Thursday, March 6, 2014

The Olympics and NBC's Actual Strength

A TV season with a Winter Olympics is a highly irregular season. We all know this. And most media seem to have at least some sense of the fact that the Olympics seasons become more and more irregular over time, because sports ratings hold up much better than entertainment ratings.

Unfortunately, the analysis ends there. I have a feeling that when end of season ratings come out in a couple months, we're going to see a lot of this kind of stuff: "NBC had a good year in the 18-49 ratings because Olympics." It's absolutely correct to point out things like NFL/Olympic distortions. In fact, it should be done more often; massive rights fees mean they are not nearly as indicative of network "success" as they appear on the surface. But it shouldn't end there. Sports ratings have gotten to the point where they can serve as an easy excuse from doing actual analysis.

This would be OK if the network race were actually stagnant, if NBC's entertainment programming were still deep in the relative toilet. For about seven years after Friends went away, the network landscape was remarkably consistent. Fox was unbelievably dominant, CBS went from meh to solid, ABC went from solid to meh, and NBC was deeply in the toilet. So those narratives became ingrained, and you can still see them persisting even a couple years later. But in reality, even if you remove the distortions, times are changing. Writing off 2013-14 as "because Olympics" (and probably 2014-15 as "because Super Bowl") and continuing to pretend that we're in a 2005-12 world is doing a disservice. So here's a quick stab at actually trying to come up with something beyond "it's inflated by the Olympics."

Getting at NBC's Actual Strength

As I've said many times over the years, a network's average of original non-sports series is a much better metric than its full primetime average. Networks pay so much for sports that the sports ratings are really just noise when it comes to assessing a network's success, and that noise gets noisier and noisier each year. Looking at how the network race developed in overall and in series-only across the three Olympic weeks, we get some sense of why it's better.

The Sochi Olympics underachieved in the ratings. Given that Olympics generally need to overachieve just to break even, it seems pretty likely they lost money for the peacock this go-round. But "underachieved" is relative. They still got stronger relative to entertainment programming, making them an even bigger game-changer in the ratings horse race. The overall ratings say that NBC went from more than a tenth behind Fox to more than three tenths ahead over the three Olympics weeks. (This same change - from 0.1 behind to 0.3 ahead - occurred in the "official" Most Current ratings from week 19 to week 22.)

The non-sports series ratings, on the other hand, were virtually flat for everyone. Surprise: that's what happens when almost nobody is airing originals! Fox was up a couple hundredths because much of its original non-sports programming was American Idol, while ABC was down a couple hundredths because it aired a lot of low-priority stuff (Killer Women, Super Fun Night and 20/20). But overall, the story is that these three weeks were pretty meaningless in terms of assessing network strength. And that's how they should be viewed.

But these original numbers, while much better than the overall numbers, are still a long way from perfect. I'm not evolved enough to be able to completely eradicate the Olympic effect. They get a lot of the way there by throwing out the inflated Olympics numbers, but they ignore the fact that NBC would've had to put something else there. That something would not have included The Voice and thus would've brought NBC down. This was the network's trajectory throughout this period last year and in January of this year. Then there's the fact that they could set up The Voice's return a month earlier, making NBC a lot stronger in the last month of what was a brutal winter for them last year.

For a look at this effect, here's NBC's week-by-week relative standing in originals from the new year through last week (and through the week before The Voice returned in 2013):
Week Ending 2012-13 2013-14 Diff
14 12/30/2013 106 111 +5
15 1/5/2014 105 110 +5
16 1/12/2014 104 109 +5
17 1/19/2014 102 107 +5
18 1/26/2014 100 105 +5
19 2/2/2014 98 104 +6
20 2/9/2014 97 103 +6
21 2/16/2014 96 103 +7
22 2/23/2014 94 104 +10
23 3/2/2014 93 104 +11
24 3/9/2014 92

25 3/16/2014 91

26 3/23/2014 90

The point here is that the network declined at a very similar rate in the Voice-less period from weeks 14-19, staying a nice five points ahead of the 2013 pace (rising to six in the Super Bowl week 19). These first 19 weeks seem like a legitimate period across which to compare the network's performance, as the programming was about as apples-to-apples as you will ever find in these complicated situations. NBC didn't have the Super Bowl either year, The Voice ended the same week both years, etc.

The gap shot up in weeks 20-22, when having no originals for 2.5 weeks was way better than the Smash crash and Go On and 1600 Penn and everything else that went wrong in February 2013. I expect the gap to continue widening unfairly through week 26, when NBC will compare early season Voice against their 2013 Voice-less sked. The gap may contract somewhat in the closing two months, since The Voice will be farther into its season and NBC will finally actually have to count Sunday against their entertainment average. But it's still probably gonna be larger than it "should" be.

