Last month’s announcement that NBC will put The Jay Leno Show on every weekday at 10pm beginning next fall prompted CBS head Les Moonves to publicly state that his business was doing just fine, thank you very much.
But comparing the estimated production costs for Leno vs. scripted shows given by Mediaweek:
CBS CEO Leslie Moonves reacted to the move by predicting that CSI: Miami (and presumably some of its other 10 p.m. shows) would beat Leno, “by a lot.” But even if Moonves turns out to be right, NBC could still succeed financially with the program because the cost of producing Leno is estimated at about $2 million a week, compared to $15 million or more to fill those same hours with sitcoms and dramas, which cost $2 million or $3 million or more per episode.
I’ll go on record predicting that unless The Jay Leno Show is a complete failure (which I will define as less than a 2.2 rating for adults 18-49. For reference, the average 18-49 rating for The Tonight Show this season is a 1.3) that you’ll see ABC and CBS trying the same thing within a year.
NBC’s best 10pm weekday show last fall, Law & Order:SVU, averaged about a 3.7 rating for adults 18-49. There are other factors favoring scripted programming, including syndication potential, DVD sales, and repeatability. But if you’re spending $15 million a week (for 22 weeks) to get a ~3.5 demo rating compared to spending $2-3 million a week for a 2.5 demo rating that’s going to be a tough business move to pass up.
January 5th, 2009 at 9:50 am
So what you’re saying is… Jay Leno is going to kill network TV!!!
January 5th, 2009 at 9:56 am
As a viewer, I have to hope this flops horribly. I don’t think it will flop, because, as you pointed out, the bar is set so low that Fat Albert could jump over it. But I sure it hope it’s a disaster, because otherwise we could be looking at potentially 15 hours a week removed from the broadcast nets schedule. That’s 15 fewer series for us to choose from, and that’s ugly. There is barely anything worth watching right now. What do you think it will be like when we have 15 fewer shows from which a potential good one can emerge.
Ultimately, I think the end game here will be the next round of negotiations with the unions. In four years time the networks will be screaming for blood in those negoations. Their viewership will be so low by then that unless actors/writers/directors are willing to take an enormous cut in compensation, I predict a lockout/strike that will last a long, long time.
And you know what? I’ll be on the nets side for a change. People take a lot less money to star in a show on TBS or AMC then they do to appear on NBC or CBS. Yet the ratings for those different outlets are beginning to equalize. In four years, I predict they will be almost completely equal, and the the nets will have something tangible to complain about. How can you compete when you are paying more for talent than some cable net that gets the same ad rates you do PLUS a fee from the cable companies?
Stick around, folks. It’s going to get a whole lot worse before it gets better.
January 5th, 2009 at 10:07 am
Schmokey, Robert and I were discussing something similar this morning. This article from Mediaweek states that the CPMs (cost per thousand impressions) for top cable networks are only 1/3 what they are for broadcast networks:
http://www.mediaweek.com/mw/content_display/news/cable-tv/e3i17e8d113d82a5300f38c16b894a1df39
We think that might be a simple error. Perhaps that ad *rates* are 1/3, but not CPMs. But regardless, any difference in the CPMs between broadcast and cable will have to, however slowly, equalize over time and that’s bad for broadcast.
January 5th, 2009 at 10:21 am
So maybe it’s time for CW to broadcast series @ 10.00pm (CWtv could get more viewers than from 8 to 10pm).
xx
January 5th, 2009 at 10:38 am
“the cost of producing Leno is estimated at about $2 million a week, compared to $15 million or more to fill those same hours with sitcoms and dramas”
That is totally, totally false because it ignores the fact that NBC has the right to 3 plays from each of those $3m per episode dramas. When you factor in repeat weeks the true cost of programming the 10pm hour with drama is more like $3-5m per week.
Also, there’s an aftermarket for any scripted shows NBCU owns. We can debate what the future value of that aftermarket might be, but we can say with confidence that the aftermarket for NBC’s Leno show is going to be zero or damn close.
