NBC's Real Late-Night Picture: Network Was Losing Money
This was the second part of the "Tonight" financial equation, discussed by Jeff Gaspin, chairman of NBC Universal Television Entertainment, when speaking to Broadcasting & Cable recently. The first part? That "The Jay Leno Show" was making money -- a fact Gaspin mentioned when he spoke at the TV Critics meeting earlier this month.
Now this begins to makes sense far beyond what NBC affiliates were complaining about. It was the first time the 56-year-old "Tonight Show" has ever been on track to lose money. Even when Jay Leno was struggling to find his way during his first year as "The Tonight Show" host back in 1993, the program continued to make money (but no doubt less than with Johnny Carson).
Here are the lessons learned: You can't just survive with young viewers on big broadcast TV. No, you need older adults, because there are more of them.
All of which means the bulk of TV advertising money, to no one's surprise, is still behind adult 18-49 viewers. This sum dwarfs the money targeting the cooler, younger, 18-34 demo.
There's been a lot of buzz around O'Brien's strong - and, in social media areas of late -- loud, young viewers, who have come to the show now, and who previously weren't there when Leno was running things.
This has led more than a few columnists, including many here at MediaPost, to talk up the possibility of O'Brien as the Internet's first real original programming star.
But if NBC was losing money on O'Brien, how could he make money on the Internet? Well, the thinking isn't necessarily one of a financially sound deal - at least initially.
For one, you would need to convert more media agencies and advertisers into believing in the power of Internet metrics. Second - and perhaps more important -- one would need a big benefactor, someone who believed that down the road O'Brien would in fact reap big marketing rewards. Third, how about $1,000 CPMs, maybe?
The near-term reality looks a little more down-to-earth. The choice probably comes down to whether the average Fox affiliate would do better with an hour of O'Brien at 11 p.m. than with back-to-back airings of, say, "Seinfeld," "Two and Half Men," or "The Office."
In years past, the only thing that mattered to broadcasters was how to be more profitable. Now it comes down to not losing money. (see NBC and the Vancouver Winter Olympics and some $200 million in red ink). That's the TV business sense today. Longer term, there may be better business sense with the Internet for someone like O'Brien.