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How The CW Stays Undead (Source)
The CW's owners say that despite eight-figure losses at the network, the profitable buzz-worthy shows make it an overall win
How Dollars Flow To CW's Makers
Losses on the network level at The CW are offset by the profits its co-owners Warner Bros. and CBS earn from revenue related to shows they own that air on the network. CBS also owns nine CW-affiliated TV stations: WPSG Philadelphia, KBCW San Francisco, WUPA Atlanta, WKBD Detroit, WTOG Tampa, KSTW Seattle, KMAX Sacramento, WPCW Pittsburgh and WGNT Norfolk.
Here is how ownership of the shows on The CW's schedule breaks down:
CBS' CW Program Properties
America's Next Top Model (started on UPN)
90210 (studio remake)
Melrose Place (studio remake)
Warner Bros. Program Properties
Smallville (started on The WB)
Supernatural (started on The WB)
One Tree Hill (started on The WB)
Jointly Owned Program Properties
Gossip Girl
Vampire Diaries
Life Unexpected
In the three-plus years that The CW has been on the air, it has built a growing coterie of buzz-worthy shows, launched a handful of budding box-office stars, and forged innovative approaches to advertising to its gadget-friendly but finicky 18-34 target audience. Yet the network's future has been questioned in industry circles since its creation was announced in late January 2006.
The doubt may be rooted in the fact that The CW, like many businesses that had to face the perils of the last couple of years, has not met all expectations set for it.
In unveiling the joint venture, executives at CBS and Warner Bros., the co-owners of the network born of the former WB and UPN, said they expected The CW to be profitable from the start and become a “fifth great broadcast network.” Yet in 2009, The CW lost tens of millions of dollars. Bernstein Research estimates the loss at $25 million to $50 million, and one source indicates that the loss is closer to the high end, though it pales in comparison to NBC's reported $500 million deficit in 2009. What's more, the network's ratings are routinely and firmly in fifth place among the English-language broadcast networks in many key demos.
But according to the people who really count in determining The CW's fate—the network's owners and affiliates—The CW will be here for a long time. The actual network's red ink is just part of the picture, according to CBS and Warner Bros. executives who say that despite the losses on the network level, the profitable programming assets created by the venture overall are a big win.
“So long as the economic model is consistent or better than it is today, we see no reason not to be fully invested and supportive of The CW as a brand, as a broadcast network and whatever ancillary businesses are developed as a result of this investment,” Warner Bros. TV Group President Bruce Rosenblum says. “So there's no hidden agenda here. There's not an end date to the network.”
Rosenblum and CBS' Senior Advisor to the CEO Nancy Tellem, who sit on The CW's board with CBS chief Leslie Moonves and Warner Bros. Chairman Barry Meyer, went on the record with B&C last week to express their commitment to the network and set straight how they evaluate the investment. Rosenblum, Tellem and several key CW affiliate executives praised the venture's progress in the face of the unforeseen circumstances of the network's formative years—factors such as the WGA strike, the country's economic collapse, the digitally driven revolution in consumer habits and changes in TV viewership metrics.
“When you reflect back, it's pretty impressive what The CW accomplished in its early years against considerable headwinds,” says Tellem, who is CBS' executive overseeing the network. “The CW is a network that everyone in the broadcasting industry should be rooting for.”
The execs say that syndication, international, digital, home-entertainment, merchandising and other ancillary revenues that the partners derive from shows that air on The CW platform offset the losses, and will keep The CW setting trends for years.
A HOLISTIC INVESTMENT
Rosenblum argues that those who look simply at the network's losses don't get the scheme. He looks at The CW as a “holistic investment in both the network and the content.”
From the Warner Bros. standpoint, Rosenblum says the profit from the shows the company controls on The CW exceeds its share of the losses. Profit and loss on The CW are split 50-50 between Warner Bros. and CBS.
“Has it been more challenging to grow our audience than we initially expected? Yes,” Rosenblum admits. “Has the network generated as much revenue as we initially anticipated? No. But has the network succeeded in its strategic initiative of the creation of content that benefits both of the partners? A strong yes.”
