TV Networks Face Falling Ratings and New Rivals

As TV Ratings and Profits Fall, Networks Face a Cliffhanger

As the major television networks prepare to unveil their new fall lineups in New York this week, they face threats from seemingly every corner.

Chase Carey, president of News Corporation, the parent company of the Fox network.

Prime-time ratings for the Big Four broadcasters â€" ABC, CBS, NBC and Fox â€" together are dropping more precipitously than ever. Even their biggest hits, like “American Idol” and “Dancing With the Stars,” are fading fast. Advertisers are moving more cash to cable, cutting into the networks’ quarterly profits. New technologies are making it easier to skip those ads, anyway.

That’s not all: there are more outlets for programming than ever, with Netflix and Amazon and dozens of cable channels competing for actors, producers and, most important, viewers. Government regulators want to take back some of the spectrum allotted to local television stations. And start-ups like Aereo are threatening to deprive the stations of subscription revenue, causing some broadcasters to talk of options that were unthinkable a few short years ago. Some have warned they might go off the air entirely.

The many pressures bearing down on the industry are casting a shadow over this week’s upfronts, an annual tradition in New York in which the new sitcoms, dramas and reality shows are previewed at splashy, open-bar events and the networks try to capture their portion of an estimated $9 billion in advertising commitments.

“The networks are getting picked at from every direction,” said Jessica Reif Cohen, the senior media analyst at Bank of America Merrill Lynch. “This year was the tipping point,” she said, “when the television ratings really fell apart.”

The broadcast networks have managed declining viewership for years, but executives by and large said they believed that they had escaped the punishing losses that digital media exacted on the music industry and newspapers.

Now, though, they say they are not sure; even the industry’s biggest boosters concede that the business is under assault, though many express confidence that the networks will adapt. While the challenges before them are numerous, said Gary Carr, who oversees ad-buying at TargetCast, “the networks are far from dead.”

They are certainly smaller. Historically the broadcasters have had outsize cultural and civic importance in the country; their owners pledged long ago to uphold the public interest and provide news programming in exchange for valuable access to the airwaves.

These days the public has mostly forgotten about those commitments. The major network news divisions as a group have suffered hundreds of layoffs in recent years, though they have added staff members to supply news for their Web sites.

No matter how confident the Big Four networks may feel about their new seasons â€" TV executives are masters at forgetting last year’s failures and staying on message about the future â€" the stress factors are enough to make them long for the days of “I Love Lucy,” when 50 million Americans would watch the same show at the same time.

Now NBC and ABC are lucky to get five million to tune in. Goldman Sachs found last month that broadcast ratings in the 18-to-49-year-old demographic, the one most coveted by advertisers, fell by 17 percent in the winter months compared with last winter. Goldman Sachs called it “the sharpest pace on record.”

While broadcast networks were setting record lows, cable channels were setting record highs; AMC’s “The Walking Dead” and the History mini-series “The Bible” regularly beat almost all the shows on network television while they were on.

At ABC, the lowest-rated of the four broadcasters, first-quarter profit fell 40 percent compared with the same quarter last year, but the network still made $138 million. NBC, on the other hand, lost $35 million in the quarter, because of lower advertising revenues. NBC’s parent, Comcast, said the network would have fared better if its biggest hit, “The Voice,” had been on in the quarter.

Ad revenue slipped at Fox too, partly because “Idol” has lost nearly a quarter of its viewers this season, on top of a 50 percent decline over the previous five years.