The death (and rebirth?) of TV

NEW YORK (CNNMoney.com) -- The big TV networks will all unveil their new shows for the fall in New York City next week. But does anyone still care?

These so-called upfront presentations, glamour-filled galas held at places like Radio City Music Hall and Carnegie Hall, have, in the past, been events where NBC, CBS, ABC and Fox celebrated their past season and touted their upcoming schedules to prospective advertisers and media buyers, who, shortly after the upfronts will begin negotiating with the networks on advertising commitments for the 2007-2008 season.

Turning off the TV With the execption of Fox, ratings for all the major networks are down this year. Viewers (Millions) Total 18-49 year olds 06-07 05-06 06-07 05-06 CBS 12.54 12.62 4.96 4.89 Fox 10.29 9.85 5.22 5.22 ABC 9.83 10.88 4.54 5.17 NBC 8.99 9.73 4.1 4.27 Source:Nielsen Media Research as of 5/6/07

This year probably won't be much different as the networks will trot out their biggest stars and hype the shows they expect to be new hits.

To that end, media buyers are already chattering about new shows that are rumored to be next fall's schedule, such as a widely-anticipated remake of "The Bionic Woman" on NBC, the "Grey's Anatomy" spin-off "Private Practice" and sitcom "Sam I Am" on ABC and "Back to You," a new comedy starring Kelsey Grammer and Patricia Heaton on Fox.

Yet only News Corp (Charts, Fortune 500).-owned Fox truly has reason to celebrate. Fox is on track to win the ratings race among 18-49 year-old viewers for the third consecutive season, according to the most recent figures from Nielsen Media Research.

Still, ratings with the 18-49 year-old demographic are merely flat as compared to last season. Fox's overall ratings are up 4.5 percent though thanks to mega-hits like "American Idol" and "House." But at least Fox isn't losing viewers like the other networks.

CBS (Charts, Fortune 500), currently in second place among 18-49 year-olds but leading in total viewers, has seen its total audience and 18-49 year old audience slip by about 1 percent. Walt Disney (Charts, Fortune 500)-owned ABC's total audience has shrunk nearly 10 percent while the number of 18-49 year olds watching ABC fell more than 12 percent.

And GE's (Charts, Fortune 500) NBC will once again finish in fourth-place among total viewers and 18-49 year olds. Overall ratings are down 8 percent from a year ago while its 18-49 year old audience tumbled 4 percent.

Analysts have cited many reasons for the decline in TV viewership.

The increased use of TiVos (Charts) and other digital video recorders as well as digital options like Apple's (Charts, Fortune 500) iTunes and the networks' own Web sites have allowed people to watch shows when they want instead of when they first air. Nielsen's live ratings do not factor in viewers using DVR or other "time-shifting" devices.

Google's (Charts, Fortune 500) YouTube and other online video sites are also stealing viewers. Finally, some have even blamed the earlier than usual shift to Daylight Savings Time for the decline in ratings.

But strangely enough, there is still a cautious sense of optimism in TV-Land. Speaking during earnings conference calls earlier this week, both Disney chief executive offer Bob Iger and News Corp. chief executive officer Peter Chernin expressed confidence about the upcoming negotiations with advertisers.

And some experts who follow the TV advertising business share this view. Instead of focusing on the doom and gloom of declining ratings, some think that this is actually a great time to be advertising on broadcast television since the medium is rapidly evolving into something that could offer marketers more efficient opportunities to reach their audience.

"The sky is not falling the way people think it is," said Alan Gould, founder and co-CEO of IAG Research, a company that provides "performance engagement" data that measures how much attention a viewer is paying to a program and commercials to broadcasters and marketers.

Networks and advertisers need to focus on new metrics, analysts say. Instead of a myopic look at the live ratings, some are starting to look more closely at different measures, such as the long-awaited debut of commercial ratings from Nielsen as well as figures that measure viewer engagement.

"Maybe I'm biased but we are falling into the trap of looking at old measures. We have to move beyond impressions. We have to make ads more DVR friendly and have ads with more offers," said Michael Kelley, a partner in the entertainment, media and communications practice with PricewaterhouseCoopers.

Kelley says that TV is still a great option for advertisers but that advertisers have to take more of a direct marketing approach in order for their ads to be effective.

Michael Kokernak agrees. He's the co-chief executive officer and founder of Backchannelmedia, a privately held company that is working on technology that can be built into cable boxes that will allow for viewers to interact with an ad in a similar manner that they would online.

For example, a viewer could click on a banner at the bottom of the screen in order to get coupons e-mailed to them or sent to them with their cable bill. Kokernak argues that too much attention is being paid to declining viewership and not enough to the fact that TV is morphing into something that, like the Web, will actually offer advertisers accountability.

"People are so focused on media fragmentation that they are ignoring addressability," Kokernak said. "Right now, the traditional model of TV advertising is spiraling out of control but with real targeting, we could be on the verge of a golden age of TV advertising."

This doesn't necessarily mean that the networks are going to be able to demand significant increases in ad rates this year. Analysts say the leverage right now is with the advertisers, not the networks.

But some networks, such as NBC, are realizing that they need to wean marketers off the Nielsen live numbers and use other measures.

NBC began using "performance engagement" data from IAG Research this year to offer guarantees to some advertisers that viewers would pay a certain amount of attention to a show. If the program did not meet a minimum engagement measure, NBC would offer the advertiser extra ad times during other shows, a practice known in the industry as a "make-good" ad.

Some big advertisers, including Home Depot (Charts, Fortune 500), are urging other networks to offer similar performance guarantees for this upcoming TV season.

"Advertisers are very concerned that their ads even in highly rated programs are not being watched," said Gould. "At the end of the day, that doesn't mean TV still isn't this incredible medium to put the message out in but the advertisers are putting pressure on the networks to get more for what they pay for."

But one ad expert said TV still has a long way to go before it offers marketers the same bang for their buck that the Internet does. And that could be bad news for the networks.

"Accountability and measurement is driving everything right now," said Thomas Lamprecht, vice president and executive creative director with The Hacker Group, an ad agency based in Bellevue, Wash.

"It may be wishful thinking on the part of advertisers and broadcasters that things will turn themselves around. Viewers are becoming more and more conditioned to scan things and control the content they watch so the TV is becoming less and less relevant," Lamprecht said.