The anatomy of a cable hit

Oct 28, 2002  •  Post A Comment

When Roger Marmet is in an airport and hears passengers and passers-by talk about “Trading Spaces,” he knows he has a hit on his hands. The TLC show is indeed a hot property and has boosted the network’s ratings in almost every demographic and category, said Mr. Marmet, TLC’s acting general manager and VP of programming.
In fact, that is why every cable network wants a show people are talking about. A hit can elevate the profile of the network, define a brand and attract a new audience. A hit also produces solid or stellar ratings, which naturally translates into the cha-ching of new advertisers, more ad revenue and the ability to charge a premium for commercial time in those shows.
Current cable hits include FX’s “The Shield,” MTV’s “The Osbournes,” USA’s “Monk and “Dead Zone,” E!’s “The Anna Nicole Show,” Nickelodeon’s “SpongeBob SquarePants” and the aforementioned “Trading Spaces.” These are shows that are not only generating water cooler talk but also positively impacting their networks’ bottom lines.
FX has virtually remade itself as the basic cable HBO on the strength of its Emmy Award-winning “The Shield.” The show is an example of how a cable hit is quantified. “Does it elevate the brand and define who you are in the cluttered marketplace?” asked Lou LaTorre, president of advertising sales for Fox Cable Networks Group. “How did you do with Nielsen? Does it deliver audience composition and strong ratings?”
“The Shield” ran three times per week in its first 13 weeks last season and averaged a 2.8 household rating, delivering about 2.1 million homes and 3.2 million viewers on its Tuesday premiere night. Of those, 2.2 million viewers, or 70 percent, were in the coveted 18 to 49 demographic. Those numbers translate into higher ad rates for the show, which can now command a 35 percent higher cost per thousand than FX’s other prime-time shows, Mr. LaTorre said.
“The majority of advertisers are paying $10 to $14 per home on a CPM basis,” he said, adding that the network was able to charge more during the most recent upfront and scatter market. Since a rising tide lifts all boats, those rate increases drove a 30 percent revenue growth for the network for the most recent fiscal year, ending in June, over the previous fiscal year.
In addition, the network was 16th in the 18 to 49 demographic among ad-supported cable networks in the 2001 upfront and came into this year’s upfront ranking anywhere from sixth to 10th, depending on the daypart, he said. FX also added 10 million new homes from 2001 to 2002, due in part to the cachet of carrying “The Shield.”
That kind of success carries over to other shows, Mr. LaTorre said. “It makes it easier to sell all your original programming,” he said. A high percentage of the commercial time for the pending spring launch of John Corbett’s half-hour comedy series” Lucky,” for example, was sold out during the upfront, he added.
Ratings are key
The element that most quantifies a hit is ratings, said Mike Goodman, programming analyst with The Yankee Group. “[A show] qualifies as a hit based on how well it does on a particular network. That’s what drives ad dollars,” he said. USA Network’s summer launches of “Monk” and “Dead Zone” have buoyed the network’s ratings and rates. For the season to date, USA has added 51 new advertisers, an increase largely due to the strength of those two shows. In addition, the network now charges about 45 percent more for ad time in those shows than before they became hits. USA’s prime-time rating average for summer 2002 was a 1.1 in adults 18 to 49, a 16 percent increase over the previous year. The ratings for the two shows’ premiere nights rose 25 percent to a 2.0 from a 1.6 the year before they launched.
USA was a stronger No. 1 this past summer, thanks to “Monk” and “Dead Zone,” said Jack Wakshlag, chief research officer with Turner Networks. USA grew 171,000 homes in the 18 to 49 demographic, and 74,000 of those homes are attributable to the new shows, he said. In 2001 USA’s lead on No. 2 network TNT in adults 18 to 49 was only 5,000 last summer; this summer it was 100,000, he said.
Clearly, content drives success, but the shows also benefited from a consistent marketing campaign, said Jeff Wachtel, executive VP of series and long-form programming for the network. The past summer’s schedule included the June debut of “Dead Zone,” the July launch of “Monk” and the August coverage of the U.S. Open. The network devoted the month before each event exclusively to promoting that event through on-air promos, radio and cross-channel spots. “We were pinpoint focused on the specific shows each month,” he said. The marketing message for each show was simple: Anthony Michael Hall’s eyes for “Dead Zone” and the magnifying glass for “Monk.” “You have to keep it strong and simple,” Mr. Wachtel said.
More and often
Cable networks can also gain substantial traction with a hit because of their scheduling model and ability to play a show many times in a week. “A hit is strong and the more hours of strong programming, the less hours of weak programming you can put on,” said Mr. Wakshlag. A hit show also drives circulation and reach since new viewers will tune in to watch the hit and the network then aims to parlay those viewers into regular watchers. In addition, a hit brings a quality of distinction, while not essential for ratings, is important in generating advertiser demand and interest in the network.
One of the downsides of a hit show is that they often are expensive to produce, especially if they are scripted dramas. Because general entertainment networks are competing more directly with broadcast networks these days, cable programmers need to spend more than they have in the past to produce a comparable product. Cable shows are also produced in 13-episode bites, which means it takes longer to amass the sheer number of episodes needed to turn a cable success into a syndicated one, said David Grant, president of Fox Television Studios and producer of shows for both cable and broadcast.
Besides, cable shows don’t have a track record of success in off-network syndication, he added. “Cable networks come from a place where original programming is still new, and they are figuring out what to pay for them. But there is no silver bullet. If they want to compete they have to compete with similar programming,” he said.
Networks like MTV and E! are in a different position financially, since their hit shows are reality programs and are cheaper to make. E!’s “Anna Nicole Show” costs less than $100,000 per episode to produce, said Mark Sonnenberg, executive VP of entertainment, E! Networks. The show garnered higher than a 4 rating in the first few weeks and has since settled into the 1.75 to 2.0 range. “It is our highest-rated show and provides a tremendous potential to bring eyeballs to other shows,” he said.
A good rule of thumb in assessing whether a show is a cable hit is when its numbers start to approach the low end of broadcast numbers, which shows such as “The Shield,” “Monk” and “Trading Spaces” have done, Mr. Grant said.
When “Trading Spaces” started to break a 2 rating TLC knew it was a hit, said Mr. Marmet, the network’s acting general manager and VP of programming. The show now serves as a launching pad for the rest of the schedule. The network recently premiered “While You Were Out” on Saturday night because of the eyeballs it can capture adjacent to “Trading Spaces.” “Here’s a show that can take off immediately without being promoted,” he said.
When a hit becomes a signature show, as Comedy’s Central’s “South Park” has become, a network stands to make even more money with brand extensions and merchandising opportunities. “South Park,” for instance, has generated $500 million in merchandising revenues for the network since it launched six years ago.
Nickelodeon’s “SpongeBob SquarePants” has generated $600 million in merchandising since its 1999 inception. “We’re in the business of having profitable franchises,” said Kevin Kay, executive VP o
f production at Nickelodeon. “Any show that’s a hit will drive a number of businesses: home video, consumer merchandise.”