REALITY SHOWS to the Networks' Rescue - prove financial boon for television networks - Statistical Data Included

They are relatively inexpensive to produce, usually generate large audiences, and engender great amounts of free publicity on other programs.

THE BIGGEST HIT SHOW of the 2000 television season had to be "Survivor" on CBS. The season finale in August attracted more than 50,000,000 viewers, which was larger than for any other series program. Sure, the Super Bowl drew a bigger audience, but that was just for one night. For three solid months in what is typically a low-rated viewing period "Survivor" outdrew anything the other networks put on. In the process, it brought in an estimated $30,000,000 profit for the network. That doesn't even take into consideration the improved revenues CBS reaped from other shows whose ratings increased by being programmed next to "Survivor," or the improved ratings for programs that had its contestants as guests. Is it any wonder CBS was quick to schedule "Survivor: The Australian Outback" for 2001 and "Survivor III" for next season?

Not every reality program enjoys the same sort of success "Survivor" has had. With or without tremendous rating numbers, broadcast networks (such as CBS and Fox) and cable channels (like MTV and Court TV) will continue to produce reality shows because of the tremendous return on their investment. "Survivor," with its 24-hour production crew and as many as two dozen cameras to capture the action, may be the most expensive reality program to produce, at a cost of just under $1,000,000 per hour, but that amount is still significantly less than the network pays for other prime-time programming. For example, CBS faces much higher costs for its other, nonreality shows. CBS's hit series, "CSI: Crime Scene Investigation" costs the network $1,625,000" per hour.

When a series is successful, quite often it raises the licensing fee (the amount the network pays the production company to deliver the show) in each subsequent year. A large part of the increase is the result of salary increases for the performers and crucial production staff. Worldwide Pants, which produces "Everybody Loves Raymond" is asking $3,000,000 per episode next season, while "Frasier" negotiated for $5,200,000 per episode from NBC for 2001-02. By comparison, a first-year situation comedy such as "The Geena Davis Show" costs $740,000, despite the high profile of its namesake.

Networks are facing growing pressure to improve their profits. As publicly traded companies, each of them faces the same demand from Wall Street analysts that General Motors, Wal-Mart, or any other Fortune 500 company faces--produce a return on investment for shareholders and continue to raise company profitability. As overall viewership for each of the networks declines, they are forced to find ways to increase profitability other than the traditional means of attracting larger audiences. One way to do that is to produce programs that cost less. Reality programs serve that function. In this regard, it is not only shows like "Survivor," "The Mole," and "Temptation Island" that prove useful. One of the most successful programs of the 2000 season, ABC's "Who Wants to Be a Millionaire," costs a mere $650,000 per hour to produce, about as much as ABC pays for a half-hour of the sitcom "Dharma & Greg." In fact, "Millionaire" is the least expensive hour of prime time for ABC, even cheaper than their news magazines "20/20" and "Prime-Time" traditionally the least expensive prime-time genre. The Fox network has the lowest-priced hour of television of all the commercial broadcast networks (including UPN and WB), paying a mere $500,000 for an hour of "America's Most Wanted."

Reality programs have another potential source of revenue less available to other types of shows. Advertisers are willing to pay sizable sums to have their product incorporated into them. Product placement is a multi-million-dollar industry that has been mostly underutilized by television. Certainly, no one would compromise the integrity of a news program by allowing an advertiser to place a product within it. A few sitcoms and dramas have taken minimal advantage of these opportunities, as the people who write them are not the same ones who worry about their profitability. Shows like "Survivor" have the opportunity to take product placement to a new level. It is not merely a coincidence that Target and Reebok logos can be spotted throughout. Reality programs appear able to accept product placements without raising the ire of critics, who would be quick to complain if "ER" were to do the same thing.

The greatest savings in the cost of reality programming comes from not having to pay actors. Regis Philbin may be compensated handsomely for his work on "Millionaire," but he is merely one person. A sitcom or drama will have at least four principal actors, and the supporting cast can number more than a dozen. Each of these people has an entourage of makeup artists, hair stylists, and other support staff. Each must receive a star's salary and annual percentage increases. The longer the show remains on the air, the more the network must pay for it. Reality programs usually have just one host to pay.

