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More than six years into the iPod era, Apple still stands atop the music player landscape. But what comes next?
Apple is at a crossroads in the evolution of the product that arguably saved its bacon. Without the iPod fueling Apple's profits and investments, we probably wouldn't have spent the past year talking about Apple's surging Mac business or its game-changing iPhone.
After years of double-digit gains, iPod growth has finally trailed off. The market is arguably saturated: do you know anyone who wants to take their music on the go who hasn't bought an MP3 player? But at the same time, the iPod is undergoing a bit of a revolution: it's morphing from a simple music player to a full-fledged computer.
Apple has sent clear signals that it thinks the iPod Touch and the iPhone are the future of its iPod business. It considers the Wi-Fi-enabled iPod Touch "a new type of device," Greg Joswiak, Apple's vice president of worldwide iPod and iPhone marketing, said when Apple unveiled a higher capacity iPod Touch in February.
But that doesn't mean the whole world is ready to step up to a more sophisticated device like the iPod Touch: lots of people just want to play their tunes and watch their shows on the go, and don't want to break the bank to do so. While Apple is taking sure steps toward evolving the upper echelon of its iPod product line, what should it do to keep its iPod cash cow going into the next decade?
Look to the clouds. IaaS (iPod as a service) will thankfully never catch on as a buzzword, but Apple could bridge the gap between today and the future by bundling regular iPods with services, adding wireless as fast as possible, and bringing OS X down into a new generation of iPods as soon as Moore's Law lets it happen.
Coming back to earth
At some point last year, iPod growth began to slow. Year-over-year unit growth dropped from 50 percent during the 2006 holiday season to just 5 percent growth during the 2007 holiday season. But revenue growth remained steady, at 18 percent during the 2006 holiday season and 17 percent during the same period in 2007.
That suggests that people are making the jump from older iPods to newer models, a trend backed up by our recent iPod survey. The iPod Classic (defined as any generation of video-playing iPod) is the day-to-day music player for 31 percent of respondents. Fifty-two percent of all respondents have owned one or two iPods, and 34 percent bought their first model in 2003 or 2004.
But 60 percent of same respondents indicated that the iPod Touch would be their next iPod purchase. And 68 percent said given their choice of possible music player/cell phone combinations, they most want the iPhone. This kind of "trading up" to the starting price of $299 for an 8GB iPod Touch--or the $499 32GB model--helps Apple offset the slow growth of the basic iPod models with stronger revenue and profits from the iPod Touch while it adds a whole new source of cash with the iPhone.
Both the iPod Touch and the iPhone are much more than just music and video players: they can get online, send e-mail, and will soon be able to run a host of officially sanctioned games and applications.
As chips continue to get smaller, more powerful, and cheaper, it stands to reason that Apple could beef up the other versions of the iPod, the Shuffle and the Nano, with additional capabilities and features. Certainly, it will be able to keep increasing the amount of storage available on each device, the single largest request of MP3 player shoppers who responded to our poll. Wi-Fi capability was the second-most desired trait in a future iPod.
The iPod Touch may be the Next Big Thing for Apple's iPod business, but it won't be the only iPod of the future.
(Credit: CNET Networks)At some point, the MP3 player market looks like it will diverge into at least three businesses: a low-end commodity business cranking out tiny standalone audio and video players for very specific tastes, the high-end portable computing business, and some third category that packs as many computing features of the iPod Touch that can fit, at the time, within $50 of a $199 price band.
This three-headed monster appears some ways off. At the moment, there doesn't appear to be any competitor making meaningful gains at Apple's expense, even in the low-end market. That suggests people are still buying their MP3 players based on design, brand identity, and the need for more storage.
If that changes, however, Apple probably doesn't want to spend a lot of effort on a low-margin commodity business. The iPod brand is easily the strongest in the portable music player world, but as the low-end of the market spreads out into countless niches (think USB drives), Apple would have no real advantage over other consumer electronics companies that know how to crank out widgets in huge volumes.