CBS also looks at the venture from a more macro perspective. “In four short years, The CW has proved its ability to develop hit programs for a specific target audience, creating and sustaining profitable program franchises for both parent companies,” Tellem says. “We established a brand. Every year we had a hit. From a studio standpoint, a content creation standpoint, we built franchises and assets that not only grew on The CW but internationally. To us, it's a win-win.”
CBS officials point out that new franchises launched on The CW—Gossip Girl, the 90210 remake and this year's freshman entry Vampire Diaries—proved profitable their first year out. Typically in the broadcast network paradigm, studios don't recoup their deficit for several years, if they do at all. 90210 currently earns $2 million per episode in foreign revenues, according to sources. Legacy shows carried over from UPN such as America's Next Top Model, and former WB shows such as Smallville, Supernatural and One Tree Hill, continue driving revenue for the parent companies.
The owners see upside in exploiting the program assets further, but also in creating new revenue opportunities with CW's core network viewership. “The CW has firmly established a distinct place in the broadcast space among 18-34 viewers—a segment that is rapidly growing in sheer size, as well as influence among marketers,” Tellem says. “It is also an audience with more monetization potential in the future as television evolves to a more integrated approach with content creation, distribution and audience measurement.”
Some key affiliates also weighed in on The CW's longevity. Hearst Television Senior VP Frank Biancuzzo's two linear CW affiliates, in Orlando and Kansas City, are among the top-rated CW affils. “Our group is very pleased with how they continue to evolve,” he says.
Gray Television President/COO Robert Prather, whose company has seven CW digital channel affiliates, tells B&C that Gray's affiliation with The CW overall is profitable. “They seem to be getting better every year,” he says.
Sean Compton, senior VP of programming and entertainment for Tribune Broadcasting, like most current Tribune executives, was not at the company when it made the initial 10-year major-market affiliation deal that runs to 2016. He acknowledges that the broadcast landscape in general is challenging: “My feelings about The CW are like my feelings for all the networks; it's a tough time.”
But Compton adds that he's “clearly happy with the efforts CW has made. The first-run shows all look good—they're not doing it half-assed.”
But going forward, he's looking for the network's programming to cast a wider demographic net. “I wish CW would go a little broader,” he says.
That indeed is the network execs' intention. “Next is to broaden out our schedule even further,” CW President of Entertainment Dawn Ostroff says of the opportunity to build on this season's successes with breakout Vampire Diaries and promising newbie Life Unexpected, which debuted on Jan. 18.
The fact that the network and its affiliates are so in line with the goal of broadening the programming typifies the close manner in which they've been operating, execs say. CW Executive VP of Distribution Elizabeth Tumulty says the network culture is one of a startup in which all stakeholders exhibit real ownership. “It's a small group, so everybody truly has a voice,” Tumulty says. “Even the affiliates, they are truly heard. If they call Friday, we're talking about it Monday.”
She adds that CW COO John Maatta leads open communication by example: He includes his home phone number on his business cards.
NOT GOING CABLE
Rosenblum calls the affiliates “a very important piece of the distribution puzzle.” He also refutes speculation in the industry that it is only a matter of time before CW goes all-cable. “That's not in the strategic game plan to convert this 100% to a cable model. We have a very important partner in our broadcast stations in the top 100 markets,” he says. “Unlike the other four broadcast networks, we have had a hybrid model going back to The WB 100+. We've used cable to help fill out the distribution footprint. But it is not on our strategic hit list to convert this thing to cable.”
But it's a fair question, one being asked about all of the broadcast networks. Comcast Chairman and CEO Brian Roberts, whose company is seeking approval of a deal that will give it control of NBC, addressed the same notion last week. He said that any thought of migrating NBC to cable is “right off the table.”
Despite the network's success penetrating the youth Zeitgeist, that is not to say there isn't significant room for improvement. By all accounts, Maatta and Ostroff must create more lucrative programming assets for their parent companies, mitigate the network losses, convert the buzz to new revenue, and continue to aggressively market and work with their affiliates to improve flow and compatibility with local programming and, of course, ratings.
