10 “Networks try to shake off a chilly fall,” was the headline of a story in USA Today on May 23, the day that marked the end of the 2012-13 TV season. The daily newspaper proceeded to explain that CBS averaged 11.9millionprimetime viewers a day and ABC 7.8 million. It also wrote that CBS reached 3.7 million viewers among ages 18 to 49. To those should be added 7.1 million average primetime daily viewers for FOX and seven million for NBC. Certainly, no one could call this a “fall,” because no matter what, broadcast television still delivers a critical mass to advertisers and it’s still the most effective, efficient and economical form of advertising. This is why CPM (cost-per-thousand viewers) increases yearly, now reaching $50.20. It is estimated that, for the 2013-14 season, unit prices will rise five percent for CBS, four percent for FOX and three percent for both ABC and NBC. Even if ratings drop drastically, as long as the networks are able to deliver a relative critical mass to advertisers, the business model continues to be a winner. Indeed, during the Upfronts CBS’s Leslie Moonves pointed out that broadcast TV “reaches people like no other medium on Earth.” Yes, the industry is changing, but what’s not generally understood is the fact that broadcast television has another moneymaking function: It is a conduit for producing high quality content that makes lots of money internationally. Let’s do the numbers: A studio produces for its own or other networks a one-hour primetime drama carrying a $1.5 million deficit. From that show, the network grosses an average of $7 million and nets $5 million (often with internal accounting). The studio then recoups the deficit internationally (including the 10 percent cost of doing business) and generates $1 million in re-runs with domestic syndication. In effect, an hour-long drama costs the studio/network $3 million, while generating revenues of $9.5 million ($7 million from the network, $1.5 million internationally and $1 million in syndication) bringing profits of $6 million after deducting distribution, development and interest costs. And all this is within a two-year period, with a library value that continues to appreciate over the years. For a studio without a U.S. TV network, such as Sony Pictures, revenues per show produced are lower than those with a network (CBS, Disney, Fox, NBCUniversal, WB). Perhaps this is one of the reasons shareholder and activist investor Daniel Loeb (his firm holds 6.5 percent of Sony) is suggesting spinning off Sony Pictures from conglomerate parent Sony of Japan, which as a foreign entity cannot own terrestrial TV stations in the U.S. So far, 53 new shows have been announced for the 2013-14 broadcast season and an additional 17 will premiere this summer. Last year 42 TV shows premiered on ABC, CBS, NBC, FOX and CW. Of those only 11 are returning this fall. The new season counts 23 new comedies—comparedwith 16 last season; 29 new dramas — compared with 22 last season. Nets want producers to provide 13, 15 and 17 episodes, rather than the standard full season of 22 episodes. Indeed, emphasis is placed on limited series (to maximize exploitation without risking a dud) and avoiding stretching 22-episode orders over a 35-week span. It has been said that there is no longer a fall season (according to FOX’s Kevin Reilly, FOX launches programs virtually year-round). Nevertheless, this year, Upfront presentations multiplied to include cable networks, Hispanic TV channels and digital TV outlets. And announcements about pick-ups came from New York City earlier than usual. By the Friday prior to the kick-off of the major broadcast Upfronts, 20 new shows had already been announced by the studios. The first Upfront of the year — for U.S. cable network Oxygen — took place on February 5. Between then and May, a plethora of other adsupported cable networks — including Bravo, Syfy, BET, and even The Weather Channel, have held presentations. This year a good share of the attention was paid to the second annual “Digital NewFronts,” a five-day event held in New York City at the end of April/beginning ofMay. At theNewFronts, digital media sellers tried their hands at imitating the traditional TV business model in an attempt to attract money from marketers and ad agencies. Nearly 20 companies — including Google, Microsoft, Yahoo, Hulu and AOL — held NewFronts under the aegis of the Interactive Advertising Bureau, and about 100 new programs were unveiled. In fact, the number of attendees at the AOL Upfront outnumbered the spaces available at the Farley Post Office, requiring the company to add an overflow room at a bar across the street. Guests were turned away from the Yahoo presentation at the Best Buy Theater in Times Square (capacity: 2,100) and at Google’s Brandcast at Pier 39 (1,500 guests attended). The question still looming is whether that digital ad spending will come from budgets diverted from television or whether it will represent additional money. Digital arms of the large studios — including A Plethora of New Shows Makes for Chilly Screenings. Blankets Needed to Warm Up June/July 2013 L.A. Screenings CBS’s Doug Smith, Armando Nuñez, Barry Chamberlain, Joe Lucas on the Paramount lot during a lunch break at the Screenings Record TV’s Delmar Andrade At the Fox party on the studio lot: Veteran TV exec Norman Horowitz, NATPE’s Rod Perth, UNE’s John Laing, Shelley Lazarus, VideoAge’s Dom Serafini, Carsey-Werner’s Herb Lazarus, Ledafilms’ Pedro Leda (Continued on Page 12)
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