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.