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DVR issues the talk of upfronts

Delayed viewing bad news for advertisers

As the upfront talks begin, the TV networks and advertisers appear to have reached consensus on the issue that plagued talks last year: what to do about the increasing number of people who record network TV on DVRs.

In a shift from last year, advertisers appear willing to compensate the networks for commercials viewed within 72 hours after their initial air date, a standard known as “live plus three.”

“‘Live plus three’ commercial ratings is where we need to be; that’s a place where we can hopefully come to terms,” said Lee Doyle, CEO of Mediaedge: CIA, a media agency within WPP Group.

Advertisers have traditionally not paid for viewing that occurs after the live air date, but in the face of growing DVR use, the networks have grown adamant they get credit for at least some of the viewing that occurs on a delayed basis.

Last year ABC held out for an even more generous 7-day window known as “live plus seven” and met a wall of resistance from Madison Avenue. But advertisers say if they can get a guarantee through commercial ratings that their spots aren’t skipped, they’re willing to pay for the first three days of viewing.

“The whole issue last year in the impasse in ratings was that advertisers said, ‘Prove to us that people are watching commercials,'” said Fox sales chief Jon Nesvig. “The research has shown that a significant number of people who are watching on a delayed basis are in fact watching the commercials.”

The issue escalated in importance over the past year as DVR penetration has increased and the networks scheduled some of the most recorded shows in the same time period on super-competitive Thursday night.

CBS research chief David Poltrack estimates that more than 5 million viewers are recording ABC’s “Grey’s Anatomy,” CBS’s “CSI” and NBC’s “The Office” at 9 p.m. Under advertising deals negotiated last year, none of that delayed viewing will count in the ratings guarantees.

Nielsen Media Research estimates overall DVR penetration at 17.2% in the United States, but some urban markets are much higher. In Dallas-Fort Worth, 26.5% of households have DVRs; in Los Angeles, penetration is 25.9%.

CBS topper Les Moonves was adamant that DVR viewing be counted in the upfront. “Last year, to their credit ABC tried to hold out for DVRs, and they lost. This year it can’t be. You’ve got to count those viewers.”

NBC U research prexy Alan Wurtzel calls the live plus three a “reasonable compromise.” “It covers about 85% of all viewing in a week, it gives the networks the ability to capture timeshifted viewing and it covers a reasonable marketing window,” he said.

While advertisers and the networks appear to be on the same page in terms of the 72-hour window, where it gets complicated is the CPM rates the advertisers will pay after the live airing. The value of some time-sensitive ads, such as for the opening of a film or promoting weekend retail, diminish rapidly after the initial airing, but creating different standards for each campaign would be enormously complex.

Nielsen will begin releasing commercial ratings to clients on May 31, including ratings back to the beginning of the month. “I think commercial ratings for the broadcast nets is a fait accompli,” said Jack Myers, editor of the Myers Report. “The buyers have drawn a line in the sand on commercial ratings and the networks have drawn a line on ‘live plus three.'”

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