Conan could turn out to be U.S. cable barbarian
Conan O’Brien could turn out to be the barbarian of American cable. In one sense, the late-night talk-show funny-man heralds a bold new era for niche channels by commanding ad rates at his new home commensurate with those at his bigger broadcast brethren. In another more important way, however, O’Brien represents TV’s widening divide and a milepost en route to the culling of an overpopulated boob tube.
O’Brien wasn’t supposed to disturb the television landscape. Instead, as only the fifth custodian of “The Tonight Show” in 66 years, the gangly redhead was in line to maintain the status quo by extending the life of one of the medium’s oldest programs. But when NBC’s plans for Jay Leno to pass the baton went haywire, O’Brien decamped to the fragmented world of cable. TBS, a younger-skewing cable channel owned by Time Warner, splashed out $10 million for him to define its comedy-focused lineup.
The decision was no laughing matter for major broadcasters. It didn’t take long for advertisers to start paying the same $30,000 to $40,000 for 30-second commercials as they do for Leno’s show, or David Letterman’s competing offering on CBS. And though the numbers already have started to taper off, O’Brien’s debut this week soundly trounced youth-oriented cable rivals Jon Stewart and Stephen Colbert, on Viacom’s Comedy Central, and drew more viewers than both Leno and Letterman routinely do.
But TBS’s boat isn’t floating higher because of a rising tide. Cable operators have welcomed all manner of specialized channels to sell the digital service they started offering nearly 20 years ago. Programming costs have increased by 12 percent annually from 2005 to 2009, according to Bernstein research, two-thirds of it driven by adding new channels. The analysts forecast, however, that the cost increases will decline in the coming years and with a much greater percentage attributable to the per-channel price rising, a sign of the growing significance of original shows with broader appeal.
What’s more, nearly nine out of 10 homes already have digital service, the cumulative ratings of cable channels have peaked, fewer new channels are being developed and content providers have aggressively started charging higher fees to cable operators like Comcast, Time Warner Cable and Cablevision to carry such niche networks as Fox Business, HGTV and Nat Geo Wild. As these retransmission fights escalate, less-watched programmers will be squeezed.
This intensifies the need for something more than reruns of “Seinfeld” and old Schwarzenegger movies. Animal Planet and the History Channel have been investing in edgier programming to attract viewers and advertisers. Deep-pocketed Time Warner has figured it out for TBS and its sister Turner networks. As it nabbed O’Brien earlier this year, the media conglomerate simultaneously broke CBS’s long-held exclusivity to the rights to the highly popular annual college basketball NCAA Tournament and will share them with the broadcast network for the next 14 years.
Not all channels will have the funds to endure nor will all the risks pay off. Game shows playing on the Travel Channel and a hip-hop offering on the Smithsonian Channel show just how unruly, even desperate, the battle is becoming. At this rate, it shouldn’t be long before “500 channels and nothing on” becomes a documentary about cable’s history for some surviving network.