It's not whether the show is 1st or 4th....

On a forum recently a member raised a question related to the suspense of what shows will not be picked up for another season:

So considering the 4 major OTA networks (ABC, CBS, FOX, NBC)... someone has to be in 1st place, and someone has to be in 4th place no matter how good or bad the show!

So I guess I wonder... when a network sees a show #4 in the ratings for a night... what are they hoping for? Would they rather sink the slot by putting Dog-Walkers Idol and put no money into it? Or try to make it better by upgrading the quality of the show?

The issue isn't rankings, it's ratings. The Live+SD (Same Day) Nielsen ratings mean everything because they determine the money flow and it's all about money.

Based on the Nielsens, last Monday at 8 pm there were 47 million Live+ SD viewers watching broadcast TV while last Friday there were only 21 million. On any night, the 10 pm slot delivers half the total of 8 pm viewers.

What is a network to do in...say... a Monday night 8 pm slot? If the top 4 networks were within a couple of million total viewers and 1.0 in the demos, it wouldn't matter who is 1st and who is 4th. But "Dancing with the Stars had 17 million viewers while "Chuck" had 6 million. Let's take a closer look at the Monday facts.

"Terminator: The Sara Conner Chronicles" on Fox could never compete with ABC's "Dancing with the Stars", but "House" is delivering for its advertisers Live+SD viewers in the 18-49 demo (4.3), even though "Dancing" (3.8) has higher total viewers 17 million to 11 million.

The CBS comedy lineup at that time delivers at a relatively low cost a consistent audience, both total (9.3 million) and demo (3.4), while "Chuck" at a relatively high cost can't deliver the audience numbers with its 5.95 million and 2.2. Those "Chuck" numbers are not meaningfully higher to advertisers then The CW's "Gossip Girl" which is a low rent production on a low rent network with a relatively narrow target audience which it delivers to advertisers.

There is a huge industry out there devoted to advertising. Ultimately, they decide where the ad dollars go, not the networks. The advertisers want to feel they are getting some return from their investment. The networks have to deliver to the advertisers an audience based on the Nielsen Live+SD ratings. Subsequent DVR viewings don't count in the ad world.

For me the time slot of the show is irrelevant. I'm a 100% DVR viewer, mostly not same day and many not even in the same season. I'm of zero value to advertisers and therefore zero value to the shows I watch. Of course, my wife and I are not in the demo and aren't a Nielsen household and make no impact anyway.

Some execs at NBC love "Chuck". There are 6 million consistent viewers who love "Chuck". But the broadcast TV advertisers want 10 million viewers before they would pay what it takes to offset the costs of delivering an episode of "Chuck." GE, NBCU's parent company, isn't interested in the personal tastes of the NBC execs or the 6 million viewers. They're interested in net profit.

Then you get to the cost of the shows. Some shows carry star costs, such as "Brothers & Sisters" in which a number of stars probably get well over $100,000 per episode. But shows like "Chuck" or "Terminator: The Sara Conner Chronicles" don't have many highly paid actors, though the top stars are likely to be getting $80,000 and up per episode. Both of those shows have heavy action production costs, special effects, etc. which increase the total cost per episode, costs that don't exist in "Brothers & Sisters" which is pretty much shot like a soap opera. All these shows cost enough that the networks have to place them where they can get top advertising revenue. An episode of your favorite broadcast network show costs $500,000 (cheap game and reality shows) to $3 million (high end scripted drama).

NBCU executives two years ago looked into their crystal ball and said this financial model won't work by 2010 even taking into account DVD sales, on line viewing, syndication, foreign sales, etc. They've shifted the focus to cable channels.

A ceiling appears to have been set on per-episode production costs of $750,000 for the best drama for cable, with a desired average of under $500,000. USA can market 13 episodes of four to six of these in any one year and make money.

In some cases like "Monk" and "Law & Order:Criminal Intent", the show earns money for NBCU on both USA and NBC so the production costs could run a little higher. I believe that the goal at NBC is cutting by half the average cost for an hour of prime time broadcast TV by 2010.

Fox has taken a different "bean counter" mentality - deliver the audience or you're out. Each year they go with a certain number of higher budget scripted shows with the proviso that a show that can't make a target per minute net revenue is a quickly replaced show. In some cases, a big advertiser might make a commitment through product placement and commercials that keeps a show on. But most advertisers will bail on a show with lower ratings and, as a result, Fox focuses on those ratings.

