NIELSENWAR: Hindsight, Girlfriends’ Guide, and The Perks of Being In the Cable Scripted Game

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Everyone knows that TV is a pitiless business, where a show lives or dies by the ratings it receives.

Except… not always.

Today, VH1 announced that it was renewing its time-travel dramedy Hindsight, even though the show’s Season 1 finale had a 0.17 rating in 18-49s, losing 70% of its Mob Wives lead-in.  (And that was an improvement over the week before, when Hindsight lost 75% of its lead-in.)  Not long before that, Bravo renewed The Girlfriends’ Guide to Divorce, whose season finale scored 0.33, losing 55% of its Real Housewives lead-in.  FXX has already renewed Man Seeking Woman, which is still playing out its first season, and which last week had a 0.13 rating that lost 59% of its lead-in from It’s Always Sunny In Philadelphia.  Earlier this season, WGNAmerica renewed Manhattan, which may have had more members in its ensemble cast than young viewers watching it.  Meanwhile, over at Sundance, the network’s signature series is Rectify, about to enter its third season and rarely if ever seeing the bright side of a 0.10 rating.

When did get so easy to be renewed?  How can the revenues from these low-rated series justify their continued existence?

All of these networks have something in common:  they’re new to the world of original scripted programming, and by issuing renewals to series that are generally considered high (or at least high-ish) quality, they’re making a statement.  Actually, they’re making several statements, each to a particular group.  (All of this is even more true for pay-cable networks, where HBO alone maintains a veritable stable of low-rated shows like Looking, Togetherness, Dot & Em and Getting On, all of which have received multi-season runs.)

To Members of the Creative Community (and the Talent Agencies That Represent Them):  These are networks that have no track record when it comes to scripted programming, and that makes it very difficult to lure A-level talent, or even names lower in the alphabet.  A writer/producer or actor doesn’t want to commit to a show that’s going to face an uphill climb from the start, with subpar budgets, difficult scheduling, and little hope of grand financial reward or even prestige, only to be thrown off the air because the numbers are weak–and agencies/managers/advisors aren’t going to send their projects and talent to those places.  By renewing marginal shows because the network “believes in them,” (and often by ordering shows that are passion projects for the talent) they’re encouraging the next wave of artists to give them a chance.

To MPVDs (what we used to call “cable operators”):  Here is where we start to reach the financial reasons why these networks, some of them already highly successful without scripted programming, are so eager to join a business where the success rate is low and costs (compared to most reality shows) are high.  Unlike broadcasters, basic cable networks get only about half their revenue from advertising (which is closely tied to ratings results), with the other half coming from a share of subscriber fees paid by each of us to our Multi-Platform Video Programming Distributor.  That enormous pile of money is distributed in a more amorphous way, based on the somewhat subjective value that the MPVD puts on each particular service–which in turn is based not just on ratings, but on how attached viewers are to that network.  The classic example is AMC, which exploded after it began to air Mad Men–even though Mad Men was never more than a moderate success in the ratings.  Scripted series breed audience loyalty, and audience loyalty is what makes MPVDs loathe to lose the signal for a given network when renewal negotiations get tough.  In addition, scripted shows tend to have the kind of viewers more prized by advertisers and MPVDs–higher-income, better educated individuals–and the series also repeat better than unscripted show.  All of this leads to higher fees, which are a far more stable source of income than advertising revenues.  That gives these shows an outsized value that goes beyond their ratings.

To Wall Street:  A more robust programming portfolio boosts the value of a network’s library and therefore of the network itself, especially if it or its affiliated studio shares in the aftermarket of a network run, like streaming and international licenses.  In addition, while reality hits tend to shoot stratospherically high and then flare out quickly (take a look at Duck Dynasty), a scripted show can often increase its viewership from year to year as new audiences catch up with it in the off-season, and can run steadily for years–again, helpful facts for company valuation.

To Viewers:  The broadcast networks, tied almost completely to advertising revenue based on ratings, can’t afford to keep shows on the air that don’t deliver, and series this year as disparate as Red Band Society and Allegiance have been yanked and either burned off months later in bad timeslots or just dumped online.  Keeping a show going that has loyal if less than numerous fans assures viewers that if they fall for a show, the network appreciates their commitment and will keep it going, at least for a while.

In the current TV ecosystem, as ratings go down and subscription fee and library valuations become more and more important to establishing the health of a network, renewed niche shows may become increasingly prevalent, perhaps not so much on heavily-scripted networks like USA or TNT, but on the ever-rising number of new players.  Tomorrow we’ll see the early ratings for The Royals, E!’s first scripted series, and find out whether it’s going to be the next title to join the list although the network has already renewed that show for a 2d season without even waiting for any ratings, we’ll find out if that, too, is more a statement than a measure of ratings success.