I’m sure you all are wondering what this has to do with Supernatural. Back in 2009 and 2011, I explained Supernatural's financial health by the numbers (the numbers that were known anyway). The accounting was pretty straight forward back then. In recent years, however, accounting for TV has taken a drastic right turn. This time, tracing the revenue has turned into a full fledged research project and the picture is still pretty murky. The issue is still vital to Supernatural's continued success, however. With the new measurements and with the show hitting the ten year mark, do advertisers still think Supernatural is worth their attention, and money? We all know how much fans love the show, but it can't survive without advertisements so what do the numbers say about Supernatural's status compared to other shows? Does it have enough power in the marketplace to go the distance?
The Upfront Dollars
Just like all other TV shows, Supernatural makes money for it's network with ads. Recently Ad Age came out with it's annual report of what every broadcast show is making for a 30 second advertisement. The report is based on a survey of the 'upfront (early) commitments' of six major ad agencies. As a bonus, this year Variety did their own survey and published their results. They too surveyed six agencies, although their figures are slightly different, meaning they polled different agencies.
Why are these figures important? Despite extra revenue coming from sources like online streaming deals, DVD sales, international syndication, and second run syndication, those streams usually only benefit the companies that produce the shows. TV ads are where the broadcast networks still make most of their money, while cable networks benefit from the dual income of ad revenue and subscription revenue. The amounts on these lists only show the upfront commitments. Usually networks only sell about 75 to 80 percent of their ad capacity during the upfront process. Any advertising that is not sold upfront goes to the scatter market, aka companies who want to buy ads closer to air time. Ads sold in the scatter market usually get a higher price, but what’s here doesn’t reflect that other potential revenue.
In the past, the idea was better the ad revenue, the more favorable your show is to the network. This means your show is likely going to get more promotion, a lucrative timeslot, and chances of survival to next season are much better too. Granted it wasn't a guarantee, but it helped. In the days of TV 2.0 though, there are many other factors now that must be considered.
After the networks' upfront presentations in May, networks spent the next several months convincing advertisers to commit to buying ads for the various shows in their fall and winter lineups*. Due to lower live viewing, overall upfront ad revenues for broadcast networks declined to $8.05 billion - $8.69 billion overall. In 2014, it was $8.17 billion to $8.94 billion. That a decrease across all shows.
The numbers this year were very interesting. One thing that that Ad Age and Variety lists have in common is that the NFL is the biggest winner. That is nothing new compared to previous years. Sunday Night Football averages $603,000 per a 30 second spot! ($637,330 on Variety’s list). Since football is in its own stratosphere, I’d rather focus on scripted broadcast programming.
The most highly rated, number one show this year, a show that just happens to air at the same time as Supernatural, is Empire. They command a whopping $497,364 per 30 seconds according to Ad Age, and even more according to Variety at $521,794. Other top performers for that network: The Big Bang Theory, How to Get Away With Murder, The Voice, Modern Family, and Scandal. There is one highly anticipated new show on the list at number ten, NBC’s Blindspot, which incidentally is a Warner Brothers show for those keeping score at home.
Out of the current shows, the two I would say are in trouble are Fox’s Sleepy Hollow and NBC’s The Blacklist. Sleepy Hollow not only had a big crash in ratings (and quality), but the move to Thursday at 9pm, a traditionally under performing slot for Fox, hasn’t helped at all. Their rate has gone down to $98,253 from $202,500. Thursdays hasn’t done much for The Blacklist either, although their decline to $193,793 from $282,975 is more respectable.
The CW Numbers
Overall, The CW finished their upfront season up 12 to 15 percent while all other networks saw declines. They also picked up 30 new advertisers. The CW is coming off its best season ever, thanks to a big hit show known as The Flash. The show not only ended up being the number one CW show last season, but the highest rated show the CW has ever had. That commanded a huge premium ad wise, especially when the show has had a ton of buzz in the off season. The Flash is up a whopping 39 percent, from $50,775 to $70,687 ($68,501 per Variety). Arrow seems to be holding up very well, too, with a slight 2% increase from $47,040 to $48,056 ($53,285 per Variety), which matches the slight ratings increase the show had from season two to season three. Also, likely because of their move to a more prominent spot with The Vampire Diaries on Thursdays, The Originals increased by 2% from $32,140 to $32,634 ($31,492 per Variety), despite the fact that their ratings heavily declined after their move to Mondays last season.