The best play here is to revert to the fairer week 19 pace and say that NBC is "truly" about five or six percentage points stronger vs. the league average than they were last year. If The Voice really overperforms this spring, maybe that'll be too harsh, but it'll probably be close. Apply that +5 to +6 to last year, when NBC rallied to 93 by the end, and NBC is essentially at (or on the cusp of being) an average big four network. That's not a very sexy story. But considering they're just a year removed from three straight years in the 70's, I think they'll take it.

Moral of the story? Yeah, as I'm pretty sure we will hear in May, the Olympics make NBC look a lot healthier than they actually are in 2013-14. It may well be the difference between #1 and not #1. But don't let that convince you that all the numbers are totally invalid. It's possible to have some ratings inflation and yet still have a positive year even after you take out that inflation. And NBC's doing it.


Spot said...

The Live+7 A18-49 season crown race is pure PR nonsense. The best measurement of networks' health is "C3 ratings, excluding sports and specials". Of course, in lack of C3, "Live+SD, excluding sports and specials" is very good approximation.

I hope you're excluding specials in your above numbers. If not, you're still on right track, just not yet there.

Anyway, I don't have numbers, but it's intuitively clear that by that measurement NBC and CW are up this year, ABC and CBS are meh (like league average drop), and only network in real trouble is Fox. Not ABC that media like to make fun of... though in a few years two absolutely disastrous could come back to haunt them.

Spot said...

I think the narrative about NBC still being in the toilet is now mainly wrapped around Must See TV Thursday. The network had an unbelievable 20 year reign as being number one on that night. Now that they are a distant fourth on the night, it's a clear-as-day example to some people that NBC's strength is illusory.

I also think there's a larger identity/expectation about each Big 4 network by the entertainment industry based on their ratings performance over the past few decades.

NBC: Number 1 network
CBS: Old but broad-skewing
ABC: Perennial also-ran
Fox: Brash/Loud, youthful upstart

When there's some story that challenges that, it becomes noteworthy: ABC's magical 2004-2005 season (Desperate Housewives, Lost, Grey's Anatomy, Dancing with the Stars) made it look like the network could become number 1. CBS winning the 18-49 demo last season was a first in over two decades. And NBC mismanaging its way to the cellar was incongruous with its successful history.

Spot said...

NBC could easily win this year in originals. They're two Plus points down on CBS, and have got The Voice running every week down the stretch while CBS lose HIMYM in a few weeks and TBBT for a basketball break.

I've said before that this NBC reminds me of a weaker version of imperial-era FOX, a network built around sporting and vocal competition with some useful drama pieces. I stand by that; the big narrative is that they're adding more useful drama pieces with Blacklist and the Chicago franchise (and SVU has strengthened, too). The narrative is damaged by yet another comedy strikeout, and given the strength of NBC sitcoms in decades past (and this year's strikeouts didn't even have critical acclaim) it's unsurprising that NBC still gets looked down on.

Spot said...

I don't think it can be overstated just how bad NBC's February 2013 sweeps were. Deception, Do No Harm, Go On, TNN. Nothing was sticking.

Spot said...

There's interesting article on Deadline today. It says NBCU revenue from Sochi Olympic was $1.1 billion. There's $840 million from broadcast division. I wouldn't expect so much given disappointing ratings, but those are official numbers. However, they did say before games there will be 185 hours of Olympics on NBC broadcast network. Then NBC aired around 130 hours of Olympics somewhere outside of the primetime. And that makes that big revenue number more logical.

And then there's $260 millions from NBCU cable networks. That's whopping, I'd expect at most 50% of it. Planned schedule was: NBCSN (230 hours), CNBC (36), MSNBC (45), USA Network (43). Plus around 1000 hours online at NBCOlympics-dot-com.

Bottom line, NBC paid $775 million for license to air Sochi games. On top of that, there's production costs, and promotion... but even if it's $100 million each, they're still more than $100 million in black. And, let's not forget Olympics value as a promotional platform.

Now I think 2016 Summer Olympics in Brazil will be huge financial success for NBCU. They agreed to pay $1.23 billion for Rio de Janeiro, seemingly splurge, but if they squeezedd more than a billion bucks out of Sochi ratings dud... Rio is in the same time zone, plus it's summer games, so ratings surely will be much higher, might even go through the roof.

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