Reader Chris Merrill left a comment regarding some of the continued discussion of Mad Men and its ratings.
Wrote Mr. Merill:
As for the critically acclaimed argument, most shows that I think about staying around for that reason have shorter runs compared to hits. Arrested Development was loved by critics and was around for all of 3 seasons. In the end, the viewers need to be there. It all comes down to profit. Maybe the feel good effect means the executives will accept less profit, but they will not tolerate a loss
If I look at things only in one dimension - from the dimension of annual profit and loss for the network, in this case AMC - I agree with Mr. Merill completely. It's not that simple however. Some of this will seem counterintuitive but if you're interested read on, and sit with it a while and hopefully it will begin to make some sense.
There is more than one dimension. I would compare it to some sports leagues and franchises. For example, my pal Ted Leonsis owns the Washington Capitals NHL franchise (he also owns the Washington Mystics of the WNBA and has a minority interest in the Washington Wizards NBA franchise). I'm pretty sure if you looked at the annual income statement for the Washington Capitals for any given year while Ted has owned it, there have mostly been losses.
Why would Ted want any part of that? Well, it's not just his naturally competitive spirit and desire to bring a Stanley Cup to my birthplace, Washington, D.C. If that was all there was to it, I don't think Ted would take the hit. But there's another dimension. It's supply and demand. There aren't that many franchises available for purchase. In fact, there seemingly are many more people around with money to spend on sports franchises than there are sports franchises available to purchase. That's speculation on my part - but what isn't speculation is this: if he were motivated, Ted could sell the franchise for much, much more than he paid for it 10 or so years ago and recover whatever he's put into it and more for himself and his partners.
The counterintuitive part of this is that it's hard to fathom something that regularly loses money on an annual basis increasing in value. But it certainly happens, and we're not talking merely about adjusting for inflation when it comes to the amount of the increases. I think this applies to the networks too, at least cable networks, and especially the smaller ones. There just aren't that many media properties available for purchase. However small AMC's viewership is, it's bigger than the Sundance Channel's - and Cablevision (who also owns AMC) recently purchased the Sundance Channel via its Rainbow Media arm reportedly ponying up nearly half a billion dollars for it ($496 million).
And so while it's counterintuitive on one hand, Mad Men, even if it bleeds red ink, could be part of something that especially by way of all the attention it's bringing AMC is jacking up the value of the network. So I can imagine that AMC would tolerate some losses, as counterintuitive as that may seem.
You went from every other post being about Mad Men to every post being about Mad Men…Not really the change I was expecting
On the topic: I do think AMC plans to loose money on Mad Men. They spent an incredible amount of money on advertising this second season, money that simply cannot be recouped with what BMW and other advertisers are going to pay for spots during the show. Why would they spend all that money for a show that will never get stellar ratings? They are trying to build something new. If AMC really wants to get into the business of airing original scripted programs, they have to accept a loss for a while to get established. And like you said, it also brings attention (and hopefully viewers) to the network overall.
By using the sports franchise analogy, you're assuming that the teams that cry poverty are actually losing money year after year — and they're not. Major-league owners are notorious for cooking their books to make it look like their teams are losing money: Paying rent to an arena management company which they own separately, etc. Some franchises have claimed annual losses for decades; doesn't add up.
Similarly, for shows like Mad Men, the sponsorship and product placement deals pay off a lot more than you'd think, and costs can be amortized. I seriously doubt AMC is losing money on it — I'd bet the opposite.
Holly, they definitely spent more on advertising this year, but I'm very skeptical that it's anywhere near the 25 million that has been reported, but I agree with you completely about accepting losses in the name of trying to build original (scripted) series.
CT, I did not make assumptions. I wrote about one specific case, with one specific franchise (where the owner is certainly not one to “poor mouth”). As for Mad Men's profitability, I have no idea. You can speculate that it's profitable, and it may well be. I do not have an opinion on this one way or the other and wasn't focusing on Mad Men specifically, but rather addressing instances when a network might accept a loss.
ox really screwed the pooch with Arrested Development, with their shoddy advertising and time-slot changes. Granted it was going to be a niche show, but they stuck the knife in and lost a lot of goodwill from me (they can get it back if they greenlight a MOVIE!!!).
