I recently came across a post on the Wall Street Cheat Sheet blog (Turn On, Tune In, Drop Out: CNBC Ratings Get Smashed) that tells of a large decline in ratings for CNBC programming. The table of data below shows that, according to Nielson ratings service, viewership during the day has collapsed 24% in the past year during the business day. Prime-time viewership has fallen by 34% between 2009 and 2010 for the period essentially covering the month of January. Clearly, this is not what CNBC had hoped for and will surely affect their advertising rates. Damien Hoffman, who wrote the post, concludes, “It’s definitely
correlated to the value CNBC offers to our investment accounts.”
Hoffman’s post disparages the oft-criticized leading business news channel, and the drop in ratings is certainly notable. However, we think his conclusion was very close to having the right idea. We think it would be much more accurate if he were to just take out the “CNBC offers to” and replace it with “of”. CNBC’s ratings are correlated to the value of our investment accounts, and this one-month snapshot only serves to demonstrate this point.
If you will recall, on January 2nd the Dow closed around 9,034 and by the end of the month it had fallen back down to 8,000. At that time, the DJIA was at its lowest point in nearly six years and the declines showed now signs of stopping. The market was in a nasty multi-quarter downtrend and people watched because they were seeing their hard earned retirement accounts slipping away. The ratings were not better because the programming was far more helpful or interesting; it was because investors were frightened and needed to learn all that they could about what was happening. Fast forward to last month and the market and the economy are in the midst of a recovery, and while the market fell in the month it is clearly not a time to panic. It is no coincidence that monthly ratings for CNBC doubled between October 2007 and October 2008, and then fell right back in line with 2007 in 2009.
Furthermore, in January of 2009 the government was in transition as a new Presidential Administration took office. Investors were uncertain about what policies the new administration might pursue first and how that would affect their portfolio. It was a fast paced time in the news cycle as President Obama nominated important cabinet positions, all in the midst of an economy in rapid decline. Surely, the CNBC-haters will blame some of this on the “exaggerated rhetoric” of CNBC regarding the financial meltdown.
Unfortunately, we do not have access to a similar report from Fox Business Network or Bloomberg in order to compare their ratings trends. That being said, to claim the drop in ratings (based on a one month snapshot) has anything to do with the quality of content denies the obvious driving factor. It is all related to consumer’s demands, and a year ago many more people believed the financial world was vital to their wellbeing.
Ockham has no affiliation with CNBC or any of the companies that have ownership in the network.