January 5th, 2009 at 10:45 am
I still think NBC will be another CW – 90% crappy programming…so far NBC only has the Superbowl and the Olympics…oh and LAW & ORDER…which i watch in syndication if at all…Leno will be on at 9PM CENTRAL TIME….let me repeat that 9pm…it WON’T work in this time slot…LENO is not funny @ 10:30 – HE WON’T BE AT 9PM either…
January 5th, 2009 at 10:47 am
….Leno sounds like Beeker from Sesame Street…I can’t understand him…how does he keep getting work?
January 5th, 2009 at 10:48 am
Mikey, I didn’t try and put something like this in the post because I’m not certain of the numbers, but would you say this is a reasonably accurate picture (based on those Mediaweek numbers):
Leno show: (assume it airs live 46 of 52 weeks, as I believe I read): 46 weeks x $2-3 million/week = $92- $138 million/year
Scripted Shows: $15m/week x 22 weeks = $330 million
Plus, the summer weeks for scripted shows slots have to be filled by something. Presumably something pretty cheap, but not a cost of zero.
Those two numbers ($92-138 million vs. $330 million) however guessy they may be are still very different.
Am I on the right track here, or am I going wrong somewhere?
January 5th, 2009 at 10:52 am
The mediaweek line about cable CPMs being one-third of broadcast is no typo.
Three factors:
Cable is a lot more cluttered than broadcast
Cable audiences channel-surf at a higher rate during commercials
The audience for a “hit” cable show is nothing special. If you don’t buy The Closer, you can get the same size and type of audience from 100 other shows. The audience for a broadcast hit can’t be found anywhere else and commands a premium CPM.
January 5th, 2009 at 11:03 am
No, I think you’re in the ballpark Bill.
I think it’s fair to say that the cost for scripted would be about three times the cost for Leno. We’re both just guessing, but I think that’s certainly much closer to the truth than saying it’s 5 to 7.5 times greater, as Mediaweek does.
3x is certainly a huge difference, but assuming a factor of three keeps it debatable whether this is a smart move. It’s certainly possible that scripted would do more than double the rating of Leno’s show, command a higher CPM, and deliver some kind of aftermarket revenue.
January 5th, 2009 at 11:04 am
I’m guessing what Mikey takes issue with is the apples-to-pears comparison because of saying $15/m per week. If you take it across the whole year including the rebroadcasts it’s a number that is much lower than $15 million per week. The aggregate view ($330mm or whatever the number is) seems to be correct but you’re looking at ~3x as expensive instead of ~7x (if the estimates are reasonable).
January 5th, 2009 at 11:12 am
how can people with jobs be faster at commenting than me!
BTW, Mikey, I always suspected there was a huge CPM premium for scale though I was never able to get anyone to admit it. But the way the conversation with Bill went was that if Law & Order: CI had 2 million 18-49 viewers on USA and Law & Order had 2 million on NBC, that I seriously doubted CI on USA only was commanding an ~$8 CPM to L&O’s ~$25.
There are over 14,000 airings of shows on basic cable each week (all day). Typically well under 100 have more than 3 million viewers. Among the top 100 shows, I am still doubtful there is a steep CPM discount versus broadcast. With the thousands of airings with less than a million viewers, I am not surprised there is a CPM discount, but if the CPMs are really only 1/3rd, I am surprised it’s so significantly discounted versus broadcast.
January 5th, 2009 at 11:27 am
The problem with trying to factor in rebroadcasts is that while the network may have the right to three airings, they rarely, if ever, use that right. Even if the networks decided to air one show every week of the year, during summer and holidays as well, they would still only be able to air about 8 episodes all three times. But that’s not how it works anyway. They air them for about 35 weeks a year, and usually a few of those weeks are used for specials, or they get a late start or early finish. So we’ve got about a dozen episodes, maybe, that air twice, and then none of them are ever seen in primetime again.
January 5th, 2009 at 11:38 am
Julia, on average you may well be right, at least in the original timeslot. NBC gets a lot of mileage out of the L&O franchise repeats and so does CBS with its procedurals. But these days that is impacted largely by Saturday airings. But I’m betting House episodes wind up getting aired at least one time beyond the original broadcast even — across the board there are a *lot* of shows that air more than a dozen episodes a second time, it sure doesn’t seem like many make it to a 3rd airing. It would be interesting to see the analysis of rebroadcast. It’s complicated further because some shows (like Heroes) don’t typically repeat at all on NBC — but NBC does air them on SciFi and G4.