The CW does get compensation from affiliates for its programming, and while Maatta would not specify how much that comp is worth, he called it a “material percentage” of revenue for the network. It is built into the model from the start, a la The WB.
Retransmission consent cash on the horizon could serve to supplement that comp, though Maatta says the retrans model will be established between the big networks and the MSOs. “Once that business model is set up, we'll participate,” he says.
According to Maatta, the fundamental direction of The CW has been established. “Now it's just the execution, the pick-and-shovel tactical work of actualizing the strategy,” he says. But all change takes time, he points out: “Anything you do in this business is like turning an ocean liner.”
And the backers of The CW maintain that this ship is firmly on course.
Q&A: The CW's Dawn Ostroff on Growing Up Fast (Source)
CW entertainment chief Dawn Ostroff talked exclusively with B&C Executive Editor Melissa Grego about the network's long-term viability, the pressure to get the network in the black and more.
CW entertainment chief Dawn Ostroff talked exclusively with B&C Executive Editor Melissa Grego about the network's long-term viability, the pressure to get the network in the black and more. An edited transcript of the interview follows.
Four years since its birth, is the network where you expected it to be today?
In some respects, the network is even further [along] than where we expected to be. We have been on the air for three years and a few months. We had some hurdles that were quite large to overcome, some of which we didn't anticipate, some which we knew very well we'd have to do.
The CW was announced in January [2006], we had our upfront in May, went on the air in September. The train was running 1,000 miles an hour as we were all jumping on. In a short period of time, we made a name for this network.
Creating a brand, and finding the white space for our network and carving a niche for us with the advertisers, came fairly quickly. Every season, we've been able to launch a show that has really helped make a name for the network and really stood out. That came quickly. Creating stars for the network came pretty quickly. Becoming known for provocative campaigns and buzzworthy shows has come fairly soon.
The advertisers have been so supportive and totally understand what we're trying to do here, and find us a must-buy when they're trying to reach young women.
I understand that the parent companies' success with the backend of the shows on The CW at the moment offset the losses on the network level. But what sort of pressure do you feel to get the network in the black, and when do you expect that to happen?
We are where we anticipated being. Last year for everybody was quite a complicated year. Nobody anticipated the economy being where it was. We had a great year in many respects last year. As the economy recovers, so will we. I think everybody feels good about where we are right now.
Do you think The CW will survive long-term?
I think The CW will survive long-term because when you look at the assets created for the parent companies through UPN, The WB and now The CW, there's no question that this platform serves as a very valuable asset to them. Shows like Smallville, Supernatural, One Tree Hill; look at America's Next Top Model; and look at a show like 90210 and how well it does internationally. You look at Gossip Girl and now Vampire Diaries; those brands are far-reaching.
We say no viewer should be left behind. We know there are viewers watching our shows not being counted right now. But more than that, our parent companies have these assets in their libraries, and they will live for a long time. Gilmore Girls is still on the air in cable, and these shows will run on many different platforms for many years to come.
And I think new ancillary rights are eventually going to be created. We're finding that the reach of The CW in fashion and music is significant.
What do you need to do to keep yourself in business going forward?
Creating hit shows. Creating shows that resonate with the viewers. Creating new stars that get the CW name out there. Creating shows that have a real voice and are very distinctive and feel specific to The CW, and be in business with writers and showrunners whom we respect and are industry leaders.
Being able to have a niche with [advertisers] that are looking to use us as a means of reaching the consumer is also important.
What's good and bad about working in a joint-venture scenario?
I will start with the good. First and foremost, all the executives who sit on our board worked together many years, so there's a shorthand, there's a comfort level that everyone has with one another.
The other advantage we have is who our parent companies are. Time Warner/Warner Bros. and CBS are also in the content business. They understand the value of creating these assets for them. The assets, the titles will live on for many, many years to come. They can be used on many different platforms, and there's a long shelf life for the shows we've created.
