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Conan's Baaaack... And Right Where He Belongs

The last time we saw Conan O’Brien in late
night, he was jamming on “Free Bird” last
January as he bid farewell to his ill-fated
146-episode stint as host of ‘The Tonight
Show’. With ratings sinking where Johnny
Carson once dominated, and affiliates apoplectic
about Jay Leno’s tired material in
prime time, NBC cut Conan loose, paying
a reported $45 million to send the carrottopped
comedian and his crew to the beach.
The brouhaha became the final punch line on
outgoing NBC Universal CEO Jeff Zucker’s
business obituary.

Fox and ABC considered giving Conan a place to land, but
Turner Broadcasting swooped in to give him a new show on TBS,
which calls itself the Very Funny network. While O’Brien famously
crashed and burned on broadcast, many TV observers expect
Conan, which launches Nov. 8, to survive, or even thrive, in his
new home on cable.

The rules are different on cable. As the wistful Kevin Reilly,
Fox entertainment president, told a Hollywood Radio & Television
Society gathering recently, “On cable, we would’ve been able
to have the guys on Lone Star take off their clothes, the show
would’ve pulled 1.3 million viewers and we would’ve declared it
a hit because that’s what MadMen draws. We would’ve collected
a few trophies too, and no one would’ve questioned it.”

With expectations different on cable, even if O’Brien’s fan base
is limited, he can be successful. There are three good reasons to
support such optimism.

1) Ad buyers like O’Brien enough to pay Turner
broadcast prices for cable Conan.

Brian Hughes, VP, director of audience analysis at Magna Global, ! gures there are de! nitely enough viewers for Conan on cable to make this
enterprise worthwhile, both for Turner and for sponsors. In a fragmenting
late night cable universe, Conan doesn’t have to get the numbers NBC was
used to in late night—which will suit him perfectly. “I don’t even know
that they’re going to hold him to that broadcast standard,” says Hughes,
who is estimating that Conan will draw a 1 rating, making it comparable
to Comedy Central’s Daily Show With Jon Stewart.

“I think it’s going to be amazing,” says Donna Speciale, president, investment
& activation and agency operations at media buyer MediaVest.

According to media buying sources, Turner is estimating that because
of heavy sampling, Conan will attract about 1.5 million households
to tune in during launch week. After that, when the excitement
settles down, Turner expects about 1 million households per night.

Turner was aggressive on price, seeking $20,000 to $25,000 per
spot on Conan, and even more during premiere week, when Turner
sought closer to $100,000 for 30 seconds for opening night. After
some huffing and puffing, Turner was able to get what it was looking
for during the upfront. Sales have continued to be strong in scatter.

“They were trying to get what they felt he was getting in broadcast.
That’s always what the top-tier cable networks are trying to do,”
Speciale says. “They did a fair job. I think everyone’s aware it’s going
to be a success.”

Ad spending on cable has been growing in
late night. According to Nielsen, cable networks
had $2.796 billion in late-night ad
revenue in 2009, up from $2.524 billion in
2008 (see chart above). In the first half of this
year, cable networks raked in $1.578 billion.
Meanwhile on broadcast, late-night spending
dropped last year thanks to the recession and
the Leno-Conan shuffle on NBC, to $1.075
billion from $1.408 billion.

One question is whether Conan’s new show
will further enlarge the roster of late-night advertisers
on cable or steal dollars from Turner’s
Adult Swim and Comedy Central’s Daily Show
and Colbert Report. “What Conan may do is attract
more mainstream network advertisers,
like packaged goods,” to late night, says Jeff
Lucas, who sells Stewart and Colbert as executive
VP of ad sales for the MTV Networks Entertainment
Group. Lucas, who as head of latenight
sales at NBC helped launch O’Brien’s Late Night, also thinks Turner’s push on price will help cable programmers.
“They can join the network CPM club, because we already get network
CPMs for those guys,” he says. “It’s only good for all of us.”