Also, basic mobile phones are growing more and more capable of handling simple music playback, said Ross Rubin, an analyst with The NPD Group. And at some point, the ability of manufacturers to add more and more capacity will outpace the growth of the average individual's personal music library, he said.
The iPhone and the iPod Touch are the kind of innovative high-margin products that Apple likes to have. In a crowded marketplace, you need to find some way to differentiate yourself, and Apple has traditionally focused on making high-end products with great design that are easy to use.
At your service
Something is going to have to fit in between the commoditized MP3 players you might find one day in Walgreens or 7-Eleven and the iPod Touch. As Apple waits for the advances in chip technology needed to bring larger screens, more capacity, and wireless capabilities into power-constrained devices, it can start offering services to increase the attractiveness of lower-priced iPods, Rubin said.
Just a combined 13 percent of our survey respondents said they are considering an iPod Shuffle or an iPod Nano for their next iPod purchase. It's great for Apple that so many people want the iPod Touch, but that's leaving an awful lot of people on the sidelines who want a music player but can't justify spending $299. One thing the company could do is finally drop its long-standing opposition to a subscription model and start selling iPods in conjunction with such a service, Rubin said.
Apple has long maintained that people want to buy music, rather than rent it. However, that might not always be the case, as people are starting to get used to the idea of "cloud computing," where much of your data is stored by a third party.
And as more and more people buy iPods for video as well as music, such a subscription service makes more sense. Apple is now offering TV and movie rentals through iTunes, and could extend some sort of similar packaging to music if the demand was there. I think most of us have made enough hasty music purchases, only to grow sick of that song or album after a week, to consider a try-before-you-buy type of service from Apple.
Apple has a bit of a luxury in this area that it doesn't have in the Mac or iPhone market, in that it enjoys a dominant position from which to make its next move. The company seems to be in a similar position to when it introduced the iPod Nano, killing off its most popular product in the process. It had a killer design with the Nano, but had to make the tough decision to abandon its best-selling product.
Now, with the iPod Touch and the iPhone, Apple has a set of very compelling products that threaten its best-selling category. When recently asked if the iPod Touch would cannibalize iPhone sales, Apple COO Tim Cook said he'd rather Apple cannibalize Apple than someone else.
More capable mobile phones might take the less-profitable low-end, but Apple needs to make sure it keeps the meaty part to itself. Service-oriented iPods mixed with handheld computers might be the best way the keep the iPod gravy train going.
Webb veterans bill misses the mark
Recreating the great success of the G.I. Bill after World War II for veterans of the war on terrorism is the best idea to emerge from this Democrat-controlled Congress. But poor conception can condemn even the best-intentioned legislation. A cast in point: a bill introduced by Sen. Jim Webb, Virginia Democrat, the Post-9/11 Veterans Educational Assistance Act of 2008. This bill is likely to attract more recruits with its very favorable educational benefits, but it will also cause the overall military re-enlistment rate to drop from approximately 42 percent to 36 percent, according to the nonpartisan Congressional Budget Office.
As explained to Sen. Judd Gregg, New Hampshire Republican, in a Thursday letter, CBO estimates that the bill "would result in a 16 percent increase in recruits," which is one benefit of a very generous package. But the experience of Pentagon retention experts suggests that every additional $10,000 in educational benefits reduces overall retention by slightly more than one percent. The Webb bill would "more than double the present value of educational benefits for servicemembers at the first reenlistment point — from about $40,000 to over $90,000 — implying a 16 percent decline in the reenlistment rate," the CBO concludes.
