NBC: "Must Flee TV" Redux - The Shelly Palmer Report

Here39s what you already know1 NBC39s going to put Jay Leno on five nights a week in the fall2 This will save them a great deal of money3 Jeff Zucker Ben Silverman and to a lesser extent Marc Graboff are being mercilessly chastised in the blogosphere4 Les Moonves is delighted by the fact that there will be one less competitor in the marketplace at 10pFirst let39s get one thing clear Things change If you look around you you will not find a business anywhere in the United States that operates the same way today as it did in the preInternet preGoogle worldWith regard to our industry I have written a book Television Disrupted The Transition from Network to Networked TV 2008 York House Presswhich dramatically illustrates how um amp8230 television has been disrupted by the advent of technology the fractionalization of audiences and the marginleveling pressure of consumer controlWith that said let39s take a minute to explore the impact of the paradigm shifts that NBC39s decision might initiateScenario 1 amp8211 Leno Is A Ratings SuccessI consider Ben Silverman a good friend I like Jeff Zucker and I39m a habitual NBC viewer so this is my favorite scenario Here life is good Big ratings mean big advertising dollars Unfortunately dramatic hours will move from the quotendangered speciesquot list to the quotcritically endangered speciesquot list TV after all is a business of follow the leader Under the quotLeno is a ratings successquot scenario NBC would see a cash windfall for as long as they could sustain the show This is undoubtedly how the network brass envision the future There are several downsides here but they affect the business not NBC particularly For example removing five hours of new dramatic programming from existence will seriously reduce the size of the offnet syndication business Less dramas to syndicate or sell to cable means a smaller business in new television production overall Just think about how the television landscape changed after ABC decided to milk quotMillionairequot for all it was worth Sure it was a cash cow for ABC but ultimately it trained cable nets to create good looking costeffective original programming much earlier than they would have if left to their own devices There was no product to buy This issue will happen no matter which quotLeno at 10quot scenario ultimately unfoldsScenario 2 amp8211 Leno Does OK but the show follows its current amp188 trendsHere NBC will still make some money Doing OK with low production costs is an acceptable result However local television stations network affiliates rely on the strength of the 10p hour to lead into their late local news Even if you attempt to program the best stuff last traditionally Jay39s audience diminishes over the course of each episode This will be horrible for affiliate relations to say nothing of the fact that news is quotthequot profit center for every local station that does news programming Here dramatic hours move from quotendangered speciesquot list up a few notches to quotnear threatenedquot NBC39s competition will start using the betterrated dramatic hours to strengthen their local affiliates and NBC will ultimately suffer for it To add insult to injury Jay39s 10pm show is not TiVoproof If viewers wait until 1020 to start watching they will miss the 10p local news break the highestpriced local avail and bump headlong into the opening minutes of the late local news the next most profitable avails for local stationsScenario 3 amp8211 Leno Does Marginally Well but the best bits find their way onlineIn this case NBC will start to die a thousand deaths Imagine a linear audience of 54dead and a snacksized online audience that cannot be monetized OuchScenario 4 amp8211 Leno FailsThis scenario comes in two flavors quick failure and protracted failure In the best case the show fails as fast as Rosie failed and the world moves on In the worst case the show gets a quick ratings boost from the novelty and then starts a slow descent into the abyss This may happen for a number of reasons The first being the quotbooker factorquot NBC will have three talk shows running back to back all looking for the same guests each night How long can this model sustain There aren39t that many interesting things going on in the world Can we really expect to see Brad Pitt promoting a new movie on all three shows Doubtful He39d choose the Primetime show because in theory it will have better ratings than the Tonight Show or Late Night How will Conan feel about this Someone might want to ask himNo matter what happens I39m pretty sure the network television business will be changed forever You could argue as one of my good friends from NBC did today in a private email to me that quotThe network business amp8211 as a single revenue stream business amp8211 was in trouble as soon as 100 cable channels could produce original programming scripted or unscripted at a lower price point than networks amp8211 as dictated by the guilds with far less government regulation In a few years the government will have to bail out local TVquotAt the end of the day broadcast network television is a scarce resource The signal passes 99 of the households in the United States If you need to reach the largest number of people for the least amount of money per person broadcast network television is your best bet For as long as this is true the business will sustain However as Jeff Zucker pointed out in his speech at the UBS conference the other day quotCan we continue to broadcast 22 hours in primetime Three of our competitors don39t Can we continue to broadcast seven days a week One of our competitors doesn39tquotIf you have read quotOn the Origin of Species by Means of Natural Selection or the Preservation of Favoured Races in the Struggle for Lifequot by Charles Darwin 1859 you know where this is headed I prefer Richard Dawkins39s perspective on the thesis he calls it quotsurvival of the most adaptablequot When the dust settles there will not be room for four major broadcast networks all producing highend shows all week long It39s not that way now What will happen is obvious The strongest competitors with most measurable audiences that deliver the biggest ROAS for their clients will get bigger and the weaker competitors no matter what they can measure will get smallerJeff went on to say that the broadcast TV model has to be rethought in the face of fierce competition from cable and the Internet I couldn39t agree more And I believe that his admonition quotIf you don39t then the broadcast network will end up like the newspaper companies or worse like the auto companiesquot is prescient Transitions are tough And as we all know people don39t really like change But I think this is the first step in the evolution of our business and although I am one of those who would not hesitate to take a cheap shot at Ben or Jeff for a rating point I have to give them both credit for trying to fight the good fightThe media business is fast becoming broadbandcentric and ondemand If you can39t find additional money to invest and you have to do something trying to increase shareholder value isn39t a bad place to start Shelly Palmer is a consultant and the host of MediaBytes a daily show featuring news you can use about technology media ampamp entertainment He is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted The Transition from Network to Networked TV 2008 York House Press Shelly is also President of the National Academy of Television Arts ampamp Sciences NY the organization that bestows the coveted Emmyamp174 Awards You can join the MediaBytes mailing list here Shelly can be reached at shellypalmernetamp160Check out the Shelly Palmer Report archive

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NBC: "Must Flee TV" Redux - The Shelly Palmer Report

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