Doing The Math: Will ‘Law & Order: Criminal Intent’ Be Renewed?

Continuing my presentation of the evidence for and against NBC renewing CI and the original L&O (the mothership) we come to the part NBC will be scrutinizing the most carefully: how profitable is each show relative to the other and to other shows NBC could air instead.

Let me just say right here and now that there are some things that concern the renewal of Law & Order SVU that do factor into what NBC will want done for CI and or the mothership.

First of all, an intriguing abstract of an article I found at The Hollywood Reporter under the byline of Nellie Andreeva dated of 03/13/2007 has some very intriguing information in it:

“Under the extended term deals implemented by all broadcast networks, beginning in the fifth season (sixth for midseason shows), the networks usually have to pay a license fee for their series that equals the series’ production costs. If one factors in ratings premiums in the range of $100,000-$150,000 per episode paid by the networks that kick in after the fourth season as well as retroactive payments by the networks of a portion of the deficits incurred by the studios in the early years of the shows, it is no surprise that the nets are taking a careful look at their older series.”

All three shows are now past the fifth season point. This means that:
1) NBC has to pick up *all* the production costs for every series it renews (it’s cleverly called a ‘license fee’). It currently costs $2-$3 million to produce each episode of CI, SVU and the mothership…so this season NBC is stuck for $2-$3million x 22 episodes per show x 3 series = $132-$198 million.
2) Add to that $100,000-$150,000 per episode for each show renewed (this is called a ‘ratings bonus/premium’). $100,000 – $150,000 x 22 episodes x 3 series =$6.6 – $9.9 million
3) Add 1) and 2) to get $138.6 – $207.9 million dollars
4) In the case of SVU the cost per show just went *up*…not only did SVU get renewed (Mariska Hargitay won an Emmy last year), Mariska and Chris Meloni’s salaries went up in the range of $300,000 per episode for each actor. So add $300,000 x 22 episodes x 2 actors and you add $13.2 million dollars to your costs which now range from $151.8 – $221.1 million dollars. And I don’t know if any of the other SVU actors also got raises but if they did, that only means that NBC’s costs went up that much more.
5)Now for the truly *nasty* surprise for NBC…the ‘retroactive payments by the networks of a portion of the deficits incurred by the studios in the early years of the shows’. What this means that any deficits that the mothership, SVU and CI racked up in Seasons 1-4 get charged to NBC. So we could be talking about costs to NBC that are *well above* $151.8 – $221.1 million dollars for this year.

Now I hope you’re starting to see why NBC is concerned about costs.

Now we need to look at the income side for NBC…which is dependent upon ratings. The higher a show’s ratings, the higher the rate an advertiser pays to run an ad on that show.

In an hour of television there are 15 minutes of time available for commercials. These 15 minutes are divided into 3 minutes for your local affiliate to run ads (and on which they collect the lion’s share of the money) and 12 minutes for the national network to sell. Usually the network does not sell all of its 12 minutes…if it did, you would never see any ads for other upcoming shows on the network and no public service announcements like NBC’s ‘The More You Know’ series of advertisements. For simplicity’s sake I’m going to make a faulty assumption that the network sells all 12 minutes only to demonstrate just how much revenue is available to try and help out the network.

Using the best available data I can find from a 2006 BusinessWeek article:
http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060511_7450_db011.htm?campaign_id=rss_daily

The average 30 second primetime TV commercial costs $20 per 1000 viewers. So if a show delivers 10 million viewers, then the ad should cost $200,000.

For the sake of keeping the calculations simple let’s say every new episode of CI is actually attracting 10 million viewers for the whole episode. There would be 24 30-second ads available for an hour episode of CI so the network could make *at most* $4.8 million per CI episode. If you subtract out the upper end of our costs from the $4.8 million possible and assume that there are no deficit costs left over for CI from Seasons 1-4 NBC gets *at most* $1.65 million dollars per episode of CI. However if there are deficit costs from CI Seasons 1-4 that means less money for NBC for airing CI. Also remember that all 12 minutes of available time for NBC may not be sold. So assuming 10 million viewers are watching CI the profit margin on CI for NBC is about 34.4% Think of that as twice as much cost as there is profit available to NBC.