In practice, this legislation could worsen the already serious manpower problems faced by the Pentagon. It would likely siphon off of the most experienced service members while expanding the overall pool of raw recruits. One can certainly see the unpleasantness of the politics of this issue. Who wants to argue against greater educational benefits for military veterans? But then again, no well-intentioned person wants to pass a bill that seriously exacerbates the already challenging problem of military re-enlistment. The wars in Afghanistan and Iraq have greatly accelerated service-member burnout in a number of areas. Insofar as lawmakers oppose this bill on the above grounds, they are certain to find themselves open to accusations of "opposing benefits for veterans" by pointing out the economic and manpower downsides.
Mr. Webb's preference for the citizen-soldier ideal of yore is admirable. But it remains to be seen whether the U.S. military can achieve that while simultaneously fighting the current global war against radical Islamists. It obviously makes no sense to pass legislation that creates perverse incentives by tempting the most valuable members of the current wartime military to leave the military. Congress and the president need to come up with a better bill — one that helps veterans without encouraging legions of fine people whose skills are still needed on the battlefield to retire from the armed services.
Clinton outwardly confident, even as hopes dim
ELEANOR, W.Va. (AP) — Hillary Rodham Clinton was just warming up the crowd in a cramped and muggy middle school gymnasium when she switched her pronouns.
"All the kitchen table issues that everybody talks to me about are ones that the next president can actually do something about," Clinton said Sunday night, "if he actually cares about it."
The word hung in the air only for a moment.
"More likely, if she cares about it," she added.
Was it a dramatic turn of phrase or a slip of the tongue? A way to spotlight gender on Mother's Day or a sign that the public doubts about her campaign have taken root?
West Virginia is expected to deliver Clinton a big win Tuesday, but her campaign is not as confident as it once was. In the week since Democratic rival Barack Obama trounced her in North Carolina, Clinton has been closely watched for signs that her campaign's dwindling hopes have gotten to her.
For instance, she has eased off her pointed jabs at Obama. She has pledged anew that she would support the Democratic nominee "no matter what happens."
On Sunday, daughter Chelsea introduced her in West Virginia. In the past, she has brought her mother to the stage as "the next president of the United States." Sunday she added the word "hopefully."
Clinton rejects any suggestion that she's dropping out of the race. She used campaign stops Sunday to remind voters of women who didn't give up in difficult situations, who fought for equal rights, broke into male-dominated professions and succeeded when others told them to quit.
She quoted Eleanor Roosevelt, telling supporters: "A woman is like a tea bag. You never know strong she is until she is in hot water."
Earlier in the day, she read letters from supporters urging her not to give up, despite campaign math that's nearly impossible to work out in her favor.
Looking only at West Virginia, this should be a confident time for the New York senator. She remains strong among working-class white voters, women and older Americans. Those demographics are expected to carry her to a triumph Tuesday and another in Kentucky next week.
But Obama has a commanding lead in pledged delegates and has erased her lead among superdelegates, the party leaders who can side with any candidate. Obama is focusing on the general election against Republican John McCain.
Clinton's last best hope is to use strong showings in West Virginia and Kentucky to make the case that Obama is weak among key Democratic constituents.
"Why can't Senator Obama beat Senator Clinton in West Virginia? Voters there have heard that he's the presumptive nominee," Clinton campaign strategist Howard Wolfson said on "Fox News Sunday." "They've seen the great press he's gotten in the past couple of days. Let's let them decide. They have an opportunity. They want to end this on Tuesday, they're perfectly capable of it."
David Gergen, former White House adviser to Presidents Nixon, Ford, Reagan and Clinton, said in an AP Broadcast interview in San Francisco, "She says 'full steam ahead,' (but) her problem is that she's running out of track."
"She was the inevitable nominee and I think they misjudged what they were up against," Gergen added. "Along comes this phenomenon named Barack Obama and upsets everybody's calculations. The real problem in the (Clinton) campaign was that they weren't adaptable, they were not able to change game plan right in the middle once it looked like they had a real fight on their hands."
Serbia in coalition scramble after ambivalent vote
Monitors put the alliance led by the Democratic Party at 39 percent of the vote, ahead of the Radicals on 29 percent.
