had been with the broadcast since October 2002. In late November 2007, another anchor, Hannah Storm, was reassigned.³⁴

There was also a major change off-camera. In September 2007, CBS named Shelley Ross the show’s senior executive producer. Ross had been with Good Morning America from 1999 to 2004, and had been credited with raising that show’s ratings.³⁵ She is one of several veterans of ABC who have been recruited by CBS News' president, Sean McManus, and in particular under his executive vice president, Paul Friedman, the former No. 2 at ABC News.

These developments did not come to as a surprise to many since McManus had told reporters in late 2006 that he would focus on improving the morning newscast ratings after re-launching the CBS Evening News With Katie Couric, who made her debut in the fall of that year.³⁶

Perhaps the biggest change came in early 2008 when CBS made the first hour of the Early Show available to all of its affiliates. Before then, 43 CBS affiliates, whose broadcasts reach about 20% of the country, had aired local news for most of the 7.a.m. hour.

“Having a fully distributed national broadcast will finally put us on a level playing field with the other two networks,” McManus told the New York Times. “[But] we are not expecting any immediate or dramatic ratings increases. Slow and steady growth is the goal.” ³⁷

The Sunday Shows

The Sunday morning talk shows have historically drawn small but highly desirable audiences. Those viewers are attractive to advertisers because they are one of the most upscale.

In 2007, NBC’s Meet the Press continued to attract the most viewers, averaging 3.5 million per week for the year, according to data from Nielsen Media Research. That is 34% more than second-place Face the Nation, which airs on CBS and averaged 2.62 million. Just 25,000 viewers behind CBS was ABC’s This Week (2.59 million). And in fourth place was Fox News Sunday, with an average of 1.3 million each week. In comparison with 2006, NBC and CBS were down 8% and 7% respectively, ABC was up 4%, and Fox remained the same.

The 2007 season was its 60th for Meet the Press, and the program finished in the top slot for the 10th consecutive year. What accounts for the show’s perennial dominance? According to one analyst, the show’s success may lie in its ability to attract the most star power. In 2007, for instance, 12 presidential candidates sat for interviews as part of the show’s “Meet the Candidate” series. “It’s strong because they get the big interviews,” said Sheree Johnson, senior vice president and director of media services for Nicholson Kovac, a marketing communications agency. “Anything that’s happening in the news that week, they come up with the big player, the big guns. They get them first, and they do a nice job of promoting that. The C-level in particular are watching.” ³⁸

Of course, to some degree this is a self-perpetuating advantage. The program first in ratings can tend to get the most sought-after guests.

Footnotes

1. PEJ has looked at the topic agenda of network news in 1977, 1987, 1997, 2001, 2002, 2003 and 2004. The 1977, 1987 and 1997 studies looked at all the coverage on the three main network newscasts for one month (March) of each of those years. The 2001 study looked at 15 days of network news. The 2002 study looked at 20 randomly selected days, as did the studies in 2003 and 2004.

2. Analyst Andrew Tyndall defines story categories slightly differently than does PEJ, and along with possible differences on when a story “begins,” that translates into slightly different total minutes over the course of a year different format categories. But both methodologies find a similar constriction in Couric’s interview time.

3. This declining newshole has been documented in these reports before using data from ADT Research and analyst Andrew Tyndall. State of the News Media 2005

4. These longitudinal comparisons of the programs are by percent of stories rather than by percent of time. The earlier studies were conducted that way. Repeated studies, however, have shown that the two different forms of calculating the newscasts yield almost identical results.

5. A day earlier, March 1, Today had done a live standup report on the tornado coming

Economics

Assessing network news economics presents a challenge. The networks do not release revenue data. Nor are there data on how much money it costs to produce network news programs. There are market researchers who do estimates on how much ad revenue each program generates, but those numbers are, on their face, questionable. Moreover, these data are just for revenue from television, and do not include money made from the Internet and wireless media.

What can be said with some confidence is that, despite declining audience numbers, network news continues to generate considerable ad revenue. This is particularly true in the morning, when what data are available suggest two news shows — the Today Show and Good Morning America — each collect roughly half a billion dollars a year in ad revenue.

Evening News Revenue

The only publicly available financial data on how much money news programs bring in come from TNS Media Intelligence, a research company that provides data to advertising agencies, advertisers and media companies

TNS’ methodology for estimating the ad revenue for each networks news program involves three steps:

1. TNS determines how much each news program charges for a 30-second advertisement. It generally receives this price from the network, but when it cannot, it collects this information from advertisers.

2. It counts the number of ads that appear in each news program.

3. It then multiplies the ad rate by the number of ads to estimate the amount of ad revenue each news program generates in a particular time period.

Television news executives — and even the ratings numbers — suggest that the TNS figures are not the full story. The programs with the highest revenues do not track with programs with the highest ratings. Some of this is because networks now bundle ads across multiple programs and even channels. And advertisers may cut deals with the networks.

What the TNS data do offer is, first, a sense of the financial trends for network evening news programming as a whole. Second, it also can offer some sense of scale of revenues, especially compared with other industries.

Looking at the three evening newscasts together, the data suggest slight declines in ad revenues. According to TNS data for 2006, the latest year with full data, the three evening newscasts together generated $478 million in ad revenue. That total is down 2% from 2005, when the newscasts collected a combined $489 million.

The three evening newscasts combined for $435 million in ad revenue through the first 11 months of 2007, a decline of 2% from the same time period a year before, according to TNS data.

And even with diminished ratings for network nightly news, these numbers indicate that the programs still generate significant revenue. And if, as network executives argue, the TNS estimates are incomplete, the revenue could be even higher.¹

Morning News Revenue

The morning news shows are even bigger engines for revenue than nightly news, generating more than double, and perhaps, according to some estimates, nearly triple the money.

But the hard data again are illusory. As was the case with the nightly newscasts, we have analyzed ad revenue data from TNS Media Intelligence. Again, these estimates appear contradictory to what insiders privately have told the Project.

In 2006, the last year of full data, the three morning news shows combined for $1.4 billion in ad revenue, a decline of 2% from 2005 totals.²

How did things look through the first 11 months of 2007? The three morning shows were projected to collect a total of $1.3 billion in ad revenue during this time, up 4% from the first 11 months in 2006, according to TNS estimates.

Footnotes

1. Breaking the TNS estimates down by individual program raises more questions than it answers. For 2006 — and projections for 2007 — TNS puts CBS first in the lineup for ad revenue.

That lineup is almost certainly not accurate. CBS was third in ratings in 2006, and NBC first. And network officials privately told the Project this year that CBS was far from the revenue leader again. Usually, revenues and ratings track closely. Thus in 2006, NBC would have been the revenue leader, with figures higher than the TNS estimates. ABC would have been next. CBS would trail.

In 2007, NBC and ABC would be close in terms of ad revenue, perhaps with ABC ahead given its ratings lead for much of the year. But these are only guesses.

2. TNS data indicated Good Morning America generated the most ad revenue in 2006. But privately, executives tell us that NBC’s Today Show produces the most ad revenue. First, it has been the morning news audience leader since December 1995. Second, it is on the air one hour more than its competitors.

Ownership

The corporations that own the three network news divisions — CBS Corp. (CBS), General Electric (NBC) and the Walt Disney Company (ABC) -- are large entities with investments in products and services other than news programming.

There are noteworthy differences between the three corporations. While General Electric is an industrial-financial conglomerate, Disney is a corporation consisting largely of media properties, entertainment and theme parks. And CBS is primarily a broadcaster. But for all three, journalism is an ancillary product.

In 2007, each corporation made acquisitions, formed partnerships and invested in their existing media properties as they dealt with concerns about sagging stock prices.

These titans of the media industry continued to face stiff competition from small start-up companies, especially on the Internet. Each implemented different strategies for dealing with these challenges in 2007.

The Big Picture

CBS

The CBS Corp. was formed in 2005, when Viacom split into two separate companies, one now known as Viacom and the other CBS Corp. After the split, Viacom was left with a number of cable properties, most notably MTV and Comedy Central. CBS Corp. consisted of a number of radio and television holdings, including CBS.

The company, with 23,650 employees, can be broken down into four segments: television, radio, outdoor and publishing.¹

Television: The television segment accounted for 66% of all revenue in 2006, according to CBS’ 2006 Annual Report. In real dollars, that was $9.5 billion for the full year.

As of January 2008, the CBS Corp. owned 29 local television stations.² Most of these stations are local CBS and CW affiliates, according to CBS’ Web site.³

But that number is notably lower than a year earlier. Heading into 2007, the company owned 40 television stations, and during the year sold 11 of them. Analysts have attributed these sales to CBS’ long-term strategy to divest holdings in medium and smaller markets, and concentrate on stations in the country’s largest ones -- such as Los Angeles, Chicago and New York — which CBS Corp. executives consider more profitable.⁴

CBS Corp.’s television holdings also include two cable networks: Showtime and CSTV: College Sports Television.

Outdoor: The best-known form of outdoor advertising (15% of total revenue) is billboards, but the category also includes ads posted on buses and in train stations, mall kiosks and sports arenas.

Radio (14% of total revenue): In 2007, CBS Corp. sold four of its radio stations, bringing its total to 140 as of January 2008. Since 2006, the company has sold 39 stations.

As with its local television properties, analysts attribute these sales to the company’s growing focus on larger markets.

In 2006, the last year for which there are complete data, CBS Corp. had the most profitable radio news operation in terms of average revenue per news station ($26.6 million), followed by Citadel/ABC ($24.5 million), according to data from the BIA Financial Network. (See Radio Chapter.)

Publishing (6% of revenue): CBS Corp. also owns the Simon & Schuster publishing house, which publishes 1,800 books each year, according to its corporate Web site.

In the first nine months of 2007, total revenues at the CBS Corp. fell 1%, to $10.3 billion. While revenues increased in the outdoor and publishing segments, they declined in the radio and television divisions. Television, which accounted for 66% of all revenues in this time period, declined 2% compared to the first nine months of 2006, according to documents filed with the Securities and Exchange Commission.⁵

Profits, reaching $1.9 billion in the first nine months of 2007, were essentially flat, falling by less than 1% compared to what they were in the first nine months of 2006, according to SEC filings.

Profits in the television division were also flat (down less than 1%) to $1.3 billion, while radio declined 15%. The segments that produced the least revenue, outdoor and publishing, increased their profits by 9% and 90%, respectively.⁶

The following tables below analyze the revenue and profits for each division within CBS Corp. through the first nine months of 2007 and compare them to the same time frame in 2006.

CBS Corp. Revenues
First Nine Months 2007 vs. First Nine Months 2006
In Millions

Source: SEC filings

CBS Corp. Profits
First Nine Months 2007 vs. First Nine Months 2006
In Millions

Source: SEC filings

In 2007, CBS Corp.’s stock price fell 11%, from 30 in January to 27 by the end of the year.⁷

A critical component of CBS Corp.’s investment strategy involves online media properties, particularly the idea of scale, which occurs when large companies reach a wider audience in the most efficient manner. “Advertisers are looking for greater scale, and, with our native properties, we weren't always able to deliver that when I came on,” said Patrick Keane, who joined CBS Corp. in February 2007 as the company’s interactive executive vice president and chief marketing officer, after previously serving as the head of ad sales for Google.⁸

In 2007, CBS Corp. made a number of moves that underscore this approach.

In February, it invested $7 million in the Electric Sheep Co., a virtual world content developer. Virtual world sites, like Second Life, are part of the growing online gaming industry. Pricewaterhouse Coopers projected that the worldwide online gaming industry would generate $38 billion in revenue in 2007, and estimated that number would grow to $49 billion by 2011.⁹ “We believe that all these virtual worlds represent next-generation communications platforms,” CBS Corp.'s interactive president, Quincy Smith, said when the deal was announced.¹⁰

In April, CBS launched CBS Audience Network, which streams full episodes of its television shows to more than 100 Web sites, including AOL and TV.com. According to analysts, this move seemed to validate CBS’s understanding that a large number of people are watching CBS content on sites the company does not own. Indeed, a quarter of CBS’s online content is consumed on a Web site other than CBS.com, the Los Angeles Times reported.¹¹ According to a CBS spokesperson, these online destinations external to CBS.com include not only its partners — like AOL and TV.com — but also sites that it does not have a formal deal with, such as YouTube.

“It takes an awful lot of humility to recognize that it’s better to distribute the stuff off your site than to try to attract people to it,” said Josh Bernoff, an analyst with Forrester Research, a technology and market research company. “That means if the viewer community wants to talk about it somewhere else, let them take it somewhere else.” ¹²

In May, CBS Corp. purchased the video blog Wallstrip.com for $5 million. This was followed by its acquisition of Last.fm, a music recommendation site, which it bought for $280 million.¹³

In October, CBS Corp. paid $10 million for Dotspotter, a celebrity blog. The acquisition comes at a time when AOL’s TMZ, which drew 9.5 million unique visitors in August 2007, dominates the online celebrity genre.¹⁴

Since October 2006, CBS Corp. has had its own channel on YouTube, the most popular online video-sharing site, with over 57 million viewers each month in the U.S. as of March 2007.¹⁵ According to the deal, CBS and YouTube will share ad revenue from the video content, which includes its hit series “Survivor” and “CSI” as well as news programming, such as the CBS Evening News with Katie Couric, 60 Minutes, and the Early Show.¹⁶

General Electric (NBC)

General Electric, with a total of 319,000 employees worldwide, is the one of the world’s largest corporations. In 2006, Forbes magazine ranked the conglomerate as the fourth biggest company in the world.¹⁷

GE can be broken down into six different segments: infrastructure, commercial finance, GE Money, healthcare, NBC Universal, and industrial.

Infrastructure: This segment, the most lucrative one, according to GE’s 2006 Annual Report in terms of total revenue (29%), takes in a wide range of goods.¹⁸ These include jet engines, motorized wheels for off-highway vehicles, gas and steam turbines, water purification equipment, and solar and geothermal technology.

Industrial: This segment (21% of revenue) includes major household appliances, such as refrigerators, freezers, ovens, dishwashers, washers and dryers, microwave ovens and lamps. Also in this category are telecommunications equipment, car parts, land and marine shipping containers and home security equipment.

Commercial Finance: GE (15% of revenues) services loans and leases to companies, particularly those in the construction, manufacturing, telecommunications and healthcare industries.

GE Money: In addition to providing loans to companies, GE Money (14% of revenues) issues personal loans, as well as credit cards, bank cards, home equity loans and car loans. It also offers debt consolidation services and credit insurance to customers in the United States and abroad.

Healthcare: Manufactured goods in this segment (10% of revenues) include MRI and CT scanners, ultrasound devices and cardiology monitoring equipment. GE’s customers, including hospitals and pharmaceutical and biotechnology companies, can be found across the globe. Spending on GE’s healthcare products is part of the $2.1 trillion that was spent on health care in the United States in 2006, a 6.7% increase compared the year before, according to the federal government.¹⁹

NBC Universal: In addition to the NBC network, NBC Universal, which in 2006 generated $16 billion (or 10% of the company’s total revenue), includes Telemundo, and the MSNBC, CNBC, Bravo, USA and the Sci-Fi cable television channels. The segment also consists of a movie and television studio, 230 local affiliates, theme parks, and a number of online digital properties.

Three differences are worth noting in the ownership of NBC’s news operations.

First, is joint ownership. GE owns 80% of NBC Universal, and the 20% balance is held by Vivendi, the French media conglomerate. The second is that NBC, unlike its broadcast rivals, operates two cable news channels (MSNBC and CNBC) and amortizes people and costs across the platforms. Third, NBC has a different relationship with its new Web site. MSNBC.com is jointly owned with Microsoft and is produced largely by people in Washington State working at the Microsoft corporate “campus.”

Through the first nine months of 2007, GE’s revenues were up 12%, to $124 billion, compared with the same time frame in 2006, according to a company press release.²⁰

Growth at GE Money led the way (up 28% over the first nine months in 2006). There were also strong performances in the infrastructure (21%) and commercial finance (16%) segments. Healthcare revenues grew just 1%. Revenues declined in both the NBC Universal (-9%) and industrial (-2%) segments.

Profits also grew in the first nine months as well. According to a company press release, GE collected $15.5 billion in earnings during the first three quarters of 2007, up 9% compared to $14.2 billion the previous year.²¹ Again, GE Money led the way, with 40% more profit than the year before, followed by infrastructure (20%) and commercial finance (17%). There was less robust, but still positive, growth, in the NBC Universal (5%) and industrial (4%) segments. Healthcare profits declined 2% during this time.

GE Revenues, First Nine Months 2007 vs. First Nine Months 2006
In Millions

Source: SEC filings

GE Profits, First Nine Months 2007 vs. First Nine Months 2006
In Millions

Source: SEC filings

Despite revenue and profit gains in 2007, GE’s stock value moved just one point during the year, from 36 in early January to 37 at the end of the year.²² But the stock price is down more than 30% from what it was when its former CEO, Jack Welch, was running the company from 1984 to 2001.

NBC Universal has received much of the criticism for GE’s sagging stock value. Critics point to its poor prime-time ratings, which in 2007 remained behind rivals CBS and ABC.²³ And its movie studio, Universal, ranked last among major studios in terms of domestic revenue as of mid-2007.