New TV Profitability And Definitions: Broadcast Networks... Er... Enterprises Might Find A New Way.
Now you might define profitability for a TV network by what kind of deal you make with the likes of Netflix.
For CW -- and its co-owners, CBS and Warner Bros -- a long-term deal, possibly a billion dollars, with Netflix for the streaming rights to its primetime shows will put the network in the black, according to Les Moonves, president/CEO of CBS Corp.
Looking closely, CW wasn't profitable from its traditional TV advertising revenue of its shows on its airwaves -- and/or from the incremental dollars it gets from Internet advertising for its programs.
The CW deals show what a lot of analysts already knew: That CW is a different kind of network, mostly defined by the ownership of its shows -- virtually all coming from its owners, CBS or Warner Bros.
Now, take this idea further, at least according to the Los Angeles Times. The deal is predicated on how well CW shows perform on the CW network, in terms of ratings. For example, instead of the $600,000 or so an episode Netflix will be paying for "Gossip Girl," it will initially "pay much less for newer or lower-rated CW programs."
Nothing wrong with this -- everyone needs to be accountable in this TV environment. All this seems to push broadcast networks into a greater emphasis as a TV marketing vehicle to tout its programming for the next distribution cycle.
"It essentially makes the CW a profitable enterprise," Moonves has said. Hmm... no "network" word in that sentence.
CBS has always made it a point of holding out for the biggest bang for its programming buck and, right now anyway, still doesn't believe free-to-consumer, advertising-supported sites like Hulu work to maximize programming profits.
Deals with Netflix look to carve out another valuable TV after-market, which typically run shows well after an original TV network debut: the U.S. syndication market on TV stations and/or cable networks, as well as growing international TV deals.
Who might be next for a similar ratings-focused deal in the future?
Taking its connection with Hulu away for the moment, the NBC network might be an obvious candidate -- should it not right its ship. All this depends on where NBC Universal's majority owner, Comcast, determines what should be factored in when it comes to NBC's future profitability.