I think there is also an understanding of our parent companies that we are trying to find a niche, that we are trying to create a brand. They understand the value of that, and they have been incredibly supportive of the digital initiatives that we have.
The negative is, I guess, that I have to make a lot of phone calls when we're making any big decisions. We have a board, which is always a little more complicated than having one boss. So I answer to many people, and that's pretty much the biggest hurdle.
But it's been relatively easy.
What is the biggest challenge facing The CW moving forward?
The biggest challenge is the shift in the way the consumer is getting their content. Clearly, we created this network in a time when there's a huge sea change. When you think about it, we're only on the air 10 hours a week. We don't control our air 24/7. We have a much bigger challenge than anyone else. Not only do we have limited shelf space, but our viewer is getting content many different ways. Our streaming numbers are big. Our DVR numbers are huge. I could tell you many shows where our DVR numbers are actually larger than the live, on-air numbers.
So our viewers are watching many different ways, and before you know it mobile will be kicking in as well. Our younger viewers are early adopters. They're going to be the first ones trying out new things.
You have essentially a 10-hour weekly schedule, and two new scripted hours, Vampire Diaries and Life Unexpected, launched this season with promise for longevity.
What's great about this season is it's allowing us to broaden out a little bit from what we had launched in prior years. Gossip Girl, being the first big show for the network, certainly got a lot of buzz, a lot of attention; the actors went on to be real stars in their own right. 90210 has continued to be a really good performer for us, made lot of noise for the network; again, a lot of fabulous young stars on that series.
The showrunners, the writers who we're in business with on both of those shows, are so impressive. And then this year to have launched Vampire Diaries with Kevin Williamson and Julie Plec--not only the magazine covers, but the actors are being sought out. And now obviously with Life Unexpected, both in terms of the critical acclaim, which has been really rewarding for us, and the fact that it's a different kind of show, as is Vampire, it just shows the breadth of shows, the genres that we want to have on the air and different ways that we're connecting with our audience.
What do the new successes allow you to do next to evolve The CW?
Next is to broaden out our schedule even further. I can tell you in development we've got some franchise shows we've really tried to tackle--some in terms of types of location, some are more humorous. So we've tried to branch out with new showrunners or some showrunners we worked with before [whom] we were big fans of.
For us, quality is first and foremost. When you look at our shows, they're distinctive, they have a clear voice, they speak to an audience and they're quality shows through and through.
When you said you may incorporate more humor, do you mean you are considering a half-hour comedy?
No, I mean more along the lines of dramedies. We've developed some hours that have humor to them. We have some reality shows in development that are also on the humorous side. We have two reality shows that are coming on in March, one of which is quite loud called High Society, another called Fly Girls. Those shows are both in the docu-soap genre, a genre we haven't tackled before.
In the case of High Society, that's a show that I think will get a lot of attention, with some of New York society's 20-somethings who have a lot of money and a lot of privilege and are just as outrageous as you can possibly imagine.
What challenges do you face drawing top talent to the network?
There are two ways to answer the question. The first thing is that we have sort of become the place that all these young actors really want to be. We saw that change about a year and a half ago. So many of our young actors have become cover girls and cover boys and sought after for features. There's this theory that you get on The CW, you do a good show and you really can launch a career into features and television. An early example on UPN was Veronica Mars star Kristen Bell, and I'm sure you have heard (Gossip Girl's) Blake Lively is starring in The Green Lantern.
As far as showrunners are concerned, you look at Josh Schwartz and Kevin Williamson, and I could go on and on and on with people we're in business with this year. I think there's a real value to having a buzzworthy show, a cult favorite, a pop culture show that everybody talks about and you have a great chance of staying on the air a long time here.
A big part of your job is making hit television. You're in the development process right now. What trigger makes you want to take a project to the board and say, "I believe this will be a hit?"
It's three things. One is oftentimes the passion of a writer for a project, be it either for something recently they've come up with or something they've been yearning to tackle for a while.
