News item: In fourth quarter 2008, the broadcast networks lost three million viewers or 7% of their total audience when compared to a year ago. Meanwhile, USA Network recorded an industry high 2.86 million viewers in prime time throughout 2008.
The fact is that the so-called “top tier” cable networks such as USA have been facing the same competition and potential for audience fractionalization that the broadcast networks have faced for the past 25 years. The emergence of smaller, niche cable networks have the ability to siphon off viewers from both broadcast networks and “top tier” cable networks. Moreover, these smaller networks continue to make inroads as cable operators, satellite and phone companies consider the number of channels offered as a “churn buster” along with other services. Yet the ratings of many larger cable networks have not been impacted negatively.
Despite the unending competition, what these top tier cable networks have been able to do to maintain viewers is to continually roll-out quality original series. From USA’s Monk, which has 100+ episodes, to TNT’s The Closer, which attracts over 7 million viewers each week, to the critically acclaimed and Emmy Award winning drama Mad Men on AMC, these original series have become well-known and popular with viewers and marketers. Many, but not all, of these scripted shows air during the summer months serving as counterprogramming to the reruns and reality shows that the broadcast networks air (USA had five original series during the summer of 2008).
Cable networks are increasingly airing first run original series throughout the year. For example, in the fall of 2008, TNT introduced Raising the Bar in September 2008 and Leverage in October 2008. FX premiered Sons of Anarchy (the heir apparent of The Shield) and USA’s The Starter Wife began in October 2008. In January 2009 (when the broadcast networks unveil their “second season”) USA is returning Monk, Psych and Burn Notice for a truncated run (four to five episodes) and TNT is bringing back The Closer for five telecasts. In January, TNT premiered a new drama Trust Me as did A&E with The Beast. FX, a cable network noted for original programming, brought back another season of Nip/Tuck and Damages in January. The final season of Sci-Fi’s Battlestar Galactica will begin in January as well. Looking ahead, Rescue Me will return to FX and AMC is expected to bring back the Emmy Award winning Breaking Bad this spring.
Despite the production costs, there are several reasons why original series continue to thrive on cable television. Unlike the broadcast networks, which can require a 22-episode commitment for a regular series, cable networks order a limited number of episodes (typically 11 to 16). Hence, because of the limited commitment, cable originals can attract actors that have never been a regular on a network television, such as William Hurt, Patrick Swayze or Holly Hunter. The limited programming commitment of cable originals enable actors to work on other projects such as movies or theater. In addition, cable networks do not adhere to a broadcast calendar and can run original series throughout the year regardless of the month (and there are no sweeps). As an example, the first year of Damages premiered in July 2007 and the second season debuted eighteen months later in January 2009.
The content on cable networks are not monitored as closely by the FCC as the broadcast networks are. Hence, they can put on riskier content that are answerable only to marketers. Another advantage, cable networks have access to two revenue streams from advertisers and cable operators, broadcast networks rely on only ad revenue. Cable networks can amortize their programming assets easier by running encore telecasts of an originals series at any time, which the broadcast networks cannot. Similar to broadcast programs, original cable series can produce revenue by DVD sales, off-net capabilities, product placement and global distribution.
Looking ahead, a number of original series will continue to be programming staples on cable television. TNT announced plans to introduce two new series slated for 2009, Time Heals and The Line and USA recently gave the go ahead with Royal Pains. Meanwhile, the broadcast networks continue to air less and less scripted entertainment shows.
While the television model may not be broken (the broadcast networks did generate $9+ billion in the upfront last year), the cable networks realize they have an advantage and are not afraid to use it.