TV Lures Ads as Audiences Scatter

Here's a business riddle: More people are turning off their televisions. So why are advertisers spending ever-larger sums -- at ever-steeper rates -- to advertise on TV? In many ways, the very fragmentation of modern media has made television all the more valuable.

An explosion in ways for consumers to entertain themselves across channels and screens is reducing the supply of ad space that can reach millions of viewers at once; that's driving up demand for TV spots, with advertisers saying there is still no substitute for its reach. Advertisers are willing to pay between $30 to $40 to reach 1,000 people between 18 and 49 years old on a broadcast network in prime-time, sums that are up more than 10% from last year for some ads, buyers say. About 96.7% of U.S. households own a TV that receives at least one channel, down from 98.9% a year earlier, according to Nielsen Holdings NV. The number of adults under 50 years old watching TV at any given moment has declined for two consecutive seasons.