If you haven't heard about the bitter game of musical chairs played on NBC this January between Jay Leno and Conan O'Brien, then you've missed some awesome television. In a nutshell, NBC's failed attempt to keep Conan O'Brien from leaving the network only ended in O'Brien escaping anyway, leaving behind a ratings and scheduling mess.
Once again, it was all over who would be the host of The Tonight Show. NBC thought it could get a younger and edgier comedian to lead the program. Its plan was to replace Leno with O'Brien. Yet, for some odd reason, NBC wouldn't let Leno leave. It decided to put him on 10PM every weeknight instead, dropping its lineup of dramas and reality shows in that time-slot.
Long story, short, the whole thing mis-fired. NBC affiliates complained about the low ratings both Leno and O'Brien were getting in their new positions. NBC came up with an insane plan to fix it by moving things back around. O'Brien didn't go for it and decided to quit, getting a $40 million severance package.
Jeff Zucker, the president and CEO of NBC Universal, talked to Charlie Rose on Jan. 18 about this whole situation. Zucker said that essentially they need better programs. In other words, it needs programs that get high ratings to appease their affiliates. Now, I have nothing against the affiliates and I'm all for better programs. NBC will greenlight more scripted shows, which, as a fan of programs that employ writers and actors, I support, but, if I ran NBC, my solution would have been a little bit different.
Late in December 2009, Andrew Vanacore, business writer for the Associated Press, posted a story online, regarding the future of TV, which seriously peaked my interest. He wrote that TV stations have broadcast informative and entertaining programming for free for over half-a-century. ABC, CBS, NBC and FOX provide a significant chunk of that programming. That programming like American Idol or CSI cost millions of dollars to make. Those millions come from revenues paid by advertisers like Nike or Coca-Cola that buy commercial time, and this has been the way it's worked on broadcast TV for 60 years. Yet, in his article, Vanacore stated that this model is no longer enough.
TV networks got millions of dollars from advertisers because the networks could deliver high ratings. The networks used to be able to command large audiences, but cable TV and the Internet have seriously taken away free TV's viewers, as well as their advertisers.
Vanacore quoted Rupert Murdoch, the founder of News Corp., the company that owns the FOX networks, and Murdoch said, "Good programming... can no longer be supported solely by advertising revenue."
Therefore, what can a network do? What can NBC do? Out of the four major networks, NBC was the least rated. Its viewing audience had sunk the most, falling far behind ABC and CBS. Low ratings mean it's not going to get a lot of money from advertisers, so it will not be able to afford its programming.
In December 2009, it was announced that NBC Universal would have 51% of its ownership turned over to Comcast. Based out of Philadelphia, Comcast is the largest cable provider in the United States. Comcast probably did this because it wanted control of NBC's cable channels. Currently, NBC Universal owns CNBC, MSNBC, USA, SyFy, Bravo, AMC, Telemundo, and The Weather Channel.
Unlike their sister network, all those cable channels are doing very well. They're not struggling. One reason is in part due to the fact that unlike NBC, which only gets its income from advertising, the cable channels get advertising dollars as well as money from cable subscribers. Unlike NBC or ABC, cable channels also don't have to pay affiliates to broadcast their programming.
In Vanacore's article, he talked about how FOX wanted to utilize that same model and negotiate money from cable providers. Other networks like CBS are planning to do the same, but when Jay Leno's show at 10PM wasn't doing well, the affiliates threatened to preempt the show with their own programming. There is a lot of syndicated shows that affiliates could use to fill holes usually provided by the networks.
Zucker and the executives at NBC didn't want to see that happen, so they cancelled Leno's 10 p.m. in order to pacify the affiliates. Obviously, if a show is getting low ratings, then that's what they should do. However, my solution is one that Vanacore suggests. He wrote, "Over time, the networks might be able to get even more money by abandoning the affiliate structure."
Comcast has hinted that it will leave NBC alone and only focus on the cable channels and related assets, but what if instead of trying to appease affiliates, as it did with Leno's show, what if NBC let go of the affiliates and only appeased itself? The other networks, aside from the CW, aren't owned by companies that are also cable providers. NBC is in a unique situation that a cable company now owns much of it.
If last year's switch to DTV proved anything, it proved that many Americans already get their programming from a cable provider like Comcast. Cable fees would potentially increase, but NBC might not have that much to lose, if it did ditch its affiliates completely.
If all the networks did that, it would seriously affect their viewership. It could mean a lot of losses. It wouldn't end free TV. It would just mean that the free programs would no longer be from ABC, CBS, NBC or FOX. If I were Jeff Zucker, I might suggest going down that road. NBC should become solely a cable channel.