Crisis Coverage Costly for Networks, Newspapers

The nation’s media outlets will stand to lose hundreds of millions of dollars in advertising this week as they provide expanded news coverage of the terrorist attacks.

The major broadcasters--NBC, CBS, ABC and Fox--dropped commercials and all regular programming Tuesday and Wednesday to provide nonstop coverage of the catastrophe. Newspapers across the country printed extra editions even as advertisers pulled their business because of the crisis.

Analysts said the crisis could extend the advertising downturn that has forced layoffs and belt-tightening this year among publishers and broadcasters.

“We were expecting a recovery in advertising in the second half of 2002, and now I can’t imagine that it will happen any sooner,” said Jessica Reif Cohen, a media analyst at Merrill Lynch.

Analysts estimated that television broadcasters alone are losing nearly $100 million a day in local and national advertising because of the extended news coverage. Cable networks are losing money as well. In addition to the cable news channels, such as CNN and MSNBC, ad-driven sports and entertainment networks including ESPN and MTV picked up the news feeds of their sister broadcast networks for the first time ever. By Wednesday, many of the cable networks and independent broadcasters had returned to normal programming.

Some non-news cable channels, including QVC, Home & Garden Television and the Food Network, eliminated all programming and commercials out of respect for the victims of national tragedy, with some returning to regular schedules on Wednesday.

“We have never before taken the service down, but it didn’t seem right to run programming and commercials,” said Ken Lowe, president and chief executive of E.W. Scripps, which owns newspapers, TV stations and cable channels including Home & Garden and the Food Network.

The networks are just now beginning to evaluate when to reinstate advertising and regular programming.

“We will be discussing tonight [Wednesday] . . . when we should begin running ads again,” said Jamie Kellner, chairman and chief executive of Turner Broadcasting System Inc., the AOL Time Warner unit that includes CNN, TBS and TNT. “Many advertisers don’t want to be there.”

Turner Broadcasting spokesman Mark Harrad said the network had decided not to air financial services or airline ads until messages and phone numbers within the spots had been checked with sponsors.

Some analysts said there may be an unexpected benefit for the big networks.

“This is the time when you prove who you are as a news-gathering operation,” said Tom Wolzien, a media analyst at Sanford C. Bernstein & Co. “This is an equity investment in the future because people will always remember who they were watching during the crisis.”

Advertisers said networks could also get a lift in rates once they return to regular programming as Americans continue to tune in for developments.

“There will be a financial hiccup that they will make up over time because this rescue is going to continue for a while and people will continue watching,” said Carolyn Bivens, president and chief operating officer of the Initiative Media unit of Interpublic Group of Cos., a major advertising agency. She said all but one of the agency’s clients had decided to make up ads that didn’t run on the networks because of the news coverage. Bivens said the tricky issue going forward is the taste of creative messages.

“Sometimes humor is no longer appropriate. You might not want to run an ad for a Swiss Army knife or any images of people running through airports,” she said.

In addition to losing ad revenue, the networks are also experiencing unexpected expenditures.

Most networks must rebuild transmitters located at the top of the World Trade Center towers, which were leveled Tuesday after airliners hijacked by terrorists crashed into them.

These transmitters cost between $5 million and $10 million apiece. With a second transmission tower atop the Empire State Building, CBS was the only major network broadcasting an over-the-air signal in New York on Tuesday, with the highest ratings in the city as a result.

The networks could also suffer losses from delays in the new fall prime-time season that gets underway in earnest next week.

CBS postponed the premiere Wednesday night of its new fall drama, “Wolf Lake” and all the networks have forgone the week of heavy promotions of their new programs.

“This has been a gut punch to the networks,” said Monica Karo, director of media at the advertising firm of TBWA/Chiat/Day which represents ABC. “We’ve pulled all the advertising for the network shows and are waiting to see how we should reschedule those ads.”

At the same time, the nation’s newspapers have pulled advertisements to focus on news developments, experiencing sellout newsstand sales and record Web site hits, publishers said.

“This is a watershed period for newspapers,” said Lowe of Scripps. “It underscores the value of newspapers as a 24-hour service.”

Marketing and advertising executives with experience during past national crises say it’s wise to delay new product introductions and new brand advertising campaigns.

To start, they say, consumers are concentrating on news and ignoring most advertising.

“If you can delay, you do, unless the thing is beyond your ability to act,” said Peter Seeley, who led Coca-Cola Co.’s worldwide marketing during the Gulf War crisis. “If you continue, you have to worry about how far to go, say, with humor.”

“I’d be very low key if I were McDonald’s, Coke or an airline,” said Seeley, a consultant and adjunct professor at UC Berkeley. “The last thing in the world I’d want to be running right now is the ‘We’d love to see you smile’ ad from McDonald’s.”

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Times staff writer Corie Brown contributed to this report.