Network TV Economics

The economic picture for prime time news magazines appeared to be improving as well. Here, too, it is impossible to view advertising revenue as an absolute measure given ad bundling and other strategies, but there are some signs that surviving programs have benefited from the thinning of the herd since the category boomed in the late 1990s.

NBC’s “Dateline” is now the last of the magazine franchises producing two editions each week. Unfortunately, according to data from TNS, “Dateline’s” other distinction is the continuing decline of its advertising revenues. Over calendar year 2004, it earned $232.3 million in advertising revenue, down from $237 million in 2003, a 2% decline. But to keep things in perspective, that 2% is substantially less than the decline in the rest of NBC’s primetime schedule.

CBS’s “60 Minutes,” in contrast, climbed 21% in 2004 to $108 million in advertising revenue, from $89.3 million in 2003. Last year, we noted that some insiders suggested that the decline in “60 Minutes’s” 2003 advertising revenue and the apparent increase in the advertising revenues for “60 Minutes II” was caused by CBS’s decision to alter the ad rates for both broadcasts4 — in essence, boosting the new program at the expense of the flagship. That makes determining the size of “60 Minutes’s” rebound murkier.

Data from TNS shows that “60 Minutes II” (which alternated between being 60 Minutes II and 60 Minutes Wednesday and even changed its broadcast night) had a 12% decline in advertising revenue, from $70 million to just under $62 million. And while “60 Minutes II” was cancelled in September of 2005, a projection based on data from TNS indicates that the advertising revenues assigned to the program would have continued to decline.

The CBS News program “48 Hours Mystery” appears to be another sign of the network’s improving fortunes. The program’s advertising revenue has climbed 41% compared to calendar year 2003, moving from $55.7M to $78.5M.

In calendar year 2004, meanwhile, ABC’s “20/20” showed an ad revenue climb of 10%.

Three things make up a magazine show’s ratings success, network officials say: program content, the lead-in show that precedes it, and the show’s competition.

CBS’s “48 Hours” has benefited here. NBC’s “Dateline,” especially on Friday nights, suffered because it was up against a big CBS hit, “Ghost Whisperer.”

“Nightline,” which had a revenue drop in 2003, regained some ground in 2004. Revenue increased from $69.5 million in 2003 to $75 million in 2004. Projecting to the end of 2005, it appeared that that figure would hold. (Most of the year, of course, was the older single-topic format for “Nightline.” The new program was launched in November.)

News Magazine Revenue, Select Programs

1999-2004

Design Your Own Chart

Source: TNS Media Intelligence/CMR unpublished data, www.tnsmi-cmr.com

The Message of "Nightline"

The case of “Nightline” deserves a moment for its implications about the economics of television journalism today, both in the move of Ted Koppel and a team of his producers to the cable channel Discovery and in their departure from ABC.

“If you want to do serious journalism in this country, this is the best place we could possibly find,” producer Tom Bettag was quoted as saying about Discovery.5 Something significant is at play here.6

Cable has a very different economic model from broadcast TV. Broadcast is financed entirely by advertising. Cable TV adds subscription fees to the mix —fees paid by cable operators and fees paid by individual households. Channels like Discovery that carry advertising often make half their revenue from fees paid by cable operators who want to include the channel in their system packages. Premium cable channels such as HBO are funded entirely by “premium” subscriptions paid directly by viewers.

Thus, any program that can tip the scales to make a cable operator treat a cable channel as indispensable can have huge financial value. Consider the impact the “Daily Show” with Jon Stewart had in raising the profile of Comedy Central.

In other words, a program that changes viewer perception of a channel can have a value in cable far beyond whatever ratings it gets for its own episodes. It can influence the brand.

In this sense, Koppel and Bettag may be doing more than finding a place to keep doing some documentaries. They may be trying to pioneer a new value for serious journalism elsewhere on television than where it currently exists.

If they are right, documentaries about major issues of the day, once a major element of network news departments but for so long their disappearing feature, could bring an economic value to cable.

That would represent a major change and add to the opportunity that Koppel, Bettag and their colleagues are pioneering.