A rolling count by the state election commission put the Democrats at 36.7 percent and the Radical Party at 28.5 percent.
The election was fought on whether Serbs should swallow their anger over European Union support for the independence of Kosovo, the Serb province which seceded in February, or turn their backs on the bid for European Union membership.
The Democrats' leader, President Boris Tadic, told supporters: "Serbs have undoubtedly confirmed a clear European path. This is a great victory, but it's not over yet.
"I want us to be aware that we must form a new government as soon as possible."
The Radicals' leader, Tomislav Nikolic, said the Democrat claim of victory jumped the gun. There were "very clear possibilities of a coalition which does not include the Democratic Party", he said.
Nikolic said he would talk to the two parties that share the Radicals' ideology, the Democratic Party of Serbia led by outgoing nationalist premier Vojislav Kostunica and the Socialists of the late Slobodan Milosevic.
Either these three parties would form a coalition, he predicted, or: "Serbia will not have a government at all and we'll have to go to new elections".
Official results are due by Thursday night. Parliament must convene by mid-June and a government be formed by mid-September or the country must hold a new election.
EU APPLAUSE
The European Union welcomed the result and urged the quick formation of a government with a "clear European agenda".
"This means that Serbia will move forward ever faster to membership of the EU," said Slovenian Foreign Minister Dimitrij Rupel, whose country holds the rotating EU presidency.
The EU had made its preference clear before the vote, offering Belgrade a pre-membership pact and a visa facilitation deal that are implicitly conditioned on a Democrat win.
The main pro-EU parties campaigned as one and consolidated their votes in one bloc, slightly increasing their share of the vote over the last election in January 2007.
But they still made no great inroads into overall nationalist support, which remained at about 50 percent of the 6.7 million electorate, spread among three parties.
One of the Democrats' choices for a coalition would be a government with the small Liberal Democratic Party -- if it crosses the 5 percent threshold needed to enter parliament -- and minority parties.
An alternative would be an alliance with Milosevic's Socialists, who took 9 percent of the vote. Political sources said that, unlikely as it sounds, it was a favoured option because it would form a stronger coalition.
A coalition with Kostunica, Tadic's ally in the eight-month government that collapsed in March, was seen as unlikely.
Kostunica insists Kosovo is more important than eventual EU membership and has cited "unbridgeable differences" with Tadic over the country's future direction. However, he has yet to respond openly to the Radicals' overtures.
"The Socialists have the biggest coalition potential because they are acceptable to both Democrats and Radicals," wrote respected daily Politika, noting the Democrats had hinted at concessions that could woo that party to their camp.
Tornado-ravaged Oklahoma town might not rebuild
PICHER, Okla. (AP) — Sue Sigle was hoping the government would offer more money for her home before she moves away from this pollution-scarred town. Then the tornado came.
As she began the task of salvage Sunday, Sigle kept a smile on her face, noting that she was fortunate to be visiting family in Missouri when the massive twister hit Saturday night, killing at least six people in this northeastern Oklahoma town.
"I'm OK with everything," Sigle said. "The Lord is going to take care of anything. ... I was going to move anyway. I guess I'll just have to move sooner."
That sense of inevitability appeared to grip residents as they picked through the remnants of their homes. The lead and zinc mines that made Picher a booming town of about 20,000 in the mid-20th century closed decades ago; leftover waste has turned the area into an environmental disaster and a Superfund site.
Many families have moved away to escape the lead pollution, taking advantage of state and federal buyouts in recent years. Piles of mine waste, or chat, have long towered over the town across a highway from the devastated neighborhood; they're now peppered with debris from homes flattened by the tornado.
The tornado — spawned by storms that also killed several people in Missouri and Georgia — could be the ultimate incentive for those 800 or so residents who have been reluctant to leave, said John Sparkman, head of the local housing authority.
"I think people probably have had enough," he said. "There's just nothing to build back to any more."