The news isn’t as good for aging CW shows though. Supernatural is down 12% to $35,631 per 30 second spot, while last year they got $40,440 per 30 second spot (Variety estimates $38,293). The reason for the decline is self explanatory, Supernatural’s ratings declined from season 9 to season 10. The biggest CW decliner by far though is The Vampire Diaries, which had a huge drop in ratings this past season. Their ad revenues are down 25%, from $59,620 to $44,924. America’s Next Top Model dropped heavily as well, 29 percent, going from $23,900 to $17,082 ($17,267 per Variety).
Supernatural By The Numbers
I’m sure you’re wondering what this drop in ad power means for Supernatural. Should Supernatural be concerned about a revenue decline? Not really. When a show gets as old as Supernatural, just making episodes is pure money, especially when over 200 episodes are in the archive. How much revenue does Supernatural pull in? Pinpointing exact figures is impossible since parent company Time Warner doesn’t report on financial figures by TV show, but there’s enough info out there to get somewhat of a picture.
Warner Brothers Television, owner of Supernatural and The CW, and a division of Time Warner, earns revenues four ways according to the 2014 Time Warner Annual Report:
- Distribution of television programming in the US for initial airing.
- Distribution of television programming after initial airing in the US to basic cable networks, local television stations, and SVOD (Streaming Video on Demand) platforms.
- International license rights to Foreign TV networks, premium and basic television services, SVOD and other digital services.
- Sale of television programming on digital formats (aka iTunes and Amazon VOD) and physical discs (aka Blu-Ray and DVD).
Supernatural is not only still in initial broadcasting mode on The CW, but because of their number of episodes they are available for second run syndication (after initial airing) as well. Combine that with the large international distribution and it being a popular seller of DVDs and iTunes, Supernatural brings in revenue from all four areas for Warner Brothers.
Supernatural is not a money maker for The CW. (These numbers won't take long...) It cost approximately $4 million per episode to make in season ten (it was half that in earlier seasons). The CW pays approximately half of that (could be more, half is a safe estimate) in license fees (to Warner Bros). Doing the math, commercials take up around 15 minutes in a 1 hour time frame (shows on The CW are traditionally shorter than other broadcast networks). That’s 30 potential 30 second commercials, but often times that involves some ad time for the local affiliates and network promos for other shows. So let’s say that the CW uses half of those slots. $35,631 X 15 = $534,465. Granted it’s more than this, since The CW only sold about 80 percent of its inventory and the other 20 percent is being sold on the scatter market. For upfront money though, let’s go with a nice round number of $550,000 per first run episode. That means that “Supernatural” only earns its network in ads $12,650,000 in upfront commitments for the season. When the license fee is in the $45 to $50 million range, that’s a hefty difference.
The CW also earns ad revenue for online viewing on CWTV.com. It is estimated that 30 to 40 percent of viewing of CW shows is done online, so those ads are growing increasingly important as well. Often times The CW will sell as part of an advertising package ads for online viewing as well as what airs on live TV. There is also a risk that The CW will have to issue a credit to advertisers if a show does not live up to it's projected ratings. It is not well known though how much online viewing and DVR over 3 days counts in those ratings.
For Warner Brothers, their job is to recover the $90 to $95 million in costs it takes to make Supernatural in a season. Considering they recover a chunk of that from The CW in license fees (a network they have ownership stake in so essentially they are paying themselves), the rest has to be found from the other streams. A show this age typically makes around $500,000 to $700,000 in second run syndication. The Netflix deal is rumored to be in the $700,000 range. Multiply that times 218. Yes, that is roughly $150 million for the full catalog…so far. That is what they get from Netflix. That deal in 2011 was originally a 4 year deal and is up for negotiation again this year. The CW will be handling re-negotiations of all their shows this year and it’s unknown at this time if they’ll be able to maintain the fees of the original deal or even get more since CW shows have been very popular on Netflix. But $150 million for 4 years is not a bad deal at all.
