Why Jay Leno is like classical music

October 28, 2009 at 12:55 pm 2 comments

| Gabriel |

As the logical conclusion of a trend that began with reality tv, NBC has concluded that it’s just too expensive to make scripted television. And so they filled their 10pm slot every week night with a dirt cheap variety show. Not surprisingly, the show has much lower ratings and ad revenues than the traditional one hour scripted dramas that filled the slot until this season. On the one hand it’s embarrassing for the network that ruled tv in the 1990s to embrace a low-cost, low-revenue model or, as some industry people call it, the “winning by losing” model. On the other hand, it’s a much more profitable strategy because low as the revenues are, the costs are even lower.

People have mostly been focusing on the short-term revenues and in that sense NBC has indeed made the smart (but shameful) call. The long-run picture is more uncertain, even if you put aside Podolny-esque status issues and affiliate defections. Scripted television has always lost money on the first run and only turned a profit over the long-run. For decades this was mostly an issue of syndication (re-run) rights but for the last ten years it’s been dvd box sets. In contrast, non-scripted tv produces basically no long-term revenues — almost nobody watches ESPN Classic or buys dvds of game shows or “the Tonight Show”. There have been some troubling signs lately for the long-run revenue streams. Gilmore Girls is one of the best shows ever on television and you can buy the dvds for $20/season, a huge drop from the $50 or $60 a season the studios were asking a few years ago for tv. Likewise, it’s not clear that the studios will be able to effectively monetize streaming video, despite Rupert Murdoch’s attempt to get media companies to charge for content.

Thus you can read the Leno-ization of NBC as not just the idea that drama production budgets have gotten out of control, but also a bet that streaming video won’t produce long-term revenue streams at all comparable to those produced by syndication or dvd. Note that SAG and WGA seem to be making the opposite bet, as for the past few years Hollywood labor has been doing extremely painful strikes and soft strikes primarily over residuals on streaming. My hunch is that NBC is right and the unions are wrong on this, but it’s an empirical question.

The other interesting thing is that NBC is doing the exact opposite of what public radio did the 80s and 90s. Originally, public radio mostly consisted of classical music and jazz djs, which was dirt cheap content to produce but brought in little revenue. Them CPB and NPR bought some Arbitron reports and noticed that “All Things Considered” brought in the lion’s share of listeners. They checked pledge drive data and found that it also brought in most listener contributions. On this basis NPR added “Morning Edition,” and a little later, “Weekend Edition,” and it’s gotten to the point that pretty much all public radio stations play news and talk either in their best time slots (e.g., KCRW Santa Monica) or pretty much 24/7 (e.g., KPCC in Pasadena, WHYY in Philadelphia). Of course news is much more expensive to produce than just hiring a dj to spin Bach, but it also brings in more numerous, young, and affluent listeners. So we’ve seen public radio experience shift from low revenue & low cost to high revenue & high cost, pretty much exactly the opposite of what NBC is doing this season.

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2 Comments

  • 1. Peter  |  October 28, 2009 at 1:56 pm

    Interesting point Gabriel, esp. about the longer-term revenues and continued changes in the TV/media landscape.

    But my impression is that even the short-term is disastrous. Shows around the Tonight Show are failing, local news affiliates down 10-30 percent, attributable in part to the Leno show. That article makes reference to the effects of Leno on the health of NBC as a whole. I mean, dang.

  • 2. Noah  |  October 28, 2009 at 10:55 pm

    Gabriel,

    I agree with you that there are a lot of concerns about long term revenue streams from DVD, but I don’t think your use of the Gilmore Girls example fully explains them. Regardless of the quality of the show, a lot of those DVDs have been sitting on the shelves for years. Even the last season on DVD has been out for at least a year, right? There are only so many people who will buy it, and I think we can assume buy this point just about anyone who would buy season 1 on DVD already has. A major price cut won’t get a whole lot of new buyers.

    I think the reason that, in the aggregate, the revenue that studios get from DVDs is declining is because more people have filled their libraries of shows from the 90s and early 2000s that they remember watching but weren’t immediately available on DVD. For a long time, Fox could make money from selling new DVD sets of Family Guy and old sets of Simpsons episodes. Now, we can assume that most Simpsons fans already have their favorite seasons on DVD. This leaves Fox with only Family Guy. It isn’t an issue of all long-term revenue streams drying up; it’s only the long-term revenue streams for shows that go off the air or ones that suffer from an erosion of the audience base that are in trouble.


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