There are some problems here. NBC isn’t getting ratings anywhere near 10 million viewers for its CI reruns. And sometimes CI isn’t getting 10 million viewers for never before seen episodes. Also there are times when CI viewers only watch part of the show (which means that if your ad airs during the wrong part of the show 10 million people may not be watching). So if you’re an advertiser you’re not going to be happy paying $200,000 if 10 million people don’t see your ad. In fact at the end of the season (and in time for the next season’s upfronts which is where package deals for advertising are made in advance of the start of the new season) you are going to be pushing for lower rates before you commit due to the lower than expected ratings for the previous season. This means that NBC isn’t likely to be able to charge the higher rate and thus CI’s profit percentage is going to be lower than the 34.4% I figured above.

What if CI’s average ratings for the season are only a 7? That means that on average only 7.7 million viewers are showing up (1 ratings point equals approximately 1.1 million viewers). So you should adjust the ad rate down from $200,000 per 30 second ad to only $154,000 per 30 second ad or $3.696 million. Doing the same kind of calculations I did before (subtract out $3.15 million) leaves NBC with only $546,000 profit or a 14.8% profit margin per episode. So losing only 2.3 million viewers has a huge impact on how profitable a show is.

I haven’t tracked the mothership’s ratings this season but I can tell you that it is probably in the same or worse shape as CI. In fact I suspect that the mothership may be more costly, partly because it has run for so many more seasons (and I figure it has earned many more bonus payments from NBC because it has lasted 17 seasons) and partly because it is doing the worst in the ratings compared to SVU and CI. My informal polling of my acquaintances suggests that no one including those who used to call themselves mothership fans is watching the new episodes. So here NBC Entertainment Division President Reilly may be right to pick CI over the mothership (assuming it’s ultimately his choice to make and that one show has to go). But from Reilly’s comments I strongly suspect that a lot depends on how Dick Wolf behaves. NBC has said no to Dick Wolf shows before…’Deadline’, ‘Crime & Punishment’, ‘Dragnet’, ‘Trial By Jury’, and ‘Conviction’ were all cancelled (the last two were cancelled only last season). Note that none of these five shows ran long enough to force NBC to pay their production costs or ratings bonuses which if they had had decent ratings may have ironically made them more profitable that Wolf’s ‘hits’.

For perspective last year NBC was only able to sell $9.8 billion worth of ads for all of its shows for the 2006-2007 season. This season because so many of NBC’s shows are finishing third or lower, that number may have to go down yet again to appease advertisers. So as far as NBC is concerned, shows with big costs but low ratings may have to be sacrificed to stay profitable for GE (their parent company) and its shareholders.

So expect to see a lot of new shows rather than old favorites on the peacock network. And be prepared for the possibility that Dick Wolf’s potential fervor to save the mothership for one more season (and get within 2 seasons of tying the ‘Gunsmoke’ record he covets and 3 seasons of beating that record for the longest running primetime drama) may cost us CI and possibly the mothership as well.

One more thing…from the abstract of the Hollywood Reporter I cited above, Dick Wolf has hired Rene Balcer to do script doctoring on the mothership for the rest of this season. Given how key Balcer has always been to CI (he wasn’t only the showrunner, he created a lot of what makes CI CI) and given that both shows are in ratings trouble, I find it very telling that the big push to improve a show is going towards the mothership *at the expense of* CI.

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Predictions: Will Law & Order: Criminal Intent Be Renewed?

Well I’ve been following the entertainment industry trade news sources very closely for the past two weeks or so and trying to put together an educated guess on whether or not Law & Order: Criminal Intent will be renewed.

Here is the evidence and my analysis of what each tidbit of information means [my comments are in brackets]

This exerpt is from the latest article to hit Variety
http://www.variety.com/article/VR1117963060.html

NBC pines for mass with its class
New slate puts focus on women, dramas
By JOSEF ADALIANNBC

Entertainment prexy Kevin Reilly is fond of describing his programming strategy for NBC as “mass with class.”
With shows such as “The Office,” “30 Rock,” “Friday Night Lights” and “My Name Is Earl” snagging Emmy noms, Peabody Awards and critical kudos, he’s doing OK on the “class” front.
[If a show has won awards or the support of a significant number of critics it has a better chance of being renewed…since CI has neither, this does not bode well for CI. Contrast this with the mothership, the original L&O which has 2 Emmy award winning actors in its cast. Advantage: The Mothership]

As for the “mass”? Despite having launched the season’s most impressive ratings winner with “Heroes,” NBC will finish in fourth place for a third straight season, last week sliding to its lowest in-season weekly ratings since … well, since Nielsen started keeping track. [This is a wash for both CI and the mothership…both have slipping ratings]

“It’s a process. It’s brick by brick,” admits Reilly’s boss, NBC West Coast prexy Marc Graboff. “We’ve said all along that we’re just at the beginning stages of the recovery. It starts by bringing quality shows back … (and) Kevin has done a great job with that.”