In addition, most reality programs do not need the services of writers or, if they do, the writer's role is dramatically reduced. As such, costs are much lower.

For the upcoming television season, reality programs have another advantage over more expensive prime-time fare. The Screen Actors Guild contract with television networks expires this summer, and the strong possibility exists that production could be shut down at the crucial time just as series begin shooting their new fall episodes. While reality programs don't make networks immune to this threat, the risk is mitigated if a network has a stable of such shows it can use. Fox can continue producing episodes of "Cops" whether or not SAG goes on strike. "Survivor" might rely on Jeff Probst to serve as a tropical tour guide, but the show could probably continue with or without him. The Writers Guild of America is also renegotiating its contract with the television networks. As networks increase their use of reality shows, it reduces the ability of SAG and WGA to make demands for their members, knowing that the networks have other programming available to them. Networks are able to negotiate from a more powerful position, since their entire operations won't shut down if there is a strike. That dramatically affects the union's ability to negotiate.

Television networks take a great financial risk whenever they decide to air new programs. A show that doesn't perform up to expectations not only costs the network in lost revenues during that time slot, but the residual impact may be felt by other programs on the same night. A good show can raise the ratings for an entire night's schedule, and a bad one can have the opposite effect. Networks are extremely careful that the new series they add to their schedules are their best possible choices. In spite of these efforts, new prime-time programs have a high failure rate. A mere one of three new network programs even sees a second year of production. Critics complain that networks are too quick to pull the plug on shows that have not had time to develop a following. Yet, the financial pressure to succeed forces each of them to cancel shows too soon, rather than give them enough time to build a loyal audience. The price for waiting too long is just too high.

In the earlier halcyon days of network television, when there were just three commercial networks and cable was little more than a service to improve reception for mountainous regions, a network could afford to experiment more. "Summer replacement" series were a regular testing ground for new ideas. Networks could try out a show for as much as 13 weeks while a regular series was on summer hiatus. If the replacement didn't do too well, its damage was limited to the lower-watched summer months. With limited choices, even a show that didn't do too well attracted a respectable audience. If it got a positive response, it might find itself inserted somewhere into the regular season lineup.

In today's more competitive environment, networks can't afford to let a weak show stay on the air for 13 weeks. In December, 2000, ABC premiered "Dot Comedy," a sort of "Funniest Home Videos" meets the Internet. It performed so poorly (reaching a mere 2,800,000 homes) that ABC canceled the show after just one airing, despite having ordered 13 episodes. ABC was obviously frustrated with the performance of its Friday night lineup, having already canceled "Madigan Men" and "The Trouble with Normal" before pulling the plug on "Dot Comedy."

Most of the reality programs seen in the U.S. have already been "tested" in other countries. Before CBS aired "Big Brother," Endemol Entertainment had produced the program in Europe and had been tremendously successful, attracting as much as 70% of the Dutch audience for some episodes. "Who Wants to Be a Millionaire" was an established hit in Britain long before it reached the U.S. The fact that these shows were successful overseas in no way assures they will do well in America, but network executives, looking for any signs of encouragement, see Europe as a testing ground, almost as they used to regard their own summer replacement series.

Networks not only worry about the size of the audience, but about the demographics. The most-sought-alter audience is 18-49-year-olds because of their tendency to buy more products, which is what advertisers want. This "target demographic" has a natural proclivity for reality programs.

Reality programs have certainly had their problems. Fox took quite a bit of criticism for "Who Wants to Marry a Multi-Millionaire." After defending itself against attacks for the basic premise, Fox was then embarrassed to find their multi-millionaire bachelor may not have been as wealthy as believed, and had a restraining order issued against him as a result of allegations by an ex-girlfriend. The bride filed for an annulment just weeks after the show was broadcast.