Interestingly, Koppel made it clear that he thought the appropriate venue for this was not the traditional cable news channels (CNN, Fox News, MSNBC), which historically have not made a mark in documentaries. “I think there is a tendency on the part of some of the cable networks to be in a desperate race to be first with the obvious,” he said.7

Just as interesting is the fact that Koppel ended up at a standard cable channel, not a premium one. On a premium channel, where there are no commercials, a single program may be enough to tip a nonsubscriber into becoming a subscriber. How many people watch “Curb Your Enthusiasm” or “Deadwood” on HBO because they first subscribed to get the “Sopranos”? Koppel’s decision suggests that documentaries could do more to help a channel’s negotiations with cable operators than as a marketing tool to attract individual viewers.

The other implications of the “Nightline” situation relate to the reasons ABC wanted to scrap the program’s format, which led to Koppel’s leaving.

ABC executives had said they wanted a program that would appeal to younger audiences, something hipper and faster-paced, and that if “Nightline” couldn’t do that, it might be replaced with an entertainment show. Implicitly, the network is arguing that every program in network TV is now viewed as its own profit center. Whatever can maximize revenues in a given time slot is the goal. That was the signal that Disney sent in 2002 when it courted but failed to lure the comedian David Letterman to replace “Nightline.” Disney executives made it plain that if Letterman could earn more money for the network in that time slot, he was preferred.

In other words, while there are economies of scale, the notion that the sum of a network is greater than its parts is now much diminished. It used to be that way, when the government viewed broadcasters as public trustees who had an obligation to present news even if it was a loss leader. In the era of deregulation, that is no longer a concern. Koppel himself made it clear that that was his understanding now. ABC had once allowed him to do four prime-time documentaries a year, just as it allowed its prime anchor, Peter Jennings, to do several. “They were indulging me,” Koppel told the Washington Post upon signing with Discovery. “They were indulging Peter.” Tom Bettag then added, “And the days of indulging are just about over.”8

Adding to that is the excessive concern at the networks, Koppel and Bettag argued, with luring younger viewers because of the Madison Avenue conviction that they are the most valuable audience.9

Aside from what they say publicly, is this really how networks now operate? It is difficult to argue to the contrary. Adverse publicity might keep a network from changing its programming if it thought it would cast management negatively, be perceived as hurting credibility, or hurt the stock price. News accounts at the time quoted Letterman’s people as saying he did not want to be seen as the guy who killed “Nightline.” Would such negative publicity dissuade a network from killing a news program today?

That might be the case for only one particular program — the nightly newscast. A network might be loath to be the first to abandon airing that one even if it thought it could make more money producing something else in the same time slot. Given that all three networks run the evening news, the first one to kill the program would probably generate significant bad publicity and risk a public backlash. Decline or no, the combined evening news audience is still more than 25 million viewers.

But that might be the last exception now.

A second argument also floated above the “Nightline” case: Were Koppel and Bettag saying that network broadcasting in general was no longer a place where viewers could find serious long-form journalism at all — in any time slot?

That notion is probably an exaggeration.

Koppel himself never said that outright. The closest he came was in the New York Times, where the reporter Bill Carter noted: “Mr. Koppel said that no broadcast network would be interested in the kinds of programs he and his team wanted to make, which he said would occasionally take the form of one-hour documentary-style special followed by a two-hour town-meeting discussion. If he asked for three hours of prime time on ABC or even on a cable news network like CNN, Mr. Koppel said, he would have no chance of success. ‘That kind of programming simply doesn’t fit anymore’ on network television.”10

Certainly there isn’t much in the way of long-form documentaries, examining significant topics or events of the day, on commercial broadcasting. What is wrong with the health care system? Are drug companies helping or hurting the situation? Are the new Medicare reforms working? Is the situation in Iraq getting better? What effect will the war have on the U.S. economy?

Commercial broadcast television news was once an occasional place for just that kind of broad stock-taking. It has not been for some time. Partisan documentary theatrical movies, on the other hand, are now more popular than ever.

But while such programming is diminishing, it is probably unfair to suggest that there are no serious longer pieces on the networks at all of the kind to which “Nightline” used to devote 20 minutes or so. As we noted in earlier content reports (see 2005 Network TV Content Analysis) such work does occur on programs such as “60 Minutes,” Sunday Morning and occasionally on certain topics by certain reporters on other prime-time magazines. It is shrinking. It seems too broad to say it is gone.