In other words, there may be some signs of light in the distance — but NBC ain’t out of the woods yet.

For Reilly, the good news is that his superiors seem pleased with the course he’s set for the network.

The exec’s contract was recently renewed, which means that almost for the first time since he returned to NBC, Reilly will be able to set a fall sked without an axe hanging over his head. What’s more, uberboss Jeff Zucker has won his bid to run NBC — giving him a honeymoon period in which to turn the network around. [This means that GE will allow Reilly and Zucker to decide what to do about renewing CI and/or the mothership and probably not interfere too much with their judgment.]

“One of the things that’s been troubling is that there was always uncertainty inside the building and outside,” Graboff says. “We have clarity now.”

THE STRATEGY

In order to get more hits like “Heroes,” NBC made a shift in the kinds of dramas it developed for next season, according to Katherine Pope, the exec VP who serves as Reilly’s No. 2.

“We wanted to get a little more female and a little more hopeful,” she says. “Quality doesn’t always mean gritty. We don’t want to sacrifice authenticity for what we think people might like … (but) people want to have some hope in their shows.” [This is a wash for both CI and the mothership…both have tended towards being authentic and gritty although of late with CI’s new production & writing staff, the shows are less authentic and gritty…I think this is a bad thing in terms of CI’s quality but this might help CI get renewed. The mothership on the other hand has not really changed its level of grittiness and authenticity so it is at a disadvantage. The (in my opinion questionable) advantage goes to: CI]

Pope says she and Reilly encouraged creators to submit “the thing you always dreamed of writing but were afraid to pitch.”

Reilly calls his roster of potential dramas “slightly more accessible franchise ideas,” particularly compared with the darker ideas NBC greenlit last year (“Kidnapped,” “Raines,” “Studio 60”). And while there are serials, the Peacock is determined to find a new generation of solid procedurals to replace warhorses like “Law & Order” and “Crossing Jordan.” [This is a wash for both CI and the mothership…both are seen as (old) warhorses]

“I’d like to find our ‘House,’ ” Reilly says.

On the comedy side, “We’re sticking with the playbook,” Reilly explains. “We’re predominantly single-camera, we’re loud tonally and we’re distinctive with ideas.”

While NBC has an equal number of drama and comedy pilots, there’s a sense that drama continues to be key to the Peacock’s plans. Alternative development is also a big part of the mix, though NBC, like all nets, is keeping a tight lid on many of its ideas.

THE PLAYERS

NBC’s femme focus on the drama front can be felt in fare such as “Lipstick Jungle,” a sudser about professional women toplined by Brooke Shields. It’s based on the novel by “Sex and the City” author Candace Bushnell, and while NBC is mum, media buzz is high.

Peacock hasn’t programmed a straight-on sudser in years. Finding the right slot could be tough, but Pope believes “there are plenty of places this could fit on our schedule.”

Another big female player on tap is NBC’s remake of “The Bionic Woman,” which is being overseen by David Eick (“Battlestar Galactica” exec producer). Pope says the net’s goal is to launch a show that women like because of the strong female at its center, and that “appeals to men because she kicks ass and there are a lot of fun gadgets.”

Then there’s the Famke Janssen starrer “Winters,” a female take on the cop genre from “House” creator David Shore. The Peacock has two more cop contenders (“Life” and “Fort Pit”).

“Everyone is feeling that there’s going to be another great cop show, and that it could happen soon,” Pope says. “That’s why we have three cop shows.”

NBC also has some fantasy-tinged contenders that, in addition to “Bionic Woman,” seem like possible companions to “Heroes,” the Monday hit that became the net’s top new drama in years.

There’s the time-travel hour “Journeymen,” while “Chuck,” from “The OC” creator Josh Schwartz and Chris Fedak, is about a reluctant action hero.

Comedy-wise, the web continues to mine the U.K. for ideas, such as “I’m With Stupid” and “The IT Crowd.” Latter is a workplace comedy, as are three other contenders (“Area 57,” “Business Class” and “Wildlife.”)

But just because they’re set in an office doesn’t mean the wannabes are all like “The Office.” “Area 57,” for example, focuses on people whose job is to guard an alien (played by Paul Reubens). And “Wildlife,” from exec producer Conan O’Brien, takes place in an animal park.

