The plunge in ratings by NBC (GE) has resulted in them having to offer advertisers refunds for the first time in years by any network. they are paying back about $500,000 on average to marketers.
This isn't to be confused with what is called make-goods, which is when networks offer other free advertising slots if pricing based on viewership doesn't reach the expected levels.
NBC isn't offering make-goods, but refunds instead, because they have no slots left to give as far as during this important holiday season goes.
Of course with NBC taking the biggest hit, as far as primetime ratings go, they don't have the space available to make up for the precipitous drop, so they must give refunds. Other networks haven't dropped in viewership like NBC, so they don't have to offer back as much, and so can replace it with advertising in the first quarter, which most are doing.
Networks offer advertising prices based upon guaranteed ratings when making deals in the upfront. When their numbers aren't reached, that's when the make-goods or refunds kick in.
When a network has to offer refunds, it means they're backed in a corner with nowhere else to go; they have nothing left to trade with. NBC has big problems, as those of us following the industry know, and there aren't any solutions that will turn things around any time soon. You know they can't wait till the Olympics come so the focus can be taken off them for a time.
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