Thursday, June 12, 2008

Your favorite show got canceled. Whose fault is it?

On my favorite satellite TV forum, someone complained about a show being canceled because it obviously had a following. The thought was that the fault lies with the ratings.

I guess we lose sight of why there are Nielsen ratings at all?

Nielsens are used to sell advertising. Remember you, the viewer, don't pay anything to watch OTA networks. So to cover the cost of buying the show, owning and operating a TV broadcast network, and owning and operating a TV station, advertising is sold.

The networks recently went through the "upfronts" for the new season, which means that they sold ads slots upfront. The most "valuable" slots are primetime Sunday through Thursday, other than special events. The problem is the broadcast networks are in trouble. To sell ads, they used to have to convince advertisers that someone watched the show. Now, with the advent of DVR's, the focus is on whether someone watches the ads.

When you hear "Jericho is brought to you by Frisbee" that is literally the truth of the matter. "Frisbee" is paying all the basic costs based upon the premise that someone is watching the ads and will buy a "Frisbee." The only evidence they have that anyone watched is the Nielsens or data from another source.

Consider this. Typically Jericho in its first season had average ratings between 20% to 25% of American Idol. Jericho probably cost double per minute to create. If nearing the end of the first season CBS said to Paramount Network Television we can generate enough revenue to pay you 20% of your production costs, the Paramount folks have to consider: "Will we be able to generate enough revenue through DVD sales and syndication recover our money and make a profit?" As you now know, the answer was "no."

Consider Friends. Any half hour show shot on a set is cheap to produce except for stars salaries which initially weren't out of the ordinary. During the last season, members of the cast were getting 7 figures per episode. How could a network cover those costs with ad sales in a 30-minute show? American viewers of episodes during all seasons were huge: 25 million, plus or minus. Buying a 30-second spot was an expensive buy.

But NBC didn't pay all the costs incurred by Warner Brothers Television for the last season of Friends. Syndication revenues worldwide for the show were huge. Even in America we started seeing episodes from early years in syndication while the last few seasons were being produced. And syndication is still hauling in the dough. DVD's were released to big sales and rereleased for continuing sales and released in box sets.

It's all about the money. Nielsens? Advertisers (you remember, the folks who bring you the show) now want second-by-second info from boxes. They want to know if you watched the ad, not the show. The show is irrelevant. If a show gets 6 million live and a 7-day 40 million DVR viewing, the assumption is likely to be that it had a live equivalent advertising influence of 7 million, maybe. We time shifters are killing OTA TV.

Those of us who prefer scripted TV have to start hoping that the average per-episode production budget for scripted shows get realistic. At the outset they need to be budgeted for cable-level Nielsens on USA, ABCFamily, Fx, or SciFi, assuming some potential for syndication and moderate DVD sales.

Yes, we watched Jericho. We'll never watch it in syndication as we saw all the episodes. We'll never buy the DVD's. And we didn't even buy some peanuts to send to CBS.

If there is a Nielsen household representative of ours, the fact is sometime within the week they appeared we watched Jericho and the shows opposite it. Our representative households skipped the ads on all of them if they did what we did. So if all those shows get canceled it's the fault of we viewers.

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