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TV—Ad Decline Hits WB More Than Other Networks

This was supposed to be the breakout year for the Burbank-based WB Television Network, which has struggled since its inception in 1995 to make a profit. Finally this fall, the sixth-placed network hoped its current lineup would place it firmly in the black. A lot has changed since those hopes were alive back before Sept. 11. Today, while ad revenues are down at every TV network, the situation is even more dramatic at the struggling WB. “It’s been a rough couple of weeks,” said WB network spokesman Keith Marder. Experts say WB, owned by AOL-Time Warner, has a tougher road ahead of it than other networks in garnering added advertising dollars. Because of its relatively small size, it is among the first to suffer when advertisers decide to scale back their spending. “When it comes to cuts, the smaller networks feel it first,” said John Lazarus, president of TN Media Inc., who said advertisers opt to keep advertising spots on larger networks with more viewers rather than smaller ones that serve mostly niche markets. The company is mired in last place with a 1.6 overall rating, according to Nielsen Media Research Inc. Since the fall season began on Sept. 24, NBC has led the ratings race with a 5.3 rating, followed closely by CBS with 4.4, ABC with 4.0, Fox Broadcasting Co. with 3.2 and UPN with 2.5. Each rating point is the equivalent of about 1 million households watching at any given moment. Jordan Levin, president of the WB’s Entertainment Division, said he is confident the network’s nine new shows will eventually gain an audience. Levin said he was pleased and optimistic about the new Superman show “Smallville,” which garnered the network’s highest ratings ever in its opening episode. “We feel we’re on the right track and that we need to stick to it,” he said of the fall lineup. Even with new shows like the dating game show “Elimidate Deluxe” pulling a dismal .9 rating in its second week and Reba McEntire’s new sitcom “Reba,” drawing a 1.7, the network remains hopeful its targeted 13-34 age group will tune in as the season progresses. Just in case it doesn’t, the network has potential replacement shows on the back burner. WB officials admit ad sales are down from the same period last year and that ratings have continued to plummet since the beginning of the new season three weeks ago. Jack Myers, chief economist and CEO of the Myers Reports trade publication, said WB’s ratings drop almost certainly will translate into reduced revenue for the company. “People are going to want reduced ad rates, and that’s going to hurt them,” he said. The WB has tried to bolster its position by offering advertisers additional commercial time. When advertisers buy airtime on the popular Thursday night series, “Charmed,” they also get commercial time when the network’s sister cable station, TNT, airs the same “Charmed” episode the following Tuesday. The plan allows the network to sell the airtime based on the cumulative rating of the show on both runs. “It’s been doing well for us,” said the WB’s Marder, but he was reluctant to be any more specific. Analyst Stuart Linde of Lehman Brothers Inc. said the soft advertising market will continue to hurt the WB along with the other broadcast networks, even if it manages to attract more viewers. He said Disney-owned ABC will have a hard time matching last year’s $4 billion in advertising revenue and NBC could see ad sales drop as much as 15 percent this year. TN Media’s Lazarus predicts ad revenue at all the networks will drop this year by about 6 percent, significant for smaller networks like the WB and UPN whose operations could be severely impacted by even a small decline. Levin said the WB’s revenue drop, due in part to the postponement of the season’s opening after the Sept. 11 terrorist attacks, has hurt. But he would not say how much was lost in potential advertising revenue. David Peeler, president of CMR Media Research, estimated the broadcast television networks lost $313 million just in the week of the attacks. CBS alone reported $85 million in lost ad revenue for that week. Neither Levin nor others would speculate whether the WB would become profitable by next year as the company had been predicting. Linde said it’s not likely the WB would be in the black anytime soon. “I don’t think anyone can predict that. Especially now,” he said. With revenue of $453 million last year, compared to $384 million in 1999, Jamie Kellner, then-company CEO, predicted in February that the network would be profitable within a year, with projected revenue of nearly $600 million. The loss of the popular “Buffy the Vampire Slayer” to UPN in June added to the company’s woes by luring away some top advertisers.

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