A couple of articles last week about network television caught my eye. The first, in The Economist looked at how the ‘big four’ broadcast networks have lost ratings during the past ten years. The most dramatic decline has been for NBC; their ratings are been reduced by half. CBS and ABC have fared almost as bad, while Fox has lost about a third. The second article I noted was in Fortune about ‘TV’s Biggest Moneymakers,’ detailing the top 10 revenue generators on broadcast network television. The results are as follows.

What I noticed was how audience size did not completely correlate to revenues. I figured that this was due to two factors: 1) advertisers were not interested in the general audience, and targeting segments like the 18-49 demographic (this explains the revenue powerhouse American Idol) and 2) certain shows with relatively lower audiences, like Private Practice and Heroes, were sold on expectations of higher ratings before their current season began.

Given The Economist article, I was also interested in looking at how network TV ad costs have changed. I found the historical prices for network TV primetime ad spots at the Television Bureau of Advertising’s website, and I also found a chart of Advertising Age’s reports of 30-second spot costs for network TV’s top 10 shows, between 2000 and 2008, at this useful website. Consolidating the two gives us the following picture.

Just as The Economist highlights, ratings have gone down as a whole, and so have primetime ad costs, particularly during the past four years. However, the decrease in ad costs hasn’t been enough to compensate for the decreasing audience, resulting in higher overall CPM’s. It would be interesting to see how the networks will handle the situation with their clients during the  upcoming upfront.