I wish they had taken the NCE Office approach – a stable timeslot, good lead-ins, and good advertising. I think if they'd kept it til season 4 they would have seen the fans tuning in.
More generally, I think if something is of fantastic quality (The Wire, AD), they should stay supportive as the product is likely to be remembered (and purchased) for years to come.
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Thinking about it and reading this post, I have to concede the point. When you look at it that way, a network would be willing to accept a loss to improve their value.
The sad part is I work in retail, where firesale items are sold at a loss to get people into the store (aka – loss leaders). Ideally, the people buy more stuff than the loss leaders and the store still makes money. Basically the same thing, but it didn't occur to me that TV networks would do it too.
My problem here was viewing TV in general through a narrow of news broadcasts. If they remain unprofitable (or sometimes even if viewship stagnates) they fire the producer and get another. The Sunday shows are a likely exception to that and to tie it to this post's point, the hope there is to make news and get your show and network mentioned non-stop for a news cycle, which is publicity you can't buy
I agree about the value to a network not necesarily coming from the number of same day viewers. There are many critically acclaimed cancelled shows that made loads of money for the network after it was cancelled (Firefly and the first season of Family Guy leap to mind). In fact, I would bet they made more money off of reruns on other cable channels, rentals, and DVD sales then they ever made while on the air. Not to mention all the merchandising and licensing. I'm pretty sure they also make money when they distribute for online viewing through their own website, Netflix, Hulu, and the like. Again, it may not be the same kind of single day killing that a season premiere might make, but those episodes are up on the web for a long time and potentially collect a lot more viewers cumulatively over time and more money for the network. I also think that the metrics are a bit out of date and can't be completely counted on to estimate the value of a show and its success among different demographics. Almost everyone in my family watches TV online, even though most of them can watch it live or with DVR on their TV. This includes my 50-ish parents and step-parents all the way down to my 17year old sister. The problem is time. It takes time to set these up to record. It also requires you to know about the show as it is happening; often you hear about the show after it has started or the season is over. Sometimes you jump into it in the second or third season (as my sister did with Lost) and have to play catch up. Its also plain easier to just look something up online and watch it exactly when and where you want to watch it.
I think we all have to keep in mind that most series are never going to be hits for whatever reason. AD had cult classic written all over it, and Fox did give it three seasons. I really don't blame Fox in AD's cancellation. I mean, it was on Sundays for two seasons and won the best comedy emmy in its first. That's pretty stable. But it also lost a consistent portion of its lead-in in every timeslot it aired. It was just a show that was never going to catch on, even if it's now more popular than it was when it aired. And I say this as a huge AD fan, one who owns all the DVDs, can recite entire scenes and has seen every episode at least 5 times. 30 Rock is the same deal. I don't like 30 rock, however.
Mad Men may very well be in the same league. What MM gives AMC is definitely branding, and awards. For that alone, I can see MM getting a third season, if not more.
To answer your question. SURE!
Obviously, as well you all know NBC is set to an air the upcoming bomb this month…otherwise known as the “Summer Olympics.”
To refresh your memory, NBC forked nearly $6 billion for the rights to broadcast the so-called 'event' that stretches from early 2000 until 2012.
They should have spent that money cloning Brandon Tartikoff instead, and i'm not even kidding!
We also don't know if AMC has been able to raise its subscriber fee by having such a critically acclaimed show, or if they are now being carried on cable systems that weren't previously carrying them.
AMC can monetize that show in ways that a broadcast network can't.
Even if they aren't making up their costs in commercial sales and DVD sales (and they probably aren't) a show like Mad Men can still be a big moneymaker in more roundabout ways.
We also don't know if AMC has been able to raise its subscriber fee by having such a critically acclaimed show, or if they are now being carried on cable systems that weren't previously carrying them.
AMC can monetize that show in ways that a broadcast network can't.
Even if they aren't making up their costs in commercial sales and DVD sales (and they probably aren't) a show like Mad Men can still be a big moneymaker in more roundabout ways.