Some residents, like Sigle, were waiting for better buyout offers before their homes were damaged.
Gov. Brad Henry, who toured the area both by air and on foot Sunday, said the buyout program won't stop just because homes were leveled. He went so far as to say he would "guarantee" that those awaiting buyouts who lost their homes would be treated fairly.
"We will continue to assess the situation. ... We will make sure the people get the assistance that they need," Henry said. "If they need help to be moved to another location, we'll do everything we can to help them do that. I think it's kind of speculative for me to sit here and say exactly what's going to happen. I don't know at this point."
Sen. Jim Inhofe, R-Okla., said he too would work to keep the buyout program on track.
Another question is how the Federal Emergency Management Agency will approach the disaster.
Because of Picher's Superfund status, FEMA is unlikely to grant assistance to homeowners to rebuild in the town, said Oklahoma Emergency Management Director Albert Ashwood. But he echoed Henry's and Inhofe's assurances about the federal buyout program, which is funded by the Environmental Protection Agency.
FEMA crews are scheduled to arrive in Picher on Monday to examine the damage, state emergency management spokeswoman Michelann Ooten said.
One of the homes those crews likely will examine will be that of Jeff Reeves, 43, who has followed his grandfather and father as Picher's fire chief. He has lived in Picher all his life and has watched it slowly decline, first from the closure of the mines, then from the mine waste.
"With everything else that's going on here, I'm not sure there is a recovery," he said, adding that city officials and the committee overseeing the buyout "are going to have to make some decisions as far as proceeding rapidly with the buyout process and getting it taken care of."
Among the first things Sigle looked for when she arrived at her house Sunday afternoon was her late husband's prize collection of Mickey Mantle memorabilia.
Friends already had removed a safe containing the collection from what used to be her bedroom, and she quickly opened the safe's door.
"Oh, hallelujah!" Sigle said when she saw the baseball cards — Mantle grew up in nearby Commerce — and an undamaged ball signed by the former New York Yankees star.
Sigle, who has taught second- and third-graders in Picher for 37 years, also found a slightly soiled T-shirt that read, in part, "Gorilla Spirit Lives On," a nod to the mascot of Picher High School, which will probably close in the next few years.
The storm will speed up what was probably going to happen anyway, she said.
"I know I lost a lot of junk. I guess it's time to clean up and see what I need."
Health: 3 People Killed in Copter Crash
MADISON, Wis. (AP) — A medical helicopter en route to the University of Wisconsin Hospital in Madison crashed shortly after taking off from the La Crosse airport, killing the surgeon, nurse and pilot on board, officials said Sunday.
The helicopter was a new American Eurocopter EC13. It went down late Saturday about three miles from the airport, said Elizabeth Isham Cory, a spokeswoman for the Federal Aviation Administration.
The wreckage was found early Sunday and preliminary reports indicate that the helicopter may have struck a hill or trees, said Margaret Van Bree, the hospital’s chief operating officer.
Ms. Van Bree said those killed in the crash were a surgeon, Darren Bean; a nurse, Mark Coyne; and the pilot, Steve Lipperer.
There were no concerns about the weather before the helicopter took off about 10:30 p.m. “No further communication was received from the crew,” Ms. Van Bree said.
The pilot was flying visually, not using instruments, at the time of the crash, said a hospital official, Mark Hanson. He said he did not know why.
San Antonio, Utah even it up
The San Antonio Spurs and the Utah Jazz tied their respective Western Conference semifinals series at 2 yesterday, with Tim Duncan having his best game of the series in leading the Spurs to a rout of the New Orleans Hornets and Andrei Kirilenko lifting the Jazz to an overtime victory over the Los Angeles Lakers.
Duncan scored 22 points, grabbed 15 rebounds, and blocked four shots in the Spurs' 100-80 victory over the Hornets last night in San Antonio.
