September 22nd, 2009
You’re likely to read a lot of stories about Jay Leno’s new prime-time show bleeding to death as its viewership drops from the high-water mark of its premiere. I don’t know that you can take such stories seriously.
Leno’s actual rating numbers matter very little to NBC. What really matters is the show’s profit margin, which NBC is not likely to share, but which could be very high, despite Leno’s low numbers. Or it could be very low. Either way, we’re unlikely to know until we see if NBC keeps the show around for three or more years. If so, then Leno is making a good buck; if not, then he isn’t.
Think of the typical cost structure for an hour of scripted TV. A drama such as Heroes or L&O might cost anywhere from $1M to $5M an episode, which buys you 22 hours of programming. Leno’s reportedly costs less than $2M per week–that’s five hours of programming, which never has to repeat.
Factor in the development costs which Leno saves the network–with fewer hours to program each week, they can spend less money on pilots. It would not surprise me if even the cut ad-rate on Leno’s low numbers wind up making good sense for NBC.
Remember that this was a defensive programming move by Jeff Zucker. He wanted to (1) substantially trim costs in the face of a monster recession that might well alter the entire face of network economics; and (2) keep Leno from another network, thus protecting NBC’s very profitable late-night franchises. A pretty gutsy call on his part. We’ll see if the numbers–dollars, not viewers–prove him right.
Update: L.A.-based Galley Friend, J.E. writes:
There’s some truth to your post, but NBC is–and has to be–desperate to get its ratings up. If direct profit were all that mattered, NBC would be programming its Bravo content. But with broadcast networks, overall network ratings directly affect ad rates across the entire primetime schedule. If Leno could actually pull up the numbers, the network’s other shows would be able to charge more. Now, it may be that NBC soon abandons the pretense of offering quality scripted
shows. But as long as 30 Rock is on the air, losing money hand over fist for NBCU, that’s just a theory. It’s not unimaginable that NBC will knock Conan off the air a year from now, then give Jay $50 million/year to go back to 11:30. Zucker would have to resign in the process, acknowledging he was wrong as a condition of his platinum parachute. Really, it’s hard to think of a single good decision he’s made. I have no idea why he still has his job.Just in terms of ratings, this NBC situation reminds me of what was happening at ABC in the early 70s. Twenty years on, it was still the weak sister of primetime, unable to catch fire or even light a spark. Then in came Fred Silverman. NBC thought it had a new Fred in Ben Silverman, but he turned out to be Jimmy Swaggart.
Sudhir September 23, 2009 at 1:44 am
This is an a fairly standard take on the Leno experiment — it all comes down to profitability, it doesn't matter what the ratings are, blah blah blah. But you've failed to account for the fact that there are multiple costs associated with this move besides production, such as leaving a very meager lead-in for NBC-owned affiliate news programs and the potential cannibalization of The Tonight Show's guests and content.NBC has set the yardstick for measuring success — they claim that if Leno can pull in his old Tonight Show ratings at 10pm, the show will be a success. By that standard (which is incredibly low), we'll know if this move is a success long before your 3 year time line.