Instead of swearing off reality programs forever, Fox offered "Temptation Island," another show with a controversial premise and somewhat unexpected result. Four contestant couples were tempted to see if they would give up their "committed" relationships. It was discovered that one of the couples already had a child, a violation of the stated rules. Certainly, after two debacles, the network would get out of the reality business, right? Wrong! Fox has already ordered another installment of "Temptation Island" and in the spring of 2001 offered "Boot Camp," where participants go through the rigors normally associated with a Marine boot camp, as well as a few others. Why? Because, in spite of the criticisms of "Who Wants to Marry a Multi-Millionaire" and "Temptation Island," both shows had significant viewership and were cost-effective for Fox. Networks can take criticism. It's harder for them to take a loss in revenues.

Reality programming may be relying to a certain extent upon its novelty to attract an audience. As the novelty wears off, though, the premises may have to become a little more unusual to attract viewers. "Big Brother" was just moderately successful, and many believe the reason the show wasn't as popular as others is because the participants weren't interesting enough, engaged in an attempt to survive, or tremendously scandalous. The basic premise--people living in a house with television cameras and without contact with the outside world--is comparatively tame. The producers needed to have participants who would yell, scream, and throw things, which they didn't do. CBS even went so far as to change the rules of the game, allowing one member to leave the house and bringing back people who had been voted out in an effort to stir up the waters. The next edition of "Big Brother" is expected to provide more conflict and fireworks than the last group of house guests, who, by and large, got along fairly well. Critics complained that the show was too dull, lacking any romance or conflict.

The networks have a stable of reality programs to choose from, and the premises are designed to attract an audience curious to see people in "interesting" situations. UPN picked up "Chains of Love" when NBC decided not to pursue the series. The Endemol Entertainment show chains one man or woman to four members of the opposite sex, and each week one is "released" until only the happy couple remains. Endemol is also syndicating "Big Diet," originally produced in Germany, where 10 overweight contestants try to lose the most weight at a spa while being tempted with luscious desserts. ABC owns the rights to another British import, "Jailbreak," where contestants attempt to escape from a prison. NBC has the option on "Destination Mir," where contestants go through astronaut training, with the winner actually to be sent into space. However, it is on hold due to the retirement of the Russian space station. Producers haven't given up, though, claiming they will investigate other options.

Reality programming benefits from the free publicity it gets from news coverage that accompanies the premiere of a unique event. Just another sitcom or drama may get a little attention, but it won't generate the news coverage that a program which sends people to a deserted island or one that chains people to each other engenders. No amount of money can generate the kind of "buzz" that these shows attract. What's more, thousands of individuals are drawn to websites, either as applicants or to follow the real-life adventures of the participants. With the hundreds of television programs to choose from, one of the keys to success is just getting noticed, and these shows are much better able to do so than the typical fare.

One unanswered question is how these programs will hold up in reruns. While networks are most interested in the original airing of a show, the production companies reap their greatest profits in reruns. Reruns of "Friends," "Spin City," and "Star Trek" bring in much more revenue for their producers than the original licensing agreement they had with their respective networks. Game shows and talk shows, on the other hand, usually have very little revenue potential in reruns, although repeats of "America's Funniest Home Videos" and "Cops" have shown some longevity.

Where this new crop of reality programs fall on this continuum is anybody's guess. CBS tried rerunning "Survivor" against the Winter Olympics, and it did not do well at all, drawing merely about 20% of the audience for the original airings. Of course, the reruns came only weeks after their first showing, and they were competing against Olympic coverage. MTV, which started its reality programming with "The Real World" in 1992, has just begun distributing its reruns. If producers such as Endemol and Stone Stanley ("The Mole" and "Popstars") find that their products are less profitable in reruns, they may feel compelled to charge more from networks for their original licensing fee. If the program costs begin to equal the costs for other entertainment shows, reality programs will lose a great deal of their attractiveness for the networks.

Dom Caristi, associate professor of telecommunications, Ball State University, Muncie, Ind., is a former fellow of the National Association of Television Program Executives.

COPYRIGHT 2001 Society for the Advancement of Education
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