The second thing is that it's a project that has a clear voice, that has a distinctive point of view, which is harder to find, and makes a show unique.
The third is, how does it fit into The CW, meaning, how does it fit into our schedule, how does it appeal to the 18-34 year olds we're trying to reach? Does it feel like a CW show?
One of the accomplishments I feel proud of is we've created a real brand here in a short amount of time. I think the writers and showrunners now know what a CW show is. So a lot shows that get pitched here are the right shows for this network because people know what a CW show is.
What have you learned about the difference between projects like Gossip Girl, Vampire Diaries, Life Unexpected--which have worked--and Beautiful Life, which appeared to be a good show but didn't work?
Sometimes it is hard to predict what is going to strike a chord. You just never, never know. Particularly between last year and this year the country changed, so many dramatic things happened in this country, more than any of us have seen in our lifetimes. There's no way to predict that people want to see different types of shows. I think that had a lot to do with it.
A show like Life Unexpected has a lot of heart. It's about family, it's about relationships, it's about things that are really meaningful. And that I think is striking a chord.
The vampire craze is definitely out there. Vampire Diaries is escapist, and I think really fun.
I would also say there's a real voice to those shows, a very distinctive voice and that's key.
I heard a couple people lately call The CW a "younger Lifetime," especially given your target demo and your professional history having run Lifetime programming arguably in its heyday. Are you comfortable with that?
The similarity is certainly targeting women, no doubt. But I think The CW has got a clearer voice, it has a more distinctive audience, and I think there's something a little more edgy about it. Certainly younger. As you know, we're the youngest broadcast network, with our median age being 31 or 32, depending on the time of year. We're a decade younger than any other broadcast network in median age.
Let's talk about Tribune, the big-market station partner for The CW. How do you reconcile your target programming not necessarily being the most natural fit with their 10 p.m. newscast?
We just touched upon it. Our median age is 32 years old, although people have the image of The CW being a much younger network. The median age is not really out of synch with who they want to bring into their news. We are a two-hour block. We work with [the affiliates] as much as we can. We broaden out some shows; we have created dual entry points into some of our shows, so there are some things for our younger audiences and something for our older audiences to hook into.
What's the toughest part of your job?
Staying with our consumer, knowing that they are getting our content in many different ways, in many different places. Getting every viewer counted. I have said before: No viewer should be left behind. Our whole industry is changing; we are at the forefront of that change.
Zu dem Interview muss ich mal ein paar Sachen hervorheben:
We're finding that the reach of The CW in fashion and music is significant.
Da die Serien mehr Wert auf einen aufdringlichen Soundtrack und die neuste Mode legen anstatt sich auf gute Drehbücher zu konzentrieren, überrascht mich nicht, dass man so denkt.
Gossip Girl, being the first big show for the network, certainly got a lot of buzz, a lot of attention; the actors went on to be real stars in their own right. 90210 has continued to be a really good performer for us, made lot of noise for the network; again, a lot of fabulous young stars on that series.
Die Schauspieler bei Gossip Girl und 90210 sind Stars? :lol:
Next is to broaden out our schedule even further.
Gute Idee. Wer hat ihr die nur ins Hirn eingepflanzt?
For us, quality is first and foremost. When you look at our shows, they're distinctive, they have a clear voice, they speak to an audience and they're quality shows through and through.
Weiß die Frau was eine Quality Show ist? :twisted: Bestimmt nicht das, was sie auf dem Sender haben.
There's this theory that you get on The CW, you do a good show and you really can launch a career into features and television.
TheWB war besser darin. Davon mal abgesehen können junge Schauspieler auch auf anderen Sendern Karrieren launchen (und werden auf diesen vermutlich nicht so belächelt wie die CW-Leute).
I would also say there's a real voice to those shows, a very distinctive voice and that's key.
Keine Serie auf dem CW hat eine 'distinctive voice'. Es sind im Grunde alles nur Kopien/Remakes von Sachen, die vorher schon mal besser gemacht wurden. :roll:
