The start of the broadcast season does not appear to have significantly changed the downward ratings momentum in aggregate. A promising start in the first few days has fizzled and we are back to mid-single digit declines season-to-date. The Big 4 broadcast networks have now seen double digit ratings declines in 5 of the last 10 days, based on fast affiliate data from Nielsen. After a little over two weeks in the season, DIS appears best positioned, although it too is losing some momentum. We believe TV networks in generally (especially broadcasters) need compelling originals to satisfy increasingly fickle audiences that now demand premium content. Overall, Broadcast faces significant challenges from OTT-driven audience erosion, improvements in cable network programming, and an aging audience. We see OTT as a source of cost inflation and as a source of ad revenue pressure that will leave broadcasters more reliant on retransmission revenue and (tragically) to sell more digital rights.

Season-to-Date Ratings Growth - DIS' ABC is performing best, with a 2% YoY increase in A18-49 demo ratings, in part due to introducing new programming such asMarvel's Agents of S.H.I.E.L.D. However, some of the largest gains were tied to strong college sports lineups and note thatS.H.I.E.L.D. lost about 15% of its GRP WoW in its third week in a very competitive timeslot. DIS has also seen setbacks and canceled itsLucky 7 show after two episodes. CMCSA's NBC is roughly flat season-to-date despite a strong start in the first week due to the season premiere of The Voice, which continues to draw strong audiences. Its show The Blacklist has been heavily marketed and well received by critics. CBS is seeing season-to-date declines in line with the Big 4 average (~5%). It has canceled We Are Men after 2 episodes. FOXA's Fox is seeing steep audience falloffs despite the relative success of Sleepy Hollow, resulting in an almost YoY 13% ratings decline season-to-date.

Big 4 Market Share - NBC continues to lead the Big 4 in terms of market share in the A18-49 demo with approximately 31% share, with CBS at 25%, ABC with 24% and Fox with 20% season-to-date. Share has been relatively consistent since the end of the first week of the season. However, on overall 2+ audiences, CBS leads the Big 4, with 32% of aggregate GRP season-to-date. NBC attracts approximately 28% of 2+ GRP, while ABC is consistent with its in-demo share of 24%. Fox is less successful in overall audiences with a paltry 16% share season-to-date.

Demo vs. Overall Audience Trends - Overall broadcast audiences are skewing older, even above the A18-49 demo, according to recent press articles. The use of Marvel's IP may allow ABC to pull in younger audiences, which explains why S.H.I.E.L.D. outperformed on the demo vs. the overall audience rankings. The differences between the 18-49 shares and 2+ shares suggest that NBC and Fox programming appeals more to their demo than the older skewing overall broadcast audience, while CBS in particular appears to continue to attract older audiences.

Social Media Buzz - As social media adoption becomes more universal, we believe it will be increasingly relevant measure of success for broadcast (see our notes on the Second Screen Thesis). ABC is leading in this area as S.H.I.E.L.D. has the most fans of any new broadcast original on Facebook - with over twice the number of fans of the next most popular show. ABC's Once Upon a Time in Wonderland and Fox' Sleepy Hollow also have a meaningful fan base. Wonderland's popularity is somewhat remarkable given that the data does not yet capture the premiere. In terms of social engagement (FB discussions), S.H.I.E.L.D. has dropped from its peak to similar levels of Sleepy Hollow, while NBC's Sean Saves the World is also seeing a strong increase since the debut of the series.

Tony Wible joined Janney Montgomery Scott in 2008 and is a Managing Director covering the Media and Entertainment sector after spending the previous 10 years at Citigroup Investment Tony WibleResearch—most recently covering the Broadcasting and Entertainment Services industries.
Tony can be reached at twible@janney.com.

Janney Montgomery Scott LLC, is a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. Disclosures may be reviewed at Wible's Weekly.

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