In Depth

The CW Lives!

How the ‘Gossip Girl’ Network Beat the Odds by Pleasing Its Parents

OMFG: Three years and nearly 1,000 days after it launched, The CW finally seems to have found its identity—and, more importantly, questions about its viability are fading away.

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Building on the momentum of 2-year-old pop culture sensation “Gossip Girl,” The CW this season appears to have achieved a breakthough, firmly establishing itself as a destination network for an advertiser-friendly audience of 18- to 34-year-old females. A revival of “90210” has been one of the season’s few ratings success stories, while a planned revival of “Melrose Place” is already generating obsessive online buzz.

What’s more, by focusing on programs with strong off-net and international appeal, The CW—under entertainment President Dawn Ostroff and Chief Operating Officer John Maatta—has turned into something of a moneymaking machine for the studio units of parent companies Time Warner and CBS Corp.

That has allowed the two conglomerates to stick by The CW, even if the network itself is not yet profitable on a stand-alone basis and although its overall Nielsen numbers remain small.

“We no longer receive questions from the creative community (or) from the advertisers (about the future of The CW),” said Bruce Rosenblum, president of the Warner Bros. Television Group. “I think the built-in assumption and the expectation is that The CW is here to stay.”

Profitable Programming

The key to The CW’s viability was evident last week, when the network announced it was giving early 2009-10 renewals to a half-dozen series, including “Gossip Girl,” “America’s Next Top Model” and first-year hit “90210.” All of the shows greenlit are turning a profit for the studios—and hail from either Warner Bros. Television or CBS Paramount Network Television.

“It’s a really synergistic relationship,” explained Nancy Tellem, president of the CBS Paramount Network Television Entertainment Group. “From a studio standpoint, when we look at the whole organism of both the studio and the network, The (CW) has been incredibly beneficial. From out of the gate, it’s been very profitable for the studios. … The value of the network is not just simply based on the relationship with advertisers but the assets that you’re building on the network platform.”

Indeed, Mr. Rosenblum said the kinds of shows The CW is airing “are ideal for profitability away from the network.”

“When you look at their international appeal, when you look at their DVD appeal, when you look at their digital distribution appeal, they’re very, very strong syndicatable assets,” he said. “I would suggest to you that from a studio standpoint, (The CW) is one of the best broadcast network platforms to generate valuable content assets for the supplier.”

Neither Mr. Rosenblum nor Ms. Tellem would discuss specific figures, but CBS Corp. chief Leslie Moonves told analysts in January that in its first season, “90210” is already netting his company $30 million a year in profit.

Still, Mr. Rosenblum and Ms. Tellem aren’t giving up on the notion of The CW turning a profit on its own.

“If we manage our costs properly, if we continue to build the audience and the brand, and the biggest if—if the advertising market turns back around and over time we are able to properly monetize the 18- to 34-year-old audience that we’re delivering to those advertisers—we should be able to build this business into something that is profitable as a stand-alone business,” Mr. Rosenblum said.

Of course, The CW’s parents had hoped the network would already be in the black. When CBS and Warner Bros. in 2006 first announced they were folding UPN and The WB in order to create The CW, executives confidently predicted the network would be profitable virtually from the start.

Early ratings weren’t as strong as expected, however. The CW was affected by the headwinds buffeting all networks, no matter their age: advertising avoidance through digital video recorders, online streaming and overall audience erosion.

“I think we all underestimated how difficult it would be to really bring viewers to a new network,” Ms. Ostroff concedes. “And then we had to create an identity, which we couldn’t do in the first year (because) we had to get on the air. … I think we’ve made incredible progress in a very short period of time.”

Ms. Ostroff and her development team, headed by Thom Sherman, have gotten the network on track via a laser-like focus on building The CW’s brand as a home for women under 35.

That’s meant halting development of half-hour comedies to concentrate on launching buzzworthy dramas such as “Gossip Girl.” It also required The CW to ditch wrestling on Friday nights, despite strong numbers, since “WWE Smackdown!” simply didn’t fit on a network for young women.

And while it still programs Friday and Sunday nights, The CW has devoted the bulk of its creative energies this season to growing its female-friendly Monday-Thursday core schedule.

“We felt that, in order to really have the network flow from night to night to night, in order to capitalize on the advertising and the marketing of the network so that everything made sense and sort of felt cohesive as a brand ... we needed to really focus the network more,” Ms. Ostroff said. “There are a lot of advertisers who want to reach young women. We have strategically put ourselves in a position where there was white space and we filled that white space.”