There is an alternative - a premium cable channel offering three hours of scripted series shows a night - which I proposed in a previous blog post. HBO is offering a smattering of shows. And DirecTV appears to be doing the same on its Channel 101. But nothing as ambitious as my proposal has been seen in "the biz" journals.

The New Sprummer Scripted TV Season

It has become apparent that the broadcast networks have designed a two part season that begins in earnest September/October and ends April/May with a mid-year mini-shift that occurs January/February. This is the Fall/Winter Season and appears to be about 9 months long and which I now name Fallter, pun intended.

The cable networks appear to have designed a season that begins April/May and ends September/October with a mid-season mini-shift that occurs somewhere in the middle. This is the Spring/Summer Season and appears to be about 6 months long and is what I now name Sprummer.

Obviously the two seasons overlap as we don't have a 15 month year. And the cable networks tend to show half of the seasons episodes of a show beginning in the Sprummer airing the second half beginning around the first of the calendar year during Fallter, when the broadcast networks are fumbling to get replacements for their faltering shows.

So we have a new Sprummer Season already under way. Based on available information the cable channels, with little help from the broadcast networks, will give us a solid scripted show lineup. While the following list is not complete, and certainly many shows are far from potential Emmy winners, it is pretty impressive given what Summer TV offerings used to be like:

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Day	Series Title	Premier
Network		Status
SUNDAY
AMC	Breaking Bad	Currently Airing
AMC	Mad Men	Not Scheduled
HBO	No.1 Ladies Detective Agency	Currently Airing
HBO	In Treatment	Currently Airing
HBO	True Blood	June 14
Lifetime	Army Wives	June 07
Lifetime	Drop Dead Diva	July 12
NBC	Merlin	June 21
USA	Law & Order: Criminal Intent	Currently Airing
USA	In Plain Sight	Currently Airing
MONDAY
ABC Family	Secret Life American Teenager	June 22
ABC Family	Make It or Break It	June 22
Showtime	Weeds	June 08
Showtime	Nurse Jackie	June 08
TNT	The Closer	June 08
TNT	Raising the Bar	June 08
TUESDAY
ABC Family	10 Things I Hate	July 07
ABC Family	Ruby & the Rockets	July 21
ABC Family	Lincoln Heights	August 04
FX	Rescue Me	Currently Airing
Syfy	Warehouse 13	July 07
TBS	My Boys	Currently Airing
TNT	Saving Grace	June 16
TNT	HawthoRNe	June 16
WEDNESDAY
ABC	The Goode Family	May 27
ABC	Surviving Suburbia (from hiatus)	May 27
ABC	The Unusuals (from hiatus)	May 27
NBC	The Philanthropist	June 24
TNT	Leverage	July 15
TNT	Dark Blue	July 15
THURSDAY
NBC	The Listener	June 04
USA	Burn Notice	June 04
USA	Royal Pains	June 04
FRIDAY
BBCA	Hotel Babylon	Not Scheduled
Fox	Mental	May 22
Syfy	Eureka	July 10
USA	Monk	Not Scheduled
USA	Psych	Not Scheduled
SATURDAY
BBCA	Primeval	May 16
BBCA	Robin Hood	Not Scheduled
BBCA	Torchwood	Not Scheduled

"1948 All Over Again" Revisited

On November 12, 2007, a six part series on the future of scripted TV and the home entertainment industry was posted here which contained the following:

Neither television industry executives, nor the writers, nor any of us viewers know where scripted episodic drama and comedy programming will end up within five years. We need to think in terms of media, source of funding, format or survival.

Since then significant changes in the industry provide some directional arrows pointing to how the future might look. And some of these arrows are clearly pointing to a revolution in home entertainment.

It is clear that this revolution does resemble the period from 1948 to 1958 when television displaced radio and movie theaters as the source of entertainment and news for Americans, and audio recording tape gained a foothold on home reproduction of music sources and serving as a portent of the impact of the DVR.

The difference is that the 50 years that have passed did result in an acceleration in the effects of technology on American life. This requires business to adapt rapidly to changes in how Americans live which occur much more rapidly.