I’m not sure where that counts in the rebroadcast counting. though Heroes is an NBCU show, so I’m not sure how it works there. I am sure though say, with Two and a Half Men (which is not a CBS produced show) that *every* episode airs at least twice. Similarly House airs on Fox but is produced by NBCU — I’m sure Fox runs every episode at least twice and may get close to 3 times.
January 5th, 2009 at 11:44 am
Yes, I was going to make an exception for shows like House which FOX uses to fill any dead space. But this is why it gets tricky to try to factor it in.
January 5th, 2009 at 11:48 am
Just for fun i womdered what ABC/CBS would do if they decided to have talk shows at 10pm
CBS:
MONDAY
8pm: BBT, HIMYM,
9pm: TAAHM, WW
TUESDAY
8PM: NCIS
9PM: CSI:MIAMI
WEDNESDAY
8PM: THE MENTALIST
9PM: CRIMINAL MINDS
THURSDAY
8PM: SURVIVOR
9PM: CSI
FRIDAY
8PM: GHOST WHISPERER
9PM: WITHOUT A TRACE
SUNDAY
8PM: COLD CASE
9PM: CSI:NY
all the shows stay the same really, only a few got rid of, maybe 3 CSI’s is to much at 9pm though!
ABC:
MONDAY
8PM: DANCING…
9:30PM: SAMANTHA WHO?
TUESDAY
8PM: COMEDIES
9PM: DANCING…
WEDNESDAY
8PM: UGLY BETTY
9PM: LOST
THURSDAY:
8PM: GREYS
9PM: PRIVATE PRACTICE
FRIDAY
8PM: EXTREME MAKEOVER
9PM: WIFE SWAP/SUPERNANNY
SAUNDAY:
8PM: BROTHERS & SISTERS
9PM: DESPERATE HOUSEWIVES
looks fine to me :p
January 5th, 2009 at 11:49 am
What is needed here is what I once saw in an old SCTV skit from the 1980s. NETWORK WARS – Hit squad from NBC bursts onto the CSI sets and spray the place with bullets. Its the only real chance NBC has. Seriously. NBC – Nothing But Crap. CBS retaliates by contracting a hit on the set of HEROES using casts of CW’s Gossip Girl and 13 is Fear as suicide bombers.
January 5th, 2009 at 12:49 pm
I agree there is a lot of junk on NBC, but they do have some quality shows in The Office, 30 Rock, and Chuck.
When I think of crap I think of Dancing with the Stars and once you’ve seen one crime drama on CBS, haven’t you really seen them all? It amazes me that some people can watch nearly 70 episodes of CSI a year
January 5th, 2009 at 12:54 pm
How do you factor in the cost of lost revenue when less people are watching one of your hours and therefore less people watching the advertising for your other shows, which therefore leads to lower rates in those shows also?
Doesn’t seem like a great business model, to just show cheap crap that gets no ratings because it is cheap. Otherwise, every network would turn into PAX, right?
January 5th, 2009 at 1:42 pm
Rufus, no question that we’ve oversimplified. Partially because we don’t have all the data, partially because even with all the data, it would be *really* complicated.
You’re right that those lower rated 10pm hours will directly hit the revenue potential of the local news shows that follow them, and some of those local stations are directly owned by NBC. It’s also less promotional opportunities for the rest of their line up. There are a lot of second and third order effects from this move that can only be guessed at now.
January 5th, 2009 at 2:18 pm
I hope it fails.
January 5th, 2009 at 2:31 pm
I had a bad day and the numbers made my eyes glaze over after post ten or so, and my printer is out of ink, so I can’t print this off and read it. But this is a fascinating discussion, in my opinion. I watch four hours of TV a week sometimes, other times ten times that. Networks, zero unless I’m being sociable with someone with even a glimmer of taste. But repeat Minnow’s favorite wasteland remark all we want to, numbers like these make the ” Beast ” see-through. We can lament what’s on, but nobody who does a little research can say they don’t know WHY its on. Wild Turkey awaits. Reform our health care system! My innocuous antiinflammatory is even being held for ransom. ( Yes, that was political. And so is not running over puppies.)