Despite another year in which single-camera pilots dominate, NBC’s traditional multicam possibilities are high-profile. In addition to “The IT Crowd,” the net has Molly Shannon and Natasha Richardson playing sisters in a serialized comedy sudser that, like the 1970s “Soap,” will feature a laugh track.

THE QUESTION MARKS

Having renewed one low-rated critical fave (“30 Rock”), one of the toughest calls facing NBC execs is what to do with “Friday Night Lights.”

To passionate fans of the family/football drama, it’s a no-brainer: Skein’s gotten the best reviews of any frosh series, it’s relatively inexpensive to produce and it won a Peabody Award.

Reilly’s heart is clearly telling him to bring the show back, and the net did just order six scripts for next season.

“We’re trying to figure a way over the top with this thing,” he says. “It’s a function of the time period.”

In other words, NBC wants to bring “Lights” back, but it doesn’t know where to put the show.[Unless you count Epatha’s relatively recent Emmy for the mothership, this is a wash for both CI and the mothership…neither has much recent critical support or awards/award nominations. Slight advantage to the mothership here]

Another nail-biter will be whether to renew the original “Law & Order” and spinoff “Criminal Intent.” Both have taken major ratings hits this season and carry high pricetags — making it very possible one might not be back.[This may not be quite a wash for both CI and the mothership…as CI is only in its 6th season while the mothership is in its 17th season, CI’s production costs are lower for reasons I’ll get into later…I have to cite other articles to run the numbers and show you which show is easier to profit from: CI or the mothership]

“We’re in the middle of a negotiation now,” Reilly says. “I think ‘CI’ has shown it can still be competitive. The mothership is a real discussion. Nothing goes on forever.”[AHA! Here’s where we have to work hard to decode network executive speak. CI’s competitiveness has to do with what kind of ratings and which audiences it can deliver in comparison to how much it costs to produce per episode. If *Reilly* were picking *only one* show on this basis, he would choose CI over the mothership. However the fact that Reilly is having a ‘real discussion’ with Dick Wolf over the mothership is worrisome…I think what this means is that Wolf will have to make the kind of financial concessions on the mothership he made with CI last year: ie hold the line or cut the salaries or number of positions for producers / writers and possibly the actors. It was this brutal cutting that in my opinion changed CI for the worse and I understand that the lion’s share of the blame lies with NBC for screwing up my favorite show. But if Wolf refuses to make enough *meaningful* concessions for the mothership I could see Reilly drop *BOTH* shows rather than just one show. And then there’s the possibility that *if the choice is left up to Wolf*, he will choose his ‘firstborn’, the mothership, over CI even though CI is more profitable than the mothership. So this too is really tough to call…I really wish I had a better insight as to who will really be making the decision but I don’t trust Wolf so I’m going to give the advantage to the mothership and not CI.]

As for Aaron Sorkin’s “Studio 60 on the Sunset Strip,” Reilly says the net won’t make a final call until May. But barring some sort of miracle, network and studio insiders agree: The show is toast.

THE BOTTOM LINE

After kicking off the season strongly — credit the return of the NFL, strong numbers for “Deal or No Deal” and the launch of “Heroes” — the net suffered a spring swoon this year. Its midseason shows didn’t click, it programmed too many repeats and its hope for a big reality tentpole, “Grease: You’re the One that I Want,” bombed. [This is a wash for both CI and the mothership…both have had way too many repeats]

As a result, NBC’s pre-upfront planning will likely focus as much on how to program its new shows as what shows to pick up.

“We have to figure out how to stagger your fall so that you have some things in the first quarter,” say Vince Manze, the longtime NBC marketing maven who just took on a new gig as head of scheduling and strategy. “We need out-of-the-box thinking about getting as many originals — and original material — on the air. And we need to figure out how to do that without spending another billion dollars.”

Despite the late-season downturn, Reilly’s team can still point to a number of positive signs, from lowering the net’s median age by 1.2 years to narrowing the gap separating it from CBS and ABC.[This is a wash for both CI and the mothership…both have older audiences]

[I cut the last paragraph of the article for brevitiy’s sake]

So if I add up all the advantages and disadvantages, CI only comes out ahead for switching its style, for being the entertainment division president’s choice and for being ‘competitive’ in a financial/profitability sense. Every other factor either favors the mothership or favors not renewing either show

Now comes the really fun analysis…how do you determine profitability and what other factors migh be at stake…for this I will continue in another blog posting.