Broadcast Bucks for Conan; Turner Ad Sales Up 14%

Late night could be the next programming segment to be subsumed by cable, as TBS’ move to secure the services of Conan O’Brien has resulted in broadcast-parity pricing.Speaking to investors during Wednesday’s second-quarter earnings call, Time Warner chairman and CEO Jeff Bewkes said demand for O’Brien’s upcoming 11 p.m. talk show on TBS has been running high, adding that the new program is commanding rates “on parity with broadcast” pricing. O’Brien’s cable show bows in November.While this may have been news to Wall Street, those who’ve been doing business with the Turner networks are well aware of the TNT and TBS pricing structure. On May 19, David Levy president of sales, distribution and sports, Turner Broadcasting System told Mediaweek he would look to strike Letterman and Leno-echelon CPMs with TBS’ newest attraction.“I believe this is the first program on ad-supported cable to get broadcast CPMs,” Levy said last spring. In securing cost-per-thousands on a par with CBS and NBC’s 11:30 p.m. shows, Levy won the first victory in his ongoing battle to repeal what he calls TV’s “legacy tax.” “We’re still not at a parity with all our original TNT dramas, but we’re getting closer all the time,” Levy said at the time. “Conan’s the proof we have when we say, ‘You can’t just throw all this stuff––our shows, USA’s, Discovery’s, you name it––in a separate cable bucket. That’s just not going to work anymore.’”Bewkes noted that the networks’ programming investments continue to pay high dividends. “Turner’s original programming strategy contributed to the quarter’s strong advertising growth and helped to generate pricing gains at the high end of the recent 2010-2011 upfront,” Bewkes said.If O’Brien’s TBS show is a hit, it could serve to kick out another strut from under an already teetering broadcast edifice. Cable has dominated the kids and news space for the better part of a decade, and but for marquee evens like the Super Bowl and the World Series, sports have long ago shifted over to the ad-supported cable nets. (In April, Turner and CBS cut a 14-year, $10.8 billion pact to share the rights to carry the NCAA men’s basketball tournament.)Indeed, the last stronghold for the broadcast nets may be their prime time scripted fare, the comedies and dramas that can still command six-figure payouts for a single 30-second spot.O’Brien will go head-to-head with Comedy Central’s hit faux news programs The Daily Show with Jon Stewart and The Colbert Report. Irreverent and uproarious, both series have siphoned younger viewers from the broadcast networks.Turner’s pricing demands became particularly aggressive as the advertising industry began showing signs of recovery. As one might expect, Time Warner’s Q2 numbers reflect that confluence of moxie and market factors. The Turner nets (TBS, TNT, truTV) took in $1 billion in ad sales revenue in the quarter, an improvement of 14 percent from the year-ago $876 million.Affiliate revenue was also up sharply. Along with subscription fees garnered by pay-TV service HBO, the Turner nets generated $1.92 billion in distribution dollars, up 9 percent from the prior-year haul of $1.76 billion. All told, the Turner networks unit took in $3.17 billion in revenue, an increase of 11 percent from Q2 ‘09 ($2.86 billion).TNT and TBS finished Q2 second and third among ad-supported cable nets in prime time, averaging 1.2 million and 917,000 members of the 18-49 demo. TNT rival USA Network beat out the Turner property in the demo by some 1,000 viewers, per Nielsen ratings data.Results at the publishing arm were muted. Time Inc. saw Q2 subscription revenue grow 1 percent to $321 million, while ad dollars at the magazine unit were up 4 percent to $503 million.For the quarter, Time Warner secured a profit of $562 million, or 49 cents per share, up 7 percent compared with $524 million, or 43 cents per share, a year ago. Consolidated revenue rose 8% to $6.38 billion as advertising revenue jumped 11 percent, marking the conglomerate’s biggest gain in nearly six years. Based on its stronger-than-expected results, Time Warner raised its full-year guidance.

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Broadcast Bucks for Conan; Turner Ad Sales Up 14%

Anthony Crupi

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Anthony Crupi