Commentary

Programs See Lower Success Rate, But Returning Ones Earn Quicker Profits

Successful TV shows are tougher to come by. Only 23% of shows from last year made it to a second season. That's down from 50% a year ago.

What kind of reaction does this get from traditional TV advertisers? They mostly shrug their shoulders. Increasingly they expect shows to be canceled, knowing they'll then be offered options to continue their deals in the same time period for whatever the network puts on next.

This is not to say they don't love some consistency. That's why CBS has been a favorite for the past several years. Three of CBS' first-year shows of this past season will return for another year --- "Hawaii Five-0," "Mike & Molly" and "Blue Bloods." That's better than any other network.

Here's the good news for networks: These days a show that gets renewed after its first year can make financiers happy. Nomura Securities' Michael Nathanson says producers now get much more money for weakly rated shows than they got for shows with higher ratings in the past.

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For instance, he says, "The Big Bang Theory" pulled $1.5 million per episode from U.S. station and cable syndication deals, or 32 cents per 18-49. This is three times as much as "The King of Queens" grabbed in 2006 when it earned $425,000 a episode or 10 cents a viewer.

Throw in growing international revenues and some new shows -- even after just one year on the air -- can reach a break-even or profitable situation. Helping the networks' overall profitability picture is their greater use of non-scripted TV programming -- sports, news, and reality shows.

If you wonder why programming executives aren't worried about the future of television because of declining ratings, now you know.

Similarly, few network ad sales executives are concerned either. Big 10% to 15% price increases for shows during the upfront market, and similar prices gains -- or more -- during scatter advertising time periods are good reasons.

Networks may not call shows "hits" these days, but they will claim "success." For advertisers -- in a more fractionalized TV universe -- fulfilling their success goals means taking a different path. <

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