"I'm just trying to do my part," Duncan said. "It's just that. You've got to step up at playoff time. It's win or go home. So you've got to step up and make plays."
The Spurs have stormed back from an 0-2 deficit that looked as if it would be tough to overcome, especially after the losses in Games 1 and 2 were each by nearly 20 points. Tony Parker added 21 points for the Spurs.
"We've got to play Game 5 the same way we approached Game 3 and 4," San Antonio's Manu Ginobili said. "That is going to be huge, so we don't have to have any satisfaction with what we just accomplished. We are the same way we started."
The Spurs led by as many as 27 and were ahead nearly the entire game. They shot 51 percent (39 of 76), while the Hornets were cold. They shot 37 percent through three quarters and finished 33 of 82 (40 percent) from the field.
"Our intensity was terrible. From Game 1 to Game 4, ours has gotten worse and theirs has gotten better," Hornets coach Byron Scott said. "And that's been the difference. They're just kicking our butts right now. Is that simple enough?"
San Antonio scored 40 points in the paint. New Orleans' plan to keep Parker out of the lane didn't work, as he knifed his way through heavy traffic or found openings to get to the rim, and hit jumpers.
Ginobili, who also got to the rim at will in Game 3, wasn't as successful in Game 4. But he hit jumpers and two 3-pointers, finishing with 15 points. Parker and Ginobili each had eight of the Spurs' 27 assists. The Hornets had 12 assists - five from Paul.
The Hornets were hoping to return to New Orleans with a commanding 3-1 series lead, but allowed Duncan and Parker to shoot a combined 18 of 25 from the field. The only area where the duo struggled was its free-throw shooting. Duncan was 2 of 5 and Parker 5 of 8.
"I really can't explain this one," Paul said. "We just looked pretty bad out there tonight. We've got to bounce back. We came out here to try and get a win here and we came up short. But the good thing about it is it's just 2 to 2 now. Now it's a three-game series. First one to win two games wins it. There's no time to panic."
The Spurs still need to win one on the Hornets' court. So far that's been a tough task, with only one team losing at home in the second round of the playoffs.
Jazz 123, Lakers 115 - Kirilenko blocked Kobe Bryant twice in overtime and converted a 3-point play with 35 seconds remaining as Utah won in Salt Lake City.
The Jazz went 9 for 9 from the foul line in overtime and outscored the Lakers, 15-7, in the extra five minutes.
Deron Williams had 29 points and 14 assists, while Carlos Boozer scored 12 of his 14 points in the second half and grabbed 12 rebounds. Kirilenko finished with 15 points and five blocks.
Bryant had 33 points and 10 assists.
The Jazz let a 12-point slip in the last four minutes of regulation. But Utah played its toughest defense of the playoffs in overtime and pulled out the victory.NBC, ABC and CBS to tone down 'upfront' advertising sales events
For decades, this has been the week for network television to strut its stuff. But not everyone is in the mood to party this year.
Typically, the major broadcast networks -- Fox, ABC, CBS and NBC -- have spent about $5 million each to whip up excitement among advertisers for their new fall schedules. They would fly hundreds of stars and executives to New York for extravagant presentations at tony Manhattan venues, followed by lavish parties.
The five networks, including the upstart CW, rounded up $9.3 billion in prime-time commercial sales in the weeks after last year's "upfront" presentations.
But a souring economy and a lingering hangover from last winter's writers strike, which cut short the TV pilot development season and depressed prime-time ratings, could cast a shadow over the kickoff of the industry's springtime selling season, which begins today in New York.
"Advertisers are not going to be willing to pay higher prices given these ratings drop-offs," said Jason Maltby, a top executive at ad-buying firm Mindshare.
The upfront presentations will be a toned-down affair. CBS Corp. and Walt Disney Co.'s ABC canceled their parties. ABC plans to downsize its presentation by holding a more low-key "sales meeting" at Lincoln Center. NBC Universal ditched its Radio City Music Hall event in favor of a more trade-show-like expo "experience" at nearby Rockefeller Plaza that will showcase all of its media units -- not just the fourth-placed NBC network.