Consider for a moment the iPod. Introduced in October 2001, it and/or the iPhone (and similar devices) are embedded in 21st Century world-wide culture as a means of communications, listening to music, and viewing photos and video, as well as a means of creating photos and video.

Yawn. So what else isn't new?

Somewhere in all this technological change, the owner of one of our most venerable broadcast television networks - NBC - has essentially declared the old model of broadcast television dead. As noted here earlier this month, top management of GE and its subsidiary NBC Universal (NBCU) have embraced the company's niche cable channels.

This fall NBC will reduce the number of week day hours of prime time available for scripted programming from three to two by assigning the 10 p.m. time slot to a Jay Leno televaudeville show, aligning its programming model more with Fox and The CW then ABC and CBS.

And at an April 8 Syracuse University’s S.I. Newhouse School of Public Communications symposium exploring the pioneering work of executive producer and network television executive Fred Silverman, Silverman himself speculated that the networks will eventually give the 8 p.m. slot back to the affiliates to fill with local and syndicated programming tailored to the region they serve or, in he case of he less imaginative, reruns. (He also speculated on the end of network-provided daytime soap operas.)

GE through NBCU has also embraced the web for presenting professional TV productions and movies, most significantly its Hulu.com system developed in partnership with News Corp's Fox. (It is a system, not just a web site, as others can feed its content through their own web sites including most notably Comcast's Fancast site which is part of Comcast Interactive Media.)

According to a recent Business Week article, many expect Disney/ABC to take an equity stake in Hulu. In the meantime, in 2008 CBS Interactive bought the parent company of TV.com announcing in December that the site would add and emphasize an HD video gallery with full episode streams.

Now the media conglomerates are negotiating with the cable and satellite companies to create a model that allows access to on-line conglomerate produced video only if you are a subscriber to a cable/satellite package that contributes to the revenue stream supporting the cost of producing that video.

And the cable companies this year will be introducing "tru2way" enabled set-top boxes allowing subscribers to easily play games, browse the web, and chat, as well as stream on the bandwidth assigned to TV newer shows that aren't even on line.

Meanwhile, San Francisco Chronicle TV columnist Tim Goodman recently advocated "the Netflix solution", meaning that in these hard economic times folks should drop the premium channels at $150± a year each and selectively rent or buy series show box sets. And Goodman even suggests viewers may want to drop cable altogether.

What's a fan of scripted TV to do as these changes begin to snowball? The upcoming Summer Season will be discussed in the next post.

Proposal: A Scripted TV Premium Cable Network

The struggle to sell scripted TV series has become more difficult in the current economy for obvious reasons. And it appears that it is easier to recover the production and delivery cost of an hour of news, sports, and televaudeville (any show other than news and sports that doesn't depend upon professional actors performing scripted scenes for its entertainment content).

From my perspective, this situation is creating an artistic loss. For instance, the allocation by NBC of a Jay Leno televaudeville show in the week day 10 pm slot represents the the loss of financial support for five 26-episode scripted programs per year.

This situation in broadcast TV is only going to get worse, not better. So I would like to offer a solution. We need to create a "scripted TV series" cable premium network. For discussion purposes, I'll call it the "ScriptTV" network.

Over two 26-week seasons per year ScriptTV would during the time period of 5 pm - 2 am Eastern Time run three hours of new one hour or 30-minute scripted episodes of TV shows without advertising. The cycle would look like this:

The economic model for ScriptTV would look something like this:

• The remaining 15 hours per day would be filled with syndicated reruns of older TV series supported by 360 seconds of advertising per hour of show.
• The ScriptTV channel would be priced to subscribers by cable and satellite systems at $12-$15 per month; subscribers also would have access to its web site to stream episodes of shows aired in the past 52 weeks.
• The ScriptTV channel would pay up to 80% of the production costs for each show and receive up to an 80% ownership interest in the show along with the first showing rights worldwide; each show's season would be offered as an exclusive for one year to broadcast and non-premium cable networks to be shown after the season run on ScriptTV; after any network exclusive expires, the show would be offered as a syndicated show and be sold on DVD.

