Commentary
NBC's Real Late-Night Picture: Network Was Losing Money
- by Wayne Friedman , Staff Writer, January 22, 2010
This was the second part of the "Tonight" financial equation, discussed by Jeff Gaspin, chairman of NBC Universal Television Entertainment, when speaking to Broadcasting & Cable recently. The first part? That "The Jay Leno Show" was making money -- a fact Gaspin mentioned when he spoke at the TV Critics meeting earlier this month.
Now this begins to makes sense far beyond what NBC affiliates were complaining about. It was the first time the 56-year-old "Tonight Show" has ever been on track to lose money. Even when Jay Leno was struggling to find his way during his first year as "The Tonight Show" host back in 1993, the program continued to make money (but no doubt less than with Johnny Carson).
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Here are the lessons learned: You can't just survive with young viewers on big broadcast TV. No, you need older adults, because there are more of them.
All of which means the bulk of TV advertising money, to no one's surprise, is still behind adult 18-49 viewers. This sum dwarfs the money targeting the cooler, younger, 18-34 demo.
There's been a lot of buzz around O'Brien's strong - and, in social media areas of late -- loud, young viewers, who have come to the show now, and who previously weren't there when Leno was running things.
This has led more than a few columnists, including many here at MediaPost, to talk up the possibility of O'Brien as the Internet's first real original programming star.
But if NBC was losing money on O'Brien, how could he make money on the Internet? Well, the thinking isn't necessarily one of a financially sound deal - at least initially.
For one, you would need to convert more media agencies and advertisers into believing in the power of Internet metrics. Second - and perhaps more important -- one would need a big benefactor, someone who believed that down the road O'Brien would in fact reap big marketing rewards. Third, how about $1,000 CPMs, maybe?
The near-term reality looks a little more down-to-earth. The choice probably comes down to whether the average Fox affiliate would do better with an hour of O'Brien at 11 p.m. than with back-to-back airings of, say, "Seinfeld," "Two and Half Men," or "The Office."
In years past, the only thing that mattered to broadcasters was how to be more profitable. Now it comes down to not losing money. (see NBC and the Vancouver Winter Olympics and some $200 million in red ink). That's the TV business sense today. Longer term, there may be better business sense with the Internet for someone like O'Brien.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
This endgame of Conan and Jay reminds me a bit of Howard Stern's move from CBS Radio to Sirius. Granted, the circumstances around their respective departures (Jay and Howard) are different, the results are the same. They are both returning to their zones of comfort. While Jay may have been profitable at 10 PM, it was like fitting the proverbial square peg in the round hole. And while Howard enjoys the freedom of satellite radio, the financial upside of a limited audience, as well as its inability to make news and be a promotional base, Sirius ultimately was a bad fit for Howard.
As for Conan, he is a tempting innovator for internet success. With his hipster rep fully burnished through this tawdry affair with The Tonight Show, he could be the first true internet success story. But that would be a risk that relies heavily on convincing his audience to become regular viewers online and getting legitimate big money advertisers to start to making a transition to the web.
There's much to be written in this continuing saga, but it is an exciting time to be Conan O'Brien, beyond being $30 million (give-or-take) richer.
NBC's revenues are down 30%. Perhaps they should look elsewhere than weeknights at 11:35 for a fix.
Hmm. Would a Fox affiliate prefer several spots to sell in an hour of reruns (e.g., Seinfeld/Office) or a handful of spots to sell locally in a Conan talker? Don't stations make more money selling local spots in shows they buy? 10 minutes, assuming a national minute held back in each sitcom, equals 20 spots to sell in sitcoms. Versus 5 (maybe) minutes of local avails in a network show, equaling 10 spots? I'm thinking 20 is bigger than 10, even after the cost of the show.
As for the Leno/Conan/stern thingy, a old friend would quote,"Don't cry for me, Argentina".
Losing money on The Tonight Show? I just don't believe it.
Is this real accounting or Hollywood accounting (where even blockbuster movies never show any "profit" on the books)?
If you could tell me a URL where I could see Conan's new monologue everyday, I would sit through 30 seconds of commercials before the monologue came on. Ditto for Leno. Do such URLs exist at least for day old monologues?
I wouldn't watch US TV at 11:35PM even if I could.
TV and Internet are merging. I give it another 2 years before the concept of TV time slots is completely out of date. All television will be pre-TIVO'd - like bread, freshly baked TV shows will jump on the shelves with 30 second and 15 second TV commercials that viewers cannot easily avoid. Leno and Obrien can both release shows at 11:35PM and broadcasters like NBC can put them both on the shelves at the same time the way Kelloggs will put Apple Cinnamon Pop Tarts next to Frosted Cherry Pop Tarts.
IMHO, this Battle of the 23:35 Time Slot has been surreal - like a battle to see whose name goes on a new style of buggy whip.
I cannot wait for the day when there isn't a sizable senior population making broadcast TV profitable. What if Leno were being chosen because he is more politically correct than Obrien (in this case, this is probably not a major factor but could have been)?
I would put a caveat on the opinion that males 18-34 are of little interest to advertisers in general - I think it is more that the advertisers are seeing a rapid abandonment of the TV medium by this demographic and they would expect the more financially successful members of this demographic to have already long-ago abandoned the habit of watching broadcast time-slot TV.
Conan was smart to refuse to go back to the after-Midnight slot. The young male crowd that watched Conan would have had their careers threatened by not getting enough sleep after watching him every day in the after-Midnight time slot. This tech savvy young crowd could have been expected to be the most likely to want to switch to an Internet format where they could watch Conan at a more reasonable time to fit their personal lives.