Interpublic Group of Com... (TG:IPG)
Historical Stock Chart

From Jun 2019 to Jun 2024

CBS Corp. (CBS) made an aggressive push this week to profit from its ratings strength and win favor from advertisers, but the broadcaster could face harsh judgment from investors if financial success eludes it for another year.

More than other TV networks, CBS laid it on the line during the so-called upfronts - annual gatherings held this week in New York where TV networks showcase their upcoming programming lineups in an attempt to lock down big, advance commitments from advertisers. Those deals are expected to be harder to negotiate this year because advertisers are looking to save money; as a result, talks could drag into the summer.

Nonetheless, CBS set a high bar for itself, thanks to an unprecedented marketing push, dismissive comments toward competitors, outspoken confidence about its programming lineup and an aggressive financial forecast. All of which occurred against the backdrop of an economic recession and lingering questions about the future of the network television business model.

"[Broadcast TV is] not dead," CBS Chief Executive Les Moonves said. "You just need a couple of hit shows, and you're alive and cooking."

His comment was a not-so-veiled jab at rival broadcast network, NBC, after its chief executive, Jeff Zucker, said last year that the business model for broadcast TV is breaking down.

"There's a difference between the model being broken and not having any hit shows for years," Moonves said to laughter and applause at the CBS upfront presentation at Carnegie Hall this week.

NBC, which has lagged in the ratings for years, did away with a traditional upfront presentation this year in favor of an evening comedy show featuring Jay Leno, who is leaving "The Tonight Show" and hosting an hour show at 10 p.m. ET Monday through Friday, cutting an hour of scripted programming out of NBC's primetime lineup. It's a controversial move that rivals have portrayed as a cost-cutting measure and an opportunity for them to gain audience.

Jeff Immelt, chief executive of General Electric Co. (GE), which owns NBC, recently called the move its "big gamble" and said Leno, who has pledged to make the show an "advertising-friendly" format, has received early support from Madison Avenue.

In general, advertisers are enthusiastic about comedy this year as audiences look for lighter fare to distract from depressing news headlines.

"Leno will not work for everybody, but he will work for some people," said Elizabeth Herbst-Brady, president of Magna, a media investment strategy unit with Interpublic Group of Cos. (IPG). "NBC will be very creative in how they utilize that time period, and how they utilize him."

Moonves, though, has offered to accept bets that its CSI crime dramas will beat Leno's ratings. CBS moved the hit show "The Mentalist" to 10 p.m. Thursday to match up against Leno. It also trumpeted CBS' position as the most-watched TV network and the only broadcaster to improve its ratings in the current season, going so far as to launch an ad campaign on its own media platforms highlighting its successes.

Magna's Herbst-Brady said CBS offers a "very stable schedule," which should appeal to advertisers this year as they become less willing to take chances with their budgets.

Moonves also laid out an optimistic case for a rebound in ad markets this year, saying there are signs that "the clouds are lifting" even as unemployment rises and certain economic indicators continue to deteriorate.

His comments echoed similar optimism from other media chiefs, but CBS has backed up its outlook with a full-year forecast that some analysts have deemed aggressive and reflective of an advertising market better than currently perceived.

Merrill Lynch analyst Jessica Reif-Cohen recently said she expects a 13% decline in this year's broadcast primetime upfront spending, but she said CBS "appears to be in the strongest position due to its outperformance on the ratings front."

CBS needs a strong performance to help an ailing stock price further recover. After losing almost three quarters of its value last year, shares have almost doubled in price in recent months as anticipation builds for an advertising market recovery.

-By Nat Worden, Dow Jones Newswires; 201-938-5216; nat.worden@dowjones.com