In order to secure subscribers, ScriptTV would adopt the following policies:

• Of its three hours of nightly original scripted programming, ScriptTV would seek to offer on average one hour per night of family-oriented programming and two-hours of "grownup" oriented programming.
• Each show's producers/creators would be contracted to create a 26-week story arc with plans for a full-resolution series end; however, ScriptTV would have the option to pick up an additional full season before the airing of the 20th episode which might require alteration plans for the season's last two or three shows.
• ScriptTV would not cancel any show in mid-season.
• ScriptTV would regularly poll its subscribers regarding its programming.

HBO has 38 million subscribers. This business model would not need more than 2 million subscribers to succeed.

NBC's Degenerative Disease

"Yes, that ad supported NBC channel you watch now may degenerate into only news, sports, and televaudeville." - The Lost Scripts, November 12, 2007

When I wrote the statement above, it was clear to me that Jeff Zucker, President & CEO of NBC Universal, had plans. They were a bit fuzzy at the time, but the hints were there. Much has come into focus since then. But then in March at the Media Summit conference Zucker said: "We are, first and foremost, a cable network company." GE's CEO Jeff Immelt discussed the situation in the GE 2008 Annual Report:

NBC UNIVERSAL earned about $3 billion last year. It’s likely to be down in 2009, as we expect the network environment to be particularly tough. But cable, more than 60% of our earnings, is going to continue to be a source of strength, building on its ratings success in 2008. Our movie business has already invested in new films for next year, which will also support DVD sales. Our strengths are good content, a strong cable focus, and international distribution. Jeff Zucker and his team have done a great job in repositioning NBC Universal to win in the rapidly changing media landscape.

If basically you are a broadcast network viewer, you should be aware that GE's CEO essentially dismissed its broadcast TV subsidiary NBC and embraced cable. NBCU cable channels include, among others, Bravo, Universal HD, Chiller, CNBC, MSNBC, Syfy (formerly SciFi), Telemundo, Sleuth, and USA. NBCU is 25% owner of the A&E television networks which includes, among others, the cable channels A&E, History Channel, and the Biography Channel.

You need to be aware that NBCU owns a strong, competitive general programming cable network - USA. It's had great success with scripted shows. Recent original scripted shows have included: The 4400, Burn Notice, The Dead Zone, In Plain Sight, Monk, Psych, The Starter Wife. Some of these shows, indicated in red, were/are produced wholly or in part by an NBCU subsidiary.

NBCU's apparent business model is "balanced vertical integration" meaning it has some control over it's products from the raw materials to delivery to the customer.¹ (Technically, cable and satellite TV companies "retail" the USA and Syfy channels to the public. But, in fact, those channels directly sell the product to advertisers and to the cable companies. They then fund their own marketing to attract and retain viewers.)

So will the broadcast arm of NBCU - NBC - really become only or mostly news, sports, and televaudeville as I predicted in November 2007?

Consider what NBC is doing. They have dedicated the 10:00 pm slot to a new Jay Leno show. Co-chairman of NBC Entertainment and Universal Media Studios Ben Silverman says it will be far more of a comedy show than The Tonight Show. Mike Pilot, president of ad sales for NBC has indicated that the new show will offer more opportunities for live commercials.

Having abandoned the traditional "upfront" ad sales system, NBC will hold an “in front,” apparently on May 4, when it will simply announce its fall prime time lineup two weeks before the other networks’ upfronts. According to reports, NBC will hold a comedy showcase on May 19, in the middle of upfront week and on the same day of ABC’s upfront presentation. The event will feature Jay Leno with comedy performers from NBC, including Conan O’Brien and Jimmy Fallon. It will be invitation only for advertisers and executives from NBC affiliated stations.

Theoretically, NBC has 14 hours of Sunday through Friday prime time left to fill this fall (17 hours if you count Saturday, but who does?). After it became apparent that under Ben Silverman tenure as head of programming the network's ratings crashed, in January 2009 Zucker brought in Angela Bromstad to be NBC's chief programmer of dramas and comedies. She is the one who moved Kings to Sunday and bought to make room for Southland. According to a Los Angeles Times article about Bromstad returning:

Kings which costs about $3 million an episode to produce, had been championed by Bromstad's predecessors. But Bromstad had doubts that a drama about a modern-day king who struggles with moral dilemmas and family conflicts would work on network television.

