October 14, 2013

THE SKED: How Much Do The Networks Make From Their Shows?


AdWeek has published its annual survey of the actual prices advertisers agreed to pay in the Upfronts for 30-second spots in the network primetime line-ups, and as usual, it’s filled with fascinating information.  It helps, though, to keep the following in mind:

A typical network hour contains about 20 30-second national ad spots.  The remaining non-show content is a mix of promos and ads sold by local stations.

For a new 1-hour series, a network typically pays about $2M per episode as a license fee.  Multi-camera sitcoms and unscripted shows come cheaper.  These numbers are the subject of frenzied negotiations each year, so numbers may vary greatly–e.g., it’s safe to assume that ABC is paying far more than the norm for Agents of SHIELD.  Also, after the first year, a renewed series gets a higher license fee each year it’s on the air, and if it becomes a long-running smash hit, the cost can escalate precipitously.  License fees also don’t cover marketing or other network expenses.

Prices are based on minimum ratings guarantees made in MayIf the show being purchased outrates its guarantee, the advertiser gets the benefit of the bonus.  If, however, the show doesn’t meet its guarantee, the network has to pay a refund for the unrealized value, either in the form of “make-goods” (free commercial time elsewhere on the schedule) or, if all else fails, cash.  For example, ABC doubtless owes refunds to every advertiser on Betrayal.

Advertisers don’t pay for viewers watching shows, they pay for viewers watching commercials–and only during the first 3 days after broadcast.  All those charts and press releases and excited articles you see about Live+7 ratings, and how much higher they are than the ratings for same-day viewing, and how the whole paradigm of how to watch television is changing?  They’re meaningless to the network bottom line, and useful only for the agents making deals for the talent’s next show.  Advertisers only pay for viewers who sit through the commercials within 3 days of air, and those are the only numbers that count toward ratings guarantees.  (The networks almost never allow what are called C3 numbers–meaning commercials viewed within 3 days–to be public, but experience shows that they’re awfully close to the overnight ratings found here and elsewhere each morning.)

Real deals are much more complicated.  In real life, networks and advertisers negotiate premiums or discounts based on number of units purchased, placement within a given show and within a given commercial break, demographic subsets of the 18-49 ratings based on income, location, specific age and gender, among other variables (especially men 18-34, the holy grail for advertisers), and on and on.  In addition, an increasing number of deals include digital and VOD components.  So none of this is holy writ.

Nevertheless, it’s worth a close look.  A few points worth noting:

NBC:  THE VOICE, naturally, is a giant moneymaker, filling 3-4 hours per week at $265K per spot.  That’s $16-21M per week, making the series the most profitable (for the network) on television.  Advertisers showed their support for THE BLACKLIST by agreeing to a price of $200K per spot, double what Revolution earned last season.  On Tuesdays, THE BIGGEST LOSER is the lowest-priced show in the 8PM hour, probably reflecting its demographics.  It seems as though advertisers got a bargain on CHICAGO FIRE, which was priced below Person of Interest at 10PM, but has been consistently outrating it.  The Wednesday numbers make it clear that SVU only remains on the air because of its ancillary value–at $64K per spot, ad revenues don’t come close to paying for the show’s cost.  Madison Avenue was also very down on IRONSIDE (with good reason), at a measly $71K per spot.  Thursday prices accurately forecast the night’s low ratings, with only THE MICHAEL J. FOX SHOW, at $110K per ad, above the $88K mark.  As we’ve noted here before, the $570K rate for SUNDAY NIGHT FOOTBALL is gigantic, but even with a 3+ hour running time and a heavy ad load, the total doesn’t match the $60M per week NBC pays for the license fee and production costs.  Football is a huge boon for ratings points and (arguably) promo opportunities, but it doesn’t turn a profit on its own.

CBS:  The Eye is taking a big hit on its Monday revenues.  HOW I MET YOUR MOTHER is only down mildly from last year, $168K compared to $188K, but 2 BROKE GIRLS fell from $269K to $178K–and with its demotion to 8:30PM, it might not even hit those guarantees.  The untried MOM was at $138K, compared to the $192K last season for MIKE & MOLLY at 9:30PM.  CBS is probably giving make-goods already for HOSTAGES.  Tuesday and Wednesday are stable, but down, reflecting the network’s aging audience for those shows–the difference, over the course of the two nights, is probably a net loss of $2.5M in revenue per week.  THE BIG BANG THEORY properly gets the highest non-football number of the week at $326K, but not unexpectedly, THE MILLERS won less enthusiasm at $122K.  For a new series, THE CRAZY ONES was quite well-priced at $175K–although whether the show is delivering its guarantees is open to question.  The network is also seeing its Sunday prices shaved, again because of aging and declining shows.

ABC:  DANCING WITH THE STARS has plunged by 40% this year, from $160K to $95K–no doubt ABC had to provide many make-goods for Dancing last season.  AGENTS OF SHIELD was high-priced at $170K, but the rest of Tuesday night was a relative bargain–and very possibly unable to meet even the low marks required of them.  As really big audiences become harder and harder to find on network TV, MODERN FAMILY was sharply up at $257K per spot, but advertisers lost faith in NASHVILLE, which tumbled from last season’s $143K price to $96K.  Even with a steep rise to $200K per spot, SCANDAL may be a bargain, still priced below the $206K for GREY’S ANATOMY, which it’s been outrating.  Sunday revenues were slashed with lower prices for all three dramas–and BETRAYAL certainly isn’t hitting its guarantees.

FOX:  A bargain on Mondays, as SLEEPY HOLLOW was priced at $139K, below last year’s $168K for THE MOB DOCTOR, a show it’s outdelivering in every way.  Interestingly, while everything else on the Tuesday schedule is lower-priced than last year (including an ugly discount on NEW GIRL from $321K to $232K, reflecting the high expectations the show didn’t meet last season), THE MINDY PROJECT was modestly up–although once again, perhaps that increase is now leading to make-goods.  The 3 hours of THE X FACTOR are priced at roughly $100K per spot less than last year, a loss for FOX of $6M per week–and that’s if it’s meeting its guarantees.

CW:  The renewal of THE CARRIE DIARIES despite a per-unit rate of just $20K is testament to this network’s very different business model.  The ad rate means total revenues of $400K per episode, which wouldn’t pay anything like a normal network license fee. (Even THE VAMPIRE DIARIES, the network’s highest-priced show, generates little over $1M per episode at a $55K rate, far less than what a network would pay for a veteran hit.)  CW earns its real money from streamed viewings and especially from Netflix, a $1 billion deal that expires in a couple of years and the extension of which (or finding a substitute licensor) could well make the difference between life and death for CW.

About the Author

Mitch Salem
MITCH SALEM has worked on the business side of the entertainment industry for 20 years, as a senior business affairs executive and attorney for such companies as NBC, ABC, USA, Syfy, Bravo, and BermanBraun Productions, and before that, at the NY law firm of Weil, Gotshal & Manges. During all that, he has more or less constantly been going to the movies and watching TV, and writing about both since the 1980s. His film reviews also currently appear on and In addition, he is co-writer of an episode of the television series "Felicity."