January 5th, 2009 at 3:03 pm
You estimate that any ratings for Leno above 2.2 would be considered a success, but I wonder if they’ll also be concerned that Conan’s ratings don’t drop below a certain threshold as well, since I assume Leno’s new show will cannibalize a large portion of NBC’s late night audience (really, how many people watch more than one late night talk show?).
January 5th, 2009 at 3:37 pm
dahlian, good point, that’s another second order effect, the devaluation of The Tonight Show’s franchise. My guess is that Tonight Show ratings suffer, but how do you separate the Leno at 10 effect from the “Conan takes over” effect?
And I’m not sure I’d call over a 2.2 demo rating a success, but even the NBC PR department would have trouble spinning less than that as anything but bad.
January 5th, 2009 at 3:45 pm
Bill, you’re kidding, right?
“OVER TWO MILLION 18-49 YEAR OLDS WATCH JAY LENO NIGHTLY!!!!”
That’s how the headline reads at a 1.8 rating. They would merely change the text and add one exclamation point for every tenth of a point below 2.2.
January 5th, 2009 at 4:00 pm
Of course you’re right. I should have written “but even the NBC PR department would have trouble sleeping at night spinning less than that as anything but bad.”
January 5th, 2009 at 4:11 pm
I’m not sure I buy the idea that the other nets will follow suit on this. Yes, Zucker wants to pretend this is the new paradigm for network TV, but let’s be honest, we’ve heard that line from him before. Remember the new paradigm of 8:00 reality hour (fall 2007), or the promised year-round development and scheduling (upfronts 2008), or even the whole bit for this last fall where each time slot would always have the same type of show (e.g. Wednesdays at 9 would always be a crime show, Mondays at 10 would be action, etc.)? Zucker always announces his moves as heralding the new network business model, and when they fail, he comes up with a new “next-big-thing”.
If it’s just a matter of accepting lower ratings for cheap shows, CBS would be better off airing crime repeats every night at 10 than paying for a new talk show. The ratings would be about the same and reruns cost a lot less.
January 5th, 2009 at 4:49 pm
Holly, I do agree on Zucker’s “next big ideas”. Never forgetting that the only real success he can point to, and it is a real success, is the Today Show.
However, it is sort of a prisoner’s dilemma for the broadcast networks. All 3 might maximize profits if they all went cheap at 10pm, or one might maximize profits if the other 2 went cheap. Problem is that it’s hard to know in advance.
The broadcast nets do continue to behave as if they’re still the only ones in the TV game (dismissing that 50%+ of the prime time audience now watches cable). Inertia at work!
January 5th, 2009 at 5:24 pm
It’s not inertia at all, Bill. It’s a model where premiums are paid for scale and huge premiums if the Mediaweek story is accurate. This comment will get long so the take away is this: the 50% who are watching cable don’t matter as much because they’re fragmented over dozens of channels. The 50% who are watching broadcast matter more because they’re not nearly as fragmented.
That 50% of primetime viewing is on cable is meaningless because it’s mostly allocated among many channels/shows that have few viewers. There are exceptions for Monday Night Football, sporting events and specials, but only ONE scripted drama regularly draws over 6 million viewers on cable. It seems like there are a lot of shows in the 3 million-5 million range, but in primetime, especially minus the Disney and other programming targeted at kids, there are really only a few handfuls of shows that are regularly in the 3mm-5mm average audience range.
During November sweeps the most watched prime-time scripted show on all of cable (outside Hannah Montana and Wizards of Waverly Place) was repeats of NCIS which didn’t eclipse 5 million viewers (but often eclipsed 4 million). That as many people are watching cable as broadcast is not particularly relevant when 10% of those are watching NCIS reruns, 10% watching Disney with the other 80% mostly scattered among shows that have less than 2 million viewers.
If advertisers pay a premium for scale and if the networks are the place to get that scale, the networks will continue to behave as if they matter more…because they do.
January 5th, 2009 at 5:42 pm
I do agree that the broadcast networks have to change and adapt to the audience fragmentation, but I don’t think the answer is to give up or program less.