...Also on Bromstad's to-do list is the task of regaining the trust of Hollywood agents and producers who have been alienated by NBC's puzzling proclamations, such as when Silverman said he was "managing for margins," not chasing shows that would generate big ratings.

Returning to my 2007 premise, with Leno NBC has reallocated one-third of it's week day prime time (5 hours) to "televaudeville." And when a show like Kings tanks in the ratings, NBC hauls in Dateline, a news show, to fill the void. In fact, Dateline covers 4 hours of prime-time programming this week.

The only thing standing in the way of NBC stations becoming all news, sports, and televaudeville is Angela Bromstad. Bromstad has a tough job. GE's NBCU star net profit producing TV subsidiaries are the cable channels, not NBC. And GE likes net profit.

Which brings me to the remaining consideration, the local broadcast station. NBCU owns 10 local broadcast stations serving 26.6% of the "TV Homes" in the United States. Those stations serve the metropolitan areas of New York, Los Angeles, Chicago, Philadelphia, Dallas-Ft. Worth, San Francisco-Oakland-San Jose, Washington DC, Miami-Ft. Lauderdale, San Diego, and Hartford-New Haven. The more money these stations make, the more money NBCU makes.

It is likely that four issues will enter into the consideration for future programming decisions. First, how will programming proposals affect NBC's profit. Second, how will programming proposals affect the profit from those 10 broadcast stations. Third, how will programming proposals affect the public reputation of GE. Fourth, and last, how will programming proposals affect the welfare of the broadcast stations owned by others.

For instance, the preferences of viewers in Cedar Rapids and Dubuque, Iowa, representating 0.3% of TV Homes served by Quincy Newspapers-owned KWWL aren't likely to be considered in programming decisions.

And, in fact, the loyalty to the Quincy Newspaper folks will be very limited as even though they own six NBC affiliates in small markets, in those same markets they also own broadcast rights to at least one other network such as Fox and The CW. And in Wisconsin, they own five ABC affiliates.

Not in anyone's wildest dreams would the GE corporate structure cater to the Quincy Newspaper owners opinions instead of the NBC employee managed stations serving the New York, Los Angeles, Chicago, Philadelphia, Dallas-Ft. Worth, San Francisco Bay Area, Washington, DC, Miami-Ft. Lauderdale, San Diego, and Hartford/New Haven metropolitan areas.

Thus when the owner of the Boston NBC affiliate who owns the The CW affiliate in the same market and broadcast the new "This TV" network on a digital subchannel and who owns the Fox affiliate in Miami tried to rebel against the Leno commitment, NBC had virtually no qualms about threatening to pull its programming.

All future programming decisions are going to be determined mostly by what will earn the NBC owned stations in the large urban areas the most money consistent with what will earn NBC and it's production arms the most profit. Expensive scripted programming run at 10:00 pm returns poor profits for NBC and its owned stations. A Leno televaudeville show will be relatively cheap to produce, attract sufficient national advertising revenue direct to NBC, and attract high priced local advertising to the NBC-owned stations serving 26.6% of the "TV Homes" in the United States.

In raw numbers, the NBC stations will broadcast 4 fewer hours of scripted programming a week which represents a 40%+ drop over a year. In terms of the five principle national networks, it represents a 10%+ drop. Whether Leno will affect the ratings for ABC and CBS programming in those slots remains to be seen.

But if, as I suspect, it does produce greater profits for GE, that ad supported NBC channel you watch now may degenerate into only news, sports, and televaudeville. Those of us who prefer scripted programming will be forced to have more DVR's recording cable channel programming.

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    ¹Consider the USA show In Plain Sight. It's production company is Universal Media Studios. It's season one DVD is from Universal Studios Home Entertainment. Then we come to Hulu.com, NBCU's major web presence shared with News Corp. The new season of In Plain Sight starts next Sunday. If you need to catch up a bit, you can watch the last five episodes of season one at Hulu or the USA web site.
     Vertical integration isn't always the case. USA's popular show Burn Notice is produced by Fox Television Studios, a News Corp. subsidiary. In fact, if you poke around the web a bit you'll discover that some cross-pollination occurs between NBCU and News Corp. For instance, one of the production companies for the Fox Network's hit show House is an NBCU subsidiary. And you can watch the last five episodes on line at Hulu, the News Corp and NBCU owned web site.