Conan O'Brien and his staff will be paid $44 million dollars as part of a severance package with NBC. O'Brien gets $32 million; his staffers split $12 million.
Is this just the cost of doing business for NBC? I have not seen a recent price estimate for network spots during Tonight, but I would guess a spot probably costs $25,000 - $40,000 each for a :30 spot.
In a one hour program, show content probably runs about 44 minutes. This leaves 16 minutes for ad/promotion insertion. 16 minutes x 2 (for two :30 spots) yields 32 commercial availabilities.
Let's guess that the network generates revenue from about 70% of these spots. Some are dedicated to network program promotion and others go to the affiliates.
32 x 70% = about 22 commercials
If the average price is $31,000, a single program episode generates $682,000 in revenue.
Five days per week, the revenue is $682,000 x 5 = $3,410,000
52 weeks per year, the revenue is $3,410,000 x 52 = $177,320,000
Before you get too excited, remember that Leno and staff must be paid also! If the recent turmoil has driven away viewers and they don't return, The Tonight Show with Jay Leno will draw fewer viewers and generate lower ad prices--there's a ripple effect on total revenue. Still, a $44 million payoff may just be the cost of doing business.
Here's an NYTimes article about the severance package.
http://www.nytimes.com/aponline/2010/01/21/business/AP-US-TV-Conan-Leno.html?_r=1&emc=na
Or: http://bit.ly/757heY
2 comments:
What about the high cost skits he has been doing? I don't know if they really spend the money or not, but they did air copyrighted Super Bowl material. They also spent $30 million on the studio. Will Jay take that over?
At the open rate, it appears as though they would make a LOT of money. I am sure they have agreements that negotiate the rates down a bit if an advertiser agrees to x amount of ads over x amount of days/weeks/months. They are hemorrhaging money on this deal.
Hearings will be held on Capital Hill on Thursday. C-SPAN will cover them live beginning at 8:30 a.m. This is very important to the future of the media industry. Many of the most critical issues will be discussed. I urge you to watch if you can or record the program for viewing later.
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