January 5th, 2009 at 5:50 pm
Holly, I’m not sure the broadcast networks have to change and adapt to audience fragmentation until/unless the advertisers demand it and that seemingly won’t happen until the broadcast nets (minus the CW) are on par scale-wise with the cable networks. That seems a long way off, too — even based on the current environment (what cable network could achieve what CBS has done with The Mentalist? Answer: none.).
When NBC announced its Leno plans my very first reaction was “that’s sad.” I reacted that way because I viewed it exactly as NBC giving up, and even sadder because from a financial perspective, it may have been the best move.
January 5th, 2009 at 9:48 pm
I think it is just another dumb move that the executives at NBC are making. They are in fourth place for a reason and have not had a good track record at coming up with stellar programming for their network. Their top rated program is NFL Sunday Night Football followed by Law & Order: SVU. Why are they messing with their only bona fide hit? It doesn’t make sense. I think they are embarrassed about the Tonight Show fiasco and this is their way of fixing it. It won’t work.
January 6th, 2009 at 7:00 am
@Adam, “When I think of crap I think of Dancing with the Stars and once you’ve seen one crime drama on CBS, haven’t you really seen them all? It amazes me that some people can watch nearly 70 episodes of CSI a year” – I could not agree more. But apparently, we are in the minority via Nielsen ratings methodology
.
This Leno case is the most interesting study yet in the “ratings versus profits” paradigm. I am curious to see the results as they unfold. I don’t think I would really notice if all networks discarded 10pm scripted programming. FOX, the only network I watch “live” (not DVR) these days, never had that hour to begin with. Cable’s original programming could really build the 10pm time slot with more “on the edge” fare (less worries of censorship due to late hour and cable vs. over-the-air FCC regulations, yadda yadda yadda).
With CBS’s giant array of 10pm success stories (mostly named CSI: Your City Here), are they the network that has the “most to lose” if everyone goes non-scripted/daily talk-show style at 10 p.m. ? Or, if this Leno route is a dismal failure, does that cement CBS as the ratings (therefore “successful”) behemoth for years to come? Curious indeed.
January 6th, 2009 at 7:06 am
If Jay’s show is successful and the other networks follow suit. I guess I will be a cable show lover for life watching intelligent well written dramas such as Damages. Bye, bye broadcast tv!
January 6th, 2009 at 7:18 am
I could see ABC pulling a similar move in 2011 (or even 2010) – with the demise of Boston Legal, they have zero scripted shows with any history at 10pm. The problem being that they lack anything pre-existing to place there.
CBS, on the other hand, will stay pat for at least 4-5 years; when all you need to do is cut a check for another season of Eleventh Hour, why change things?
Besides, it’s not like this is the death of TV – the networks will simply move their 10pm programming to their cable nets. Yes, the advertising rates are worse, but they also get subscription fees from the cable providers as well.
(CBS’ lack of a cross-demographic basic cable network to develop new dramas on will also factor in to their staying status quo the longest.)
Besides, this handwringing ignores that there have been serious stretches where there already were few scripted shows on a network at 10pm – recall the aftermath of the previous strike, where ABC aired 20/20 / Primetime news shows on quite a few days.
January 6th, 2009 at 8:08 pm
Tom, you raise valid points. CBS is the only network that’s got several bona fide scripted “hits” at 10 p.m. at this point. FOX never had the timeslot; plenty of news programming already airs there on ABC; CBS and NBC have gone the news route sometimes too.
Is there a lot of handwringing here over something that’s … well, already on the decline everywhere but CBS?
Has NBC admitted failure, or are they the ahead of their time here? Is the Leno experiment a means of giving up, or is it merely a way of confronting the inevitable?
Is CBS the strongest network, therefore they have 10p.m. hits? Or are they the last remaining dinosaur, who got lucky with a CSI franchise that can sustain them a while longer? Is CBS clinging to the “if it ain’t broke don’t fix it” mantra, as their current system ain’t broke? Or do they simply know what works better than other nets? Time will tell I guess.
January 7th, 2009 at 2:37 am
You also have to remember that it’s the C3 commercial-pod ratings that count, not the programme ratings, when it comes to converting them into ad money. I strongly suspect that a chat show like Leno’s will be less effective in retaining its audience during a commercial pod than a drama series would.