At first glance, The CW’s 2008-09 numbers don’t look that impressive. Compared with 2007, it lost 18% of its total audience in the fourth quarter of 2008, and dipped 3% among all viewers 18-34.

Up in Key Demos

But Ms. Ostroff’s efforts have yielded ratings results where they count. Among women 18 to 34, The CW’s Monday-through-Thursday lineup is up 13% year-over-year; among all viewers in the age group, the network is up 8%.

Among the shows driving the women 18-34 gains: “Gossip Girl” (up 36%), “One Tree Hill” (up 31%), “Supernatural” (up 8%) and “90210” (which has improved its Tuesday timeslot by 67% from last season). During the fall, The CW was No. 1 among women 18 to 34 on Monday, while its C3 ratings (on a Monday-Friday basis) rose 16% in the same demographic.

It’s no wonder, then, that when CW executives talk about the network’s difficulties, it’s almost always in the past tense.

“We’re there now,” Mr. Rosenblum said. “It just took a little longer than we had initially planned.”

Mr. Maatta added that, in terms of revenues, “We are right where we need to be. I can’t get into (details), but I think last year was a very good year for us. Every constituency is happy.”

That includes The CW’s affiliates, Mr. Maatta said—even the Tribune stations. There had been buzz last year that Tribune was unhappy with its relationship with The CW and was preparing its own primetime programming in case the network went away.

But just as quickly as those rumors began spreading, word of Tribune’s own financial difficulties became apparent. The company filed for bankruptcy, and any talk of its displeasure with The CW has evaporated.

“Tribune has expressed nothing but full support for The CW and for their relationship with CBS and Warner Bros.,” Mr. Rosenblum said, adding that Tribune’s woes aren’t hurting its relationship with The CW. Just the opposite, in fact.

“When you’re going through bankruptcy, you want to do everything you can to maintain the value of the assets that you have,” he said. “And one of the key pieces in the value of their local television stations is an affiliation with a broadcast network. … We do not anticipate a problem with Tribune as they work through their economic challenges.”

Of course, like any broadcast network in 2009, The CW still faces plenty of challenges in the year ahead.

Despite doing well in a demographic that advertisers covet, the network is not immune to the downturn in the overall ad marketplace. Budgets are constantly scrutinized, with Mr. Rosenblum noting The CW pays “very close attention to every dollar” it spends and that the network “is looking at costs across the board.”

Friday and Sunday nights also remain unsolved mysteries for Ms. Ostroff.

An attempt to farm out Sunday to Media Rights Capital was an embarassing flop that generated negative buzz for The CW. Its leaders say it didn’t cost the network anything financially, however, and a quickly assembled movie package has helped the network rebound in the ratings on the night.

Ms. Ostroff hinted that movies might continue to be part of the network’s Sunday strategy next season, though she said no decisions have been made.

Focus on Friday

The CW also needs to figure out Friday nights by next fall. It seems a long shot that “Everybody Hates Chris” will return for another season, and comedy “The Game” is also on the bubble. Ms. Ostroff said the network’s strategy on Friday will depend on how its crop of pilots turns out.

Ms. Ostroff is still weighing what to do about summer programming. The CW has pretty much gone dark in the warm-weather months, forcing it to work overtime come September to woo viewers back.

Nothing has been finalized, but one scenario under discussion has The CW launching two new unscripted series this summer—including a relationship show from producer Mike Fleiss and RDF USA. A decision one way or another is expected this month.

In the meantime, Ms. Ostroff and her team are busy putting together a slate of five scripted pilots that are in contention for broadcast next season. In addition to the new “Melrose Place,” possibilities include a vampire-themed romantic drama and a planted spinoff of “Gossip Girl” starring Brittany Snow.

Ms. Ostroff is hoping one or two of the prototypes will join the network’s growing roster of established successes, in the process supplying CBS and Warner Bros. with more reasons to be proud of their 3-year-old love child.

However the development season turns out, The CW seems to have won genuine love and affection from its parents.

“The CW’s done an extraordinary job of building a brand around scripted drama that appeals to our target demographic,” Mr. Rosenblum said. “I think there’s a real possibility that next fall, Dawn and her team will have more scripted programming Monday through Friday in primetime than NBC. That’s a franchise that will be very, very valuable for CBS and Warner Bros. to continue to build.”

Added Ms. Tellem: “We really believe there’s a very bright future for The CW.”