Supernatural is also in a successful second run syndication deal with TNT. The exact dollar figure per episode is not known, but it can be safe to say that each syndication cycle (that timeline is also unknown) will easily bring in $100 to $150 million. There are also deals with Hulu, Xfinity, and other SVOD services where dollar figures have not been disclosed.
International distribution gets really interesting. In 2014, fifty percent of Warner Brothers' revenue was earned from outside the US. Warner Brothers produces and distributes over 60 shows and often sells their inventory internationally in bundles. It’s hard to determine what cut of those revenues go to each individual show (a contention point for creative talent trying to make residuals), but safe to say Supernatural is in just about every major market. Considering Warner Brothers distributes to 175 countries, that is a wide open potential market! This distribution also includes the numerous SVOD services that are expanding internationally. Time shifted viewing is becoming more of a thing in other countries too. The assumption is that whatever Supernatural pulls in revenue in the US, it is easily doubled when international revenues are factored!
As for DVD sales, back in 2009 it was known that Supernatural had sold nearly 2 million DVDs in the first four seasons. Based on estimated sales since then (getting confirmation of exact sales numbers is the equivalent of trying to get the nuclear launch codes), that number is now in the 6 million plus range. Estimated revenue overall for Supernatural DVDs, $150 million and counting (season ten has not been factored into this).
Sales on iTunes and Amazon VOD is a complete unknown. The studios usually get about 70 to 80 percent of the cost of the episode. So if an episode is $1.99, Warner Brothers gets approx. $1.50 of that. Multiply that times 100,000 (which could be generous considering the free viewing one can get from CWTV, Hulu, and Netflix), and we’re looking at $150,000 per episode. A small piece of the pie, but more for the pie nonetheless.
Remember though, that’s not all pure profit for the studio. Costs like residuals bite into it. A lead actor gets 2% residuals from the syndication deals, so Jared and Jensen knock off at least 4% of the syndication money. Misha, Mark, and any other actor that has been on the show also get their little piece for the episodes in which they appear, as well as all producers and directors. There’s also promotional costs as well. All that hub-bub at Comic Con ain’t free! Still, even with these costs, the profit margin is rather healthy.
Another thing that greatly helps Supernatural is the rule that if the network a TV show is airing owns the show, or at least if a company under the corporate parent of the network owns the show, then that is considered an inside show and more profitable. That’s a double win for the corporate parent because they get the ad revenue and the distribution revenue. Supernatural is owned by Warner Brothers, who is 50 percent owner of The CW. Warner Brothers is owned by Time Warner. Supernatural airs in syndication on TNT, which is owned by Turner Broadcasting, which is owned by Time Warner. TNT, earning ad and subscription revenue for airing Supernatural reruns, is paying money to Warner Brothers, who is earning money for the show other ways, not to mention getting ad and license revenue from The CW, which they own 50 percent. All sides of the transaction go up to Time Warner’s bottom line. Oh yes, it’s a crafty little business, isn’t it? It’s also why your favorite show may not have made the fall lineup and/or gotten a full season order because they weren’t owned by their network (still bitter about Person of Interest).
You’ll never see the exact numbers for Supernatural on a balance sheet or income statement BTW. Financials for TV shows are a best kept secret by the studios, who usually lump all revenue and costs together. It is a well known fact in the industry that TV is the true money maker for studios, not films. But just like films, the industry loves to hide the true profit. It’s good for business.
The Social Media Factor
While money is the bottom line, there’s something else at stake now, something equally as important as ad revenue. Even though Supernatural is a cash cow, it doesn’t come close to making Friends or even The Big Bang Theory money. The most important role Supernatural plays at this time is standing out among the crowd, something that’s getting near impossible these days. The landscape is very different since 2011. The biggest change is there is too much TV content out there. There are close to 400 scripted shows alone in 2015. It’s too much for people to consume. According to an article in Broadcasting and Cable , TiVo found that of its subscribers, they recorded on average 85 hours of programming. After 42 days 33% remained unwatched.