"The world has indeed changed," Michael Nathanson, media analyst for Bernstein Research, wrote in a Friday report about the upfront process.
In an age of shifting consumer tastes and viewing patterns, the giants of television are losing stature. Digital video recorders that enable viewers to speed through commercials are just one technological threat to network advertising revenue.
Younger viewers also are turning to such places as YouTube and Facebook for their entertainment fix. At the same time, cable television is attracting more viewers than the networks, thanks in part to its specialized programming such as the NBA playoffs, provocative series and year-round schedule.
The trend only accelerated during the writers strike, which left the broadcasters running weeks of repeats that drew dismal ratings.
"The networks were already headed for a very difficult season, but the strike made things worse," said Jack Wakshlag, chief research officer for the Turner cable networks. "This season has seen the biggest loss in audience in broadcast network history."
And Hollywood's labor troubles may not be over. A strike by members of the Screen Actors Guild, whose contract with studios expires at the end of June, would probably delay the start of the fall season and could dig the networks into a deeper hole.
Already, ratings are down by about 15% for the broadcast networks compared with last season.
Some of the most popular shows on TV have not bounced back since the strike was resolved in February. ABC's "Grey's Anatomy" and "Ugly Betty" in recent weeks have fallen about 20% from their pre-strike averages. CBS' "CSI: Crime Scene Investigation" is off by about 15%, and NBC's "The Office" and "Deal or No Deal" have posted season lows.
Even television's most popular show, Fox's "American Idol," is down 10% this year in the key advertising demographic of 18- to 49-year-olds.
Broadcasters are betting that they will recapture viewers when they return to a more normal season. A few shows, such as the CBS sitcom "How I Met Your Mother" and ABC's "Desperate Housewives," have bounced back to pre-strike viewership levels.
Yet Wall Street analysts, advertisers and network executives are divided about whether this year's broadcast sales will remain flat or fall from last year's totals. Some advertisers worry about a pullback in spending by consumers, who have been slammed with higher fuel and food costs at a time of falling home values.
"Consumers are definitely being stomped on," said Rino Scanzoni, chief investment officer of Group M, an umbrella company of advertising-buying firms. "Not since 1992 has there been this much economic uncertainty."
People who just a few years ago were buoyed by rising home values are now swimming in debt, he said, adding that if they continue to reduce their spending, "that will have a significant impact on advertising."
Merrill Lynch media analyst Jessica Reif Cohen predicted that broadcasters could see year-over-year declines of as much as 14% in total sales. She noted that local TV stations had already experienced a drop-off in advertising.
Other analysts, however, point to strong demand for network commercial time, which sent advertising rates skyrocketing earlier this season over last year's upfront prices. And even though broadcast ratings are down, Nielsen research shows that people have been watching more TV this season.
Cable channels have been the primary beneficiary.
"We captured all the viewers that broadcasters lost and then some," Turner's Wakshlag said.
Seven of the top 10 ad-supported cable channels, including TBS, TNT, MTV, USA and ESPN, have seen their ratings grow this year over last. Seeking to cash in on the networks' weakness, Time Warner Inc.'s Turner Entertainment, which programs TBS, TNT and Tru TV, made a bold move this year by scheduling its upfront presentation Wednesday, in the middle of the week that had long been reserved for broadcasters.
Not all the broadcasters have scaled back their plans. First-place Fox, part of Rupert Murdoch's News Corp. empire, is in the best position. Its prime-time ratings are up 5% this season, in part because of the gigantic Super Bowl audience in February. Fox will announce its schedule Thursday, and then, just like last year, host a party for advertisers in Central Park.
"Broadcast networks still have the power, the immediacy, the impact and the wide reach that advertisers need," said Jon Nesvig, ad sales president for Fox Broadcasting.