Conan Deal Shows the Power of the Cable TV Business Model

Apr 13, 2010  •  Post A Comment

conan-tbs-.jpgBrian Steinberg
Advertising Age

Conan O’Brien’s move to bring his late-night talents to TBS surprised many TV-watchers Monday, but the decision is just another signal that cable’s business model is increasingly preferable to that of broadcast TV as the economics of the TV business continue to shift.

The Time Warner cable network, which over the last few years has tried to market itself as a place for comedy, said Mr. O’Brien will host an hour-long late-night talk-show starting at 11 p.m., Monday through Thursday, beginning in November. TBS’s recent foray into the late-night genre, "Lopez Tonight," will move to midnight, the network said. Mr. O’Brien left his job hosting "Tonight" at NBC after the network said it would return predecessor Jay Leno to 11:30 p.m.

TBS "doesn’t need the same audience" that broadcast networks do "to be very, very, very successful," said Steve Koonin, president of Turner Entertainment Networks, the Time Warner division that includes TBS. Audiences will notice little difference between seeing Mr. O’Brien on TBS or seeing him on broadcast TV, he added. "The only people who bifurcate" cable and broadcast "are the people in the industry," Mr. Koonin said. "There’s really no separation."

In years past, a move from broadcast to cable would have been deemed a sign of failure, made due to one’s inability to attract a sizable audience that can keep ad money coming through the door. And to be sure, Mr. O’Brien’s ratings during his short-lived tenure on NBC’s "Tonight Show" on NBC did not match those of his predecessor or those of his main rival, David Letterman. But at a time when technology allows TV audiences to watch their favorite programs at times they like best, smaller audiences are becoming more tolerable for both marketers and media outlets.

"In three months I’ve gone from network television to Twitter to performing live in theaters, and now I’m headed to basic cable," Mr. O’Brien joked in a statement. "My plan is working perfectly."

While the announcement raised eyebrows, Mr. O’Brien’s cable choice seems much easier to put into action than the other option he was considering, a late-night program on News Corp.’s Fox. At that network, Mr. O’Brien was said to have faced a number of high hurdles, including persuading Fox station affiliates to run his late-night program rather than the syndicated fare that brings them a healthy stream of ad dollars.

Making the program available on a national basis through Fox could have taken two years, according to a person familiar with the situation. This person said too many stations had prior commitments to syndicated programming in late night, which could have kept Mr. O’Brien’s show from appearing on enough stations quickly enough for a successful launch.
Senior Fox executives told Mr. O’Brien’s team last week that a deal with Fox could not be put together, this person said. In a prepared statement, Fox Broadcasting said, "Conan is a great talent and we wish him every success."

Turner’s Mr. Koonin said he "sensed that a lot of time had passed" in Mr. O’Brien’s Fox negotiations and that he "had an opportunity."

Mr. O’Brien’s cable maneuver follows those by other celebrities who made their bones working on broadcast TV. Oprah Winfrey has ruled daytime broadcast TV for years, but last year opted to start her own cable network with Discovery Communications. That network, OWN, is slated to launch in January of 2011. More recently, Martha Stewart, whose fortunes in syndicated TV were waning, unveiled a pact with cable’s Hallmark Channel that will put her in a significant portion of that cable outlet’s on-air content.

And over the years, many TV staples — "Monday Night Football" among them — have moved from broadcast to cable. A TV critic could certainly make the argument that cable is also home to TV’s more daring dramas, such as "Mad Men," "Damages" and "The Closer," shows that put atypical characters in protagonist roles. Broadcast television has, in turn, hunkered down on procedural dramas and reality fare.

One ad buyer suggested the arrival of Mr. O’Brien on TBS would give the cable outlet more ammunition to compete with broadcast. "I think it is a great get for TBS," said Kris Magel, exec VP-director, national broadcast, at Interpublic Group’s Initiative. "Conan gives them a legitimate program block to compete with broadcast late night programming, which most likely will skew younger. Over the past few years, we’ve seen a nice youth-driven complement to the broadcast late-night programs developing on cable networks like Comedy Central and Adult Swim and E! TBS was already there with George Lopez. This now strengthens their position."

Indeed, TBS’s late-night salvo only crowds an already busy field of play — and not just for the typical middle-of-the-road late-night viewer. While his 11 p.m. start will give Mr. O’Brien a 35-minute jump on rivals David Letterman and Jay Leno, he will still face off against cable competitors such as Jon Stewart and his "Daily Show" on Viacom’s Comedy Central and even Chelsea Handler on Comcast’s E!.

