As discussed in a previous post (Dec 22) the Jay Leno show has been at risk due to low ratings. Yesterday Jay made light of the current cancellation rumors. Video clip here: http://www.thejaylenoshow.com/video/clips/leno-talks-cancellation/1191249 There are lots of business reasons for the potential re-working of late-night television. Reports seem to indicate that Jay would go back to late-night where he is a dominant figure and has been for 17 years. Why the problems with low ratings? NBC knew that the Jay Leno show would not attract as many viewers as its prime-time offerings. The problems are that the low ratings are destroying affiliate and O&O stations’ new ratings as well as having a deleterious “halo effect” on prime-time. One could say that everyone is losing money on the deal.
Taking one money-losing portion at a time: First the local affiliates and their newscasts. A broadcast network actually owns the stations that cover a large portion of the country, up to approximately 35%, varying slightly by network and NBC’s percentage is 27% owned-and-operated coverage. That leaves approximately 73% of the country that is covered by affiliate stations and the cable systems that pick them up. the local stations depend on the network for a good lead-in to their news to get good ratings. The problem for the networks is that people tend to “fall in love” with their local newscasters and have a very high loyalty to a local news team. If NBC is effectively chasing away viewers to other stations, the viewers have a chance to “fall in love” with another news team. The effects would take a long time, perhaps years to undo. So the affiliates want the problem fixed and fixed fast.
The O & O stations have a similar problem and the O & O stations deliver a lot of profit to the networks. But if the network was making money otherwise, it could take the decrease in revenue from its O & O newscasts. It sometimes happens during special events (the Olympics, etc.) that the network might take a brief hit to the O & O newscasts for the greater good of the network. But a long-term hit might take years for the O & O stations to undo, the same as for the affiliates. News is a very competitive business. The other stations will be doing all they can to attract and keep the disaffected network viewers.
Most important, however, to the network is the developing “halo effect” – all of NBC’s primetime ratings are falling. Is it due to the Leno experiment? Or partially due to the Leno experiment? It is hard to tell but ratings for NBC have clearly fallen to very low numbers. NBC’s primetime was not doing well before Leno (http://www.huffingtonpost.com/2009/05/28/nbc-primetime-ratings-hit_n_208518.html) and had already hit lows. So it is difficult to sort out the reason for the Fall decline, but various outlets are reporting that NBC has as many as 18 pilots in the pipeline for next year – a possible sign that they were preparing to bail on the Leno experiment a while ago. (http://www.forbes.com/feeds/ap/2010/01/08/entertainment-broadcasting-amp-entertainment-us-tv-jay-leno_7261171.html).
Back when I worked at NBC, the two big revenue generators for the network were primetime and latenight. Primetime ratings are in the tank and Conan has not kept the same latenight ratings that Leno had when he ran the “Tonight Show.” My guess is that NBC is hurting and changes are coming very soon.