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Who’s Got the Profits?

May 26, 2003  •  Post A Comment

My profit’s bigger than your profit.
That’s the debate that took over the broadcast networks’ post-sweeps conference calls with reporters last week, which the networks traditionally use to tout their May ratings highlights.
CBS Chairman and CEO Leslie Moonves incited the debate when he declared CBS the most profitable network in prime time, despite the fact that the network doesn’t target the advertiser-friendly 18 to 49 demographic.
“The money is coming in here just fine based on 25 to 54 and based on older demographics,” he said. “I’d rather have my bottom line than the four other networks that are shooting solely for 18 to 49.”
He also said CBS is more profitable than NBC on Thursday nights even though NBC may bring in more ad money on that night, because CBS’s shows aren’t as expensive as NBC’s-a claim that NBC Entertainment President Jeff Zucker vehemently refuted.
“This idea that CBS is or will be the most profitable network in prime time is one of the more laughable claims of the year, probably the most laughable, since CBS spent the first half of the season claiming in its promos that Hack was a new smash hit,” Mr. Zucker said. “Remember, just because Les says something doesn’t mean it’s true.”
Mr. Zucker said NBC’s prime-time schedule is “by far more profitable than anyone else’s, even with our higher costs” and told reporters to look it up in a report issued by Morgan Stanley Dean Witter analyst Richard Bilotti. He even gave out the page number of the report and Mr. Bilotti’s phone number.
Mr. Moonves based his claims on a Kagan World Media report that was published in April.

Fox Entertainment Group Chairman Sandy Grushow later jumped into the fray, saying that the entertainment division combined with the sports division is not profitable at Fox, but if one isolates the entertainment division, it is profitable on its own.
He also found a way to capitalize on Mr. Moonves and Mr. Zucker’s war of words. “Never one to miss an opportunity, we decided to put a new special in development starring Les and Jeff called Man vs. Beast,” he joked. “It’s up to you guys to decide who’s who.”
At ABC, Entertainment Chairman Lloyd Braun would only say that ABC is doing better
financially this year than last. “This is going to be a very profitable division for this company and in really short order,” he said.
The WB Entertainment President Jordan Levin said the network is profitable, despite Mr. Moonves’ skepticism and repeated public comments that there are only two profitable networks-CBS and NBC.
“For somebody who likes to say they’re going to hold people accountable for their statements, all I can say is our bottom line is our bottom line, and the bottom line is profitable right now,” Mr. Levin said. “It’s profitable as a network that is targeting 12- to 34-year-olds in competition with another startup network that he oversees targeting 12- to 34-year-olds [UPN] that is a billion dollars in the hole with no sign of profitability and the impending threat of station negotiations looming over their head.”
Lost in all the sniping over profitability is the fact that Fox won its second sweeps in a row in adults 18 to 49 and is gunning to challenge NBC for the season crown next year.
Thanks to a powerful American Idol finale that pushed Fox past NBC on the last night of sweeps, Fox won the May sweeps with a 4.7 rating/14 share to NBC’s 4.4/12.
Fox fell just short of overtaking NBC for the season crown with a 4.3/11 to NBC’s 4.5/12. Mr. Grushow said the key to overtaking Fox next year is “to avoid stumbling out of the gate in the fourth quarter following postseason baseball.”
“We’re hopeful we can avoid spotting the competition a big lead, because clearly we know we are going to come back strong in January with the launch of American Idol 3,” he said.
Mr. Grushow wouldn’t predict a victory for next year because NBC will be able to take advantage of series finales for Friends and Frasier. But he said Fox will be well positioned to challenge the next year. “Time is on our side,” he said.
While CBS came in third in adults 18 to 49 for the May sweeps with a 3.7/10, beating ABC’s 3.3/9, the two networks fought it out for third place in the season race. Mr. Braun said the two networks are tied at a 3.8/10, while Mr. Moonves said CBS is slightly ahead.
“If this year, unlike past years, he sees fit to get out to the thousandth of a decimal point, not a problem,” Mr. Braun said.
The only two networks showing growth in adults 18 to 49 in the May sweeps were Fox (up 27 percent) and The WB (up 6 percent). Mr. Levin said growth in May was the biggest surprise for the network since they frontloaded the season with original episodes. “We were really shooting to be flat this May,” he said.
UPN remained in last place and had ratings down across the board, including adults 18 to 49 (down 17 percent) and adults 18 to 34 (down 11 percent).
UPN Entertainment President Dawn Ostroff acknowledged that the network didn’t start the year off in the best position but was encouraged that they narrowed the gap from last year, which was the network’s highest-rated year. “When you look at our May sweeps period, what we feel pretty good about is our May sweeps last year was the highest we’ve had in five years and we came in two-tenths of a point off that in our key demo,” she said. “We really did narrow the gap as the year went on.”
She said they were also encouraged by the numbers for America’s Top Model, which debuted after the series finale of Buffy the Vampire Slayer. It gave the network its second-highest number in the time slot for the season win households and adults 18 to 34 and grew 24 percent from the first half-hour to the second.
Despite the huge cost-about $2.3 million an episode-of stealing Buffy away from The WB, Ms. Ostroff said having the show on the schedule was worth it even though the network was never able to launch a new successful series off of it.
“It brought a lot of attention to the network,” she said. “It gave us a great promotional platform. Looking at it now after having it two years and the price tag and the fact that it was in its seventh year and the fact that the numbers were on the decline, I think it made a lot of sense for us to all move on at this point. It was a tremendous asset to have the show for the two years it was here.”