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Conan’s TBS Show Nears Leno and Letterman Pricing–A Conan O’Brien Spot Costs $30,000 to $40,000, but Package Deals Complicate Comparisons

Aug 26, 2010  •  Post A Comment

By Brian Steinberg
Advertising Age

Do advertisers consider Conan O’Brien’s upcoming cable show equivalent to Jay Leno and David Letterman’s programs on broadcast networks?

Time Warner’s Turner cable unit is securing $30,000 to $40,000 for 30-second berths in Mr. O’Brien’s show on TBS starting this November — an eyebrow-raising figure because it’s close to the cost for commercials during NBC’s "Tonight Show with Jay Leno" and CBS’s "Late Show with David Letterman," according to ad buyers. Cable shows typically draw smaller audiences than broadcast programming but in recent years that gap has begun to narrow.
"The value they are charging is in the ballpark" of the broadcast networks’ late-night prices, said one buyer. The price of a 30-second ad on "Tonight" or "Late Show" can range from $30,000 to $45,000, buyers estimated.

Turner has aggressively told marketers that commercials during Mr. O’Brien’s much-anticipated show carries similar value to those during Mr. O’Brien’s "Tonight Show" on NBC last year. "Overall the pricing we’ve achieved for Conan’s new show is comparable to that of late-night programming on broadcast television," a Turner spokesman said, declining to comment on specific prices. "What we continue to do, whether it involves Conan or other original programming, is to offer premium content that creates a great environment for advertisers."

There is enough complexity in the ad sales process that direct comparisons are difficult. But establishing the value of Mr. Conan’s new program is crucial to Turner. The cable unit has forcefully been adding to its programming lineup, part of a broader effort to give advertisers "broadcast replacement" fare that attempts to mimic broadcast’s reach at more attractive prices. Turner has added several dramas to its TNT network, snatching up cult-favorite cop show "Southland" after NBC dropped it last year, for instance. It also formed a joint effort with CBS to show a good chunk of the NCAA men’s basketball championships across its many cable outlets.

But Mr. O’Brien isn’t a must-see sports event or a favorite drama. His cable debut will further fragment the late-night audience, and his show’s 11 p.m. berth could also vie for young male viewers with Comedy Central’s "Daily Show with Jon Stewart" or even the Adult Swim programming block on the Cartoon Network, a Turner sibling within Time Warner.
There is a significant number of viewers, however, to fight over. "Daily Show" has captured a bigger average audience of people between the ages of 18 and 49 — around 861,000 viewers — this season to date as of Aug. 15 than ABC’s "Jimmy Kimmel Live." But ABC’s "Nightline," CBS’s "Late Show"and NBC’s "Tonight" bring in the lion’s share of this demographic, the one that most advertisers covet. "Nightline" captured about 1.27 million viewers from 18 to 49 in the season to date through Aug. 15, while "Late Show" drew 1.21 million and "Tonight" averaged 1.41 million, according to Nielsen.

In its outreach to ad buyers, Turner guaranteed that Mr. O’Brien’s ratings among audiences aged 18 to 49 would match those of Mr. Letterman and run about 15% below those of Mr. Leno, according to a person familiar with the company’s offer to advertisers. Turner now believes Mr. O’Brien’s 18-to-49 ratings could be just 10% below those of Mr. Leno, this person said.

Buyers expect robust ratings for the first few weeks of Mr. O’Brien’s program, but also believe they’ll have to wait until January to see if his ratings are sustainable. Indeed, according to two people familiar with the situation, some ad buyers have tried to see whether Turner would take lower ad rates for the first quarter of 2011 in case Mr. O’Brien’s show cools over time. Turner refused to negotiate such deals, according to these people.

Turner has been selling packages of ad inventory for Mr. O’Brien that could include a marketer’s commercials showing up not only in the first-run broadcast of his new program but also in a repeat later the same night, according to several ad buyers and the person familiar with Turner’s offer. A small number of packages aimed at keeping advertisers who bought time in lower-rated, lower-priced comedies last season but who could find the new prices prohibitive call for ads to run in Mr. O’Brien’s show as well as in "George Lopez Tonight," the TBS companion comedy show that will also run two times in late night, these people said.

Arranging such parcels of ad inventory prompts the question of whether it lowers the ultimate cost of a single ad unit. "I don’t think anybody that I represent has bought a ‘Conan-only’ package," said one media-buying executive. "Most advertisers do business across multiple dayparts with the network, and actually with both of their entertainment networks, so it’s hard to isolate [a single unit price]." Turner also owns TNT, as well as TruTV, Cartoon Network and TCM. Broadcast networks also make use of packages to sell late-night programs, ad buyers said.

Advertisers are likely to structure their schedules so the majority of their commercials appear during the first run of Mr. O’Brien’s show, another buyer said.

Sales for Mr. O’Brien’s show have been robust, according to buyers. Movie studios have shown strong interest in the first week of the program, and so-called "scatter" advertising, or commercials purchased closer to air date, for the show’s run in the fourth quarter is close to being sold out, according to the person familiar with Turner’s offer to advertisers.

Buyers, however, will be making sure they get the ratings they’ve been promised. "There’s a lot of speculation about how well he’s actually going to do," said one buying executive.

 

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