Networks set for $120m from Web ads

The four US television networks in a pay dispute with Hollywood television writers over online video advertising are in line to generate $120m of revenues in 2007 from free web streaming of their content, according to a leading media buyer.

The networks have been reluctant to acknowledge the size of their streaming businesses, partly because online video advertising has become a sticking point in pay negotiations with the writers, who have been on strike for almost a month.

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However, advertisers are flocking to web streaming. “Based on what we’re paying for spots across the four networks, we estimate this market to be worth more than $120m,” said Tracey Scheppach, senior vice-president and video innovation director for Starcom, a leading media buying agency.

The total online video advertising market will be worth close to $1.3bn this year after doubling in size in 2006, according to Accustream, the digital media research company.

Revenues generated by the US networks – ABC, CBS, NBC and Fox – form a sizeable chunk of this total and are expected to grow sharply next year, partly because of the quality and popularity of the programming they offer.

Desperate Housewives, Prison Break and Heroes have all been big web hits. “In an expanding universe of content, advertisers cluster around premium inventory,” said Paul Palumbo, research director with Accustream. 

Media buyers expect streaming revenues to increase because online video commercials have better recall rates than traditional TV advertising.

“You get 85 per cent recall [with web streaming] versus single-digit recall for TV,” Ms Scheppach said. Syndication of online video commercials across social networking sites will also fuel future revenues, she added.

ABC, owned by Walt Disney, has streamed 160m episodes of hit programmes. Bob Iger, Disney’s chief executive, said recently that internet streaming had helped deliver “more targeted messages for our advertisers”.

The Writers’ Guild of America wants a new contract that reflects streaming revenues. But before the strike started the Alliance of Motion Picture and Television Producers, which represents the networks, had insisted online video streaming was promotional and should not be included in the new pay deal. But on the eve of the strike earlier this month it offered a deal that reflected a share of streaming revenues. The offer was rejected by the WGA be­cause payments would only kick in after the content had been streamed for six weeks.

Talks between the sides resumed this week. The strike has resulted in many top shows being pulled from the airwaves, including late-night talk shows and scripted comedy programmes.

The networks are believed to have three or four weeks of drama episodes left before they have to start running repeats or alternatives.

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