So how do networks get people to watch their shows in a timely manner and get them to keep watching every week? Enter Social Media. There is no money in Social Media. What it does is offer a cheap and effective promotional tool that reaches the exact audience to whom networks want to sell their product. With so many shows, PR departments need to go out and find the niche market, aka the viewers that not only watch a particular show, but will obsess about it online and create a lot of buzz. These days, a network just can’t put a show out and advertise it. They have to go to Social Media platforms, engage fans and get them fired up about what is coming. The goal is same day viewing, or just viewing that doesn’t involve festering on the DVR for months. This can be DVR, mobile, online, or anywhere the show can be seen. It’s become a huge effort on the part of publicists, so much so that actors and producers of the shows must get involved as well to boost engagement.
Social Media is exactly the reason that Supernatural is a very crucial brand for The CW and Warner Brothers. It takes a lot to get a viewer’s attention, especially with new shows. For long running shows like Supernatural that already come with a fiercely loyal and dedicated fanbase, that is a brand that builds a legacy of an entire network. Bottom line, it keeps that network in business. It keeps the show going to the point where it can become a well known brand that brings in recognition (and money) long after the show ends. For Supernatural, a cult brand like it will go on years after the show has ended.
In many cases ratings are becoming secondary. Shows and networks can survive on fewer viewers now, but they need to be visible. Cable networks that have gone into original programming are finding out the hard way that having just one successful show isn’t enough. According to Broadcasting and Cable, a cable network (or a small net like The CW) needs 4 to 6 popular shows to be successful. Since budgets are tight, proper marketing is crucial. Social media popularity means just as much to the brand.
When looking at The CW, it’s taken them ten years and near extinction to get to this point. Considering the amount of effort they’ve had to put into “Arrow,” “The Flash,” “The Vampire Diaries,” “Supernatural,” not to mention numerous other shows for recognition, it does help when at least one of those shows comes into the mix from the beginning with super loyal and engaged fans (it also helps that they have a range of shows that caters to males and females now). Getting Supernatural fans online to generate excitement and chatter for their show has been a dream come true for The CW. It is a perfect model for the new way of branding and marketing television.
Bottom line, TV has become one convoluted business in the last few years. So if you’re clinging to ad revenue charts and ratings to determine if your show is successful or not, then you must work for Nielsen :). All kidding aside, Supernatural’s health in business terms just keeps getting better and better, and in ways never imagined when the show started back in 2006. That’s really the only thing you need to know from all this…
Supernatural doesn't have to make money for the CW. Supernatural survives because:
- it's is a huge part of CW's brand and image, and
- it makes a LOT of money for Warner Brothers, and it will for years to come.
It’s all good.
* Northern hemisphere seasons, where Supernatural is based.
TV Ad Pricing Chart: http://adage.com/article/media/ad-pricing-chart-sunday-night-football-empire-broadcasts-most-expensive-ad-buys/300516/
TV Ad Prices: http://variety.com/2015/tv/news/tv-advertising-prices-football-empire-walking-dead-big-bang-theory-1201603800/
Upfront 2015: Why Didn't TV Tune in More Ad Dollars: http://variety.com/2015/tv/news/tv-upfront-advertising-2015-1201573711/
Supernatural by the Numbers: http://www.thewinchesterfamilybusiness.com/articles/article-archives/general/2234-supernatural-by-the-numbers
Supernatural by the Numbers, Part Deux: http://www.thewinchesterfamilybusiness.com/articles/article-archives/general/16654-supernatural-by-the-numbers-part-deux
CW Wraps Its 2015-2016 Upfront Business: http://adage.com/article/special-report-tv-upfront/cw-puts-a-bow/299253/
All this TV: Too Much of a Good Thing?: http://www.broadcastingcable.com/news/programming/all-tv-too-much-good-thing/142488
National TV Ad Revenues Down 2.7%: - http://www.broadcastingcable.com/blog/currency/summing-it-national-tv-ad-revenues-down-27/143191
Time Warner Annual Report 2014: http://www.timewarner.com/sites/timewarner.com/files/ckeditor/public/files/TWX_2014_Annual_Report.PDF
Here's Exactly Why TV Has Gotten So Annoying: http://time.com/96303/tv-commercials-increasing/