Mr. O’Brien’s TBS show may not do the numbers it would have on Fox. Mr. Stewart’s program, for instance, snared about 1.4 million live-plus-same-day viewers season-to-date as of Feb. 14, according to Nielsen. Mr. Lopez’s "Lopez Tonight" captured just 1.2 million live-plus-same-day viewers for that period. Meanwhile, Mr. O’Brien’s "Tonight Show" on NBC notched an average of 2.92 million between June 1, 2009 and Jan. 24, 2010.

But that may not matter from an economic standpoint. Cable networks benefit not only from advertising support but from programming fees paid by cable systems. So they can tolerate ratings that would never fly on broadcast. Indeed, had NBC been a cable network, its 10 p.m. "Jay Leno Show" might not have been the failure it was in a more traditional television prime-time lineup.

Ad dollars may also flow less readily. CBS’s "Late Show with David Letterman" brought in $271 million in 2009, according to Kantar Media, while NBC’s "Tonight" captured $175.9 million and ABC’s "Jimmy Kimmel Live" attracted 138.1 million. Viacom’s "Daily Show" and "Colbert Report" received $52.4 million and $48.1 million, respectively, while E!’s "Chelsea Handler Show" took in approximately $40.7 million that year.

Turner’s decision to take on Mr. O’Brien will likely give it more ammunition in this year’s coming upfront marketplace, during which many advertisers commit the majority of their media spend for the fall TV season. Turner has over the last few years armed itself with an aggressive sales pitch touting its networks — it also operates TNT and TruTV — as a viable alternative to broadcast programming. Mr. Koonin said he expects Mr. O’Brien to appear at Turner’s May’s upfront presentation.

While Mr. O’Brien was ostensibly pushed from his roost by NBC, TBS is taking pains to suggest Mr. Lopez is taking a hit for the team. The network said Mr. Lopez called Mr. O’Brien to invite him to join TBS and take the earlier time slot.#


  1. YEAY!!!!!!!!
    can’t wait!!!!!!!!!!!!!!!!!!!!!

  2. Excellent read, I just passed this onto a colleague who was doing a little homework on that. And he in fact bought me lunch because I found it for him

  3. Thanks for the share, I have been readin online all day and this was actully worth reading. Thanks

  4. Thanks for the share, I have been readin online all day and this was actully worth reading. Thanks

  5. Informative information and excellent posts you have!

  6. I truly appreciate you taking the time to post this. I really liked reading it and am looking forward to more posts from you! Keep ’em coming.

  7. Now and then I’ll stumble across a post like this and I’ll recall that there really are still interesting pages on the web. ^_^. Thanks.

  8. Great information that is much appreciated. Thank you for providing such interesting content in my quest to lose the flab.

  9. Thanks for your helpful Post, I hope you have a good day!

  10. That’s great.very helpful,thanks a lot

  11. Great information that is much appreciated. Thank you for providing such interesting content in my quest to lose the flab.

  12. Thanks for your helpful Post, I hope you have a good day!

  13. Very good text. I’ve found your site via Google and I’m really glad about the information you provide in your articles.

  14. Thanks for your helpful Post, I hope you have a good day!

  15. Thanks for the share, I have been readin online all day and this was actully worth reading. Thanks

  16. Great blog, appreciate the effort put into this post! Thanks! 😀

  17. Found your site today through Google. Great blog you’ve got, bookmarked.

  18. My bro told me about this site just today. Great blog you’ve got!

  19. Found your site today through Yahoo. Great blog you’ve got, bookmarked.

  20. Thank you for the great content. I am glad I have taken the time to see this.

  21. Great blog!! You should start many more. I love all the info provided. I will stay tuned 🙂

  22. Great blog!! You should start many more. I love all the info provided. I will stay tuned 🙂

  23. This is the best blog I’ve ever seen in my life! I really appreciate you taking the time out of your busy day to share your this with everyone.

  24. I like the journalism relevancy of your website and it will a sweet decent work of presenting the info.

  25. I love your blog.. very nice colors & theme. Did you create this website yourself or did you hire someone to do it for you? Plz reply back as I’m looking to create my own blog and would like to know wheere u got this from. thanks

  26. Wow, amazing blog layout! How long have you been blogging for? you make blogging look easy.

Your Comment

Email (will not be published)