Oscar Flops on TV Viewership: Trouble Ahead for Ad Revenues?

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The verdict is out. The 2018 Oscars are over and the official viewership tally from Nielsen has just come in. Sadly, the picture doesn't appear too rosy with Sunday's Oscars viewership likely to have hit an all-time low -- the lowest since Nielsen started tracking Oscars viewership in 1974.

This is also the first time that the viewership has sunk below 30 million. While there can be several factors behind declining television viewership, rapidly changing viewing habits of television audience might be one of the primary reasons.

Besides that, an unnecessarily long telecast, the nature of nominations, or this year's nominees' left-leaning politics may also have led to poor ratings. However, it has to be accepted that television viewership has declined across the board because of alternate viewership platforms, particularly online streaming. Interestingly, despite the Oscars failing to attract television viewership in 2017, ABC, the broadcasting network, sold ad spots at a 30% premium rate.

All-Time Low Oscar Viewership

The Oscar's television viewership and rating has been declining for the last few years but according to preliminary figures provided by Nielsen, Sunday's telecast hit a potential all-time low. The official tally shows that ABC's telecast of the 90th Academy Awards managed to attract a mere 26.5 million television viewers, down 20% from 2017.

ABC is a property of Disney-ABC Television Group, a subsidiary of the Disney Media Networks division of Walt Disney Company DIS . Disney's shares have declined 7.04% in the last year. Currently, Disney sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Per Nielsen, this year's Oscar broadcast managed to earn an overnight household rating of 18.9, reflecting a decline of 16% from last year's 22.4. This is much lower than last year's Oscars broadcast which attracted 32.9 million viewers, the lowest since 2008, when the show was seen by 31.8 million.

However, it's not only the Oscars that is losing appeal. Other big awards seem to be witnessing the same downtrend. February's Grammy Awards, which was broadcast on CBS, a property of CBS Corporation CBS , too dropped to 19.8 million viewers, reflecting a decline of 24% from 2017.

Golden Globes, which was broadcast on NBC, a flagship property of NBCUniversal, a subsidiary of Comcast Corporation CMCSA , witnessed viewership decline of 5% to 19 million viewers. CBS's shares have declined 21.7% in a year, while Comcast has lost 1.18%.

Viewership Declines Amid Premium Ad Rates

In 2017, the Oscars could attract only 32.9 million television viewers. However, ABC still charged 30% more this year for ad spots. A 30-second ad spot was sold for $2.4 million compared with $1.9 million in 2016. According to Forbes, both Olympic and Super Bowl ad spots rose in cost this year despite a decline in viewership.

Moreover, according to reports, ABC reportedly expects ad revenues from the Oscars to rise as much as 9%. This definitely is huge given that television viewership of all major big-ticket award shows has been on a decline for quite some time now.

Multiple Factors Lead to Viewership Decline

Ratings of a number of live events have taken a beating in the last few years, including Super Bowl, which hit a seven-year low in 2018. That said, the Oscars still was the fourth-highest viewed live event in 2017. This year's figure is alarming but there can be multiple reasons behind this decline in television viewership. One of the major factors already being cited for this dip in is that this year's nominations for Best Picture featured only a handful of box-office blockbusters.

Among all the nominees for Best Picture, Dunkirk was the highest grossing box-office film. Dunkirk , a film produced by Warner Bros., which is a division of Time Warner Inc.'s TWX , earned $525 million worldwide. However, it failed to win any award in the major categories although took home three Oscars for film editing, mixing and sound editing. The second-highest box-office grossing film, Universal Pictures' Get Out , with collections of $255 million, won only one award for screenplay.

Moreover, many analysts are of the view that this year's event was highly politicized in nature, with stars openly criticizing politicians and voicing their opinion on equal rights. Also, this wasn't a great year for Hollywood, as it was shaken by allegations of sexual harassment against Harvey Weinstein, producer and co-founder of Miramax Films and The Weinstein Company. Weinstein had become almost synonymous with Hollywood and the event's image took a hit after these revelations.

Viewers Going Online

It's a bit too early to gauge how much appeal the Oscars has really lost, as Nielsen's ratings track only traditional broadcast viewers and do not include other platforms such as live streaming. An increasing number of viewers are shunning television viewing and opting for online streaming or watching live shows on mobile devices. This is because technology has not only provided viewers with better options but has also made them adventurous with their tastes.

That said, audiences are pressed for time and they may not like to watch a 3-hour-and-50 minute long affair. Online streaming offers them the option of watching the highlights of Oscars even on social networking sites like Facebook FB and Twitter TWTR .

In Conclusion

Nielsen's initial figures do not include digital and mobile viewership and it's perhaps too early to ascertain the final viewership figures. But Oscars, much like other major live award shows, is slowly losing its appeal and gradually failing to attract television viewership thanks to the increasing number of online and mobile viewership.

Despite a poor show in 2017, ABC charged higher rates for ad spots this time. But given the dismal show, will ABC slash ad rates for not only the next Oscars and also for its other big-ticket shows lined up this year? If that happens, revenues will also slide. Going forward, major live events may no longer remain money spinners that broadcasters has so long relied on to boost their top lines.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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