Buyers expect O’Brien to be friendly when it comes to integrating
brands into his new show. “He’s got strong opinions about how to do
things, and I think his involvement is there as long as it keeps the essence
of his brand and his show,” MediaVest’s Speciale says. “If you’re
buying Conan, that’s what you want.” AT&T has been integrated into
tune-ads that have been running, and Diet Coke was a sponsor of an
online preview of the new show last week.

Speciale also praises the timing of Conan’s launch as propitious, given
the current " urry of tech-toy launches—including Google TV and several
iPad competitors—that Conan’s audience will crave. “Those [advertisers]
are very much into that 18-to-34 segment, so there are new
advertisers that can lend themselves to that [late-night] space,” she says.

2) O’Brien is now aiming straight for the Coco demo.

Conan’s fans are younger than the group that traditionally tunes into
The Tonight Show before turning in for the evening. And those fans are
more likely to follow him to TBS, says Magna Global’s Hughes.

“When he was at the helm [of Tonight], the median age went down a
few years . . . part of the problem is that broadcast
late night is generally an older-skewing environment,
which is why Jay Leno is generally
successful there. TBS having a median age in
the mid-30s is a much better fit,” Hughes says.

Turner sees that audience as an opportunity.
“There are a lot of young viewers there, and it’s
become a really robust environment for what I
would describe as relevant comedy,” says Michael
Wright, executive VP, head of programming
for TBS, TNT and Turner Classic Movies.

TBS also has George Lopez’s year-old Lopez
in late night. Multiple sources say
Lopez’s show was set to be canceled prior to
O’Brien’s arrival due to low ratings; instead,
the network pushed Lopez back an hour,
where it will be promoted by O’Brien each
night. A TBS spokesperson denied there was
any talk at the network of canceling Lopez.

Lopez earned a 1.09 household rating his first week on the air, drawing an average of 1.1
million viewers in the 18-to-49 demo. That audience has dwindled. During the third-quarter, Lopez drew a 0.56
household rating and 804,000 viewers in the 18-49 demo.

According to Wright, much of Conan’s audience will come from viewers
watching TBS shows such as Family Guy, The Office and Tyler Perry’s
House of Payne
. There will also be some viewers who aren’t watching TV
at that hour. “For all I know they’re playing Halo or watching something
on demand. There are probably some very loyal Conan viewers who
aren’t even watching at all at 11 o’clock,” Wright says. The rest of the
viewers will come from a variety of sources. “I don’t think the show is
going to take a bite out of any particular program,” he adds.

Lucas says he doesn’t expect to lose Stewart’s or Colbert’s exceedingly
loyal audience to Conan. “They’ll get some sampling, as they
should. It’s a new guy and a new space in cable. But you know what?
I have complete faith in our guys, and they’re strong and they’re creative
and I think there’s room for everybody,” Lucas says. Lucas adds
that the current attention to late night on cable could bring more
viewers to Comedy Central.

Back in 2008, when O’Brien was on at 12:30 a.m. on NBC, the
median age of his audience was 47.2 years. In the first four weeks of
his Tonight Show, it was 46.9. For the first four weeks of this season,
Leno’s Tonight has a median age of 56.1.

Wright believes Conan’s new audience will be balanced between
men and women with a median age slightly older than TBS’ current
average of 35. “In any event, that’s a wonderful,
young audience,” he says.

3) On TBS, expect Conan to get
his creative mojo back.

“Speaking as a fan of his old show, I think
he’ll go back to doing more provocative, edgy
stuff that he used to do,” says Magna’s Hughes.
“He’s not trying to fit into that Tonight Show
paradigm that had been established over so
many years. So I think we’ll see more of the
classic Conan—the 12:30 Conan, if you will.”

When he was doing Tonight, O’Brien was criticized
for being “stubborn about not being willing
to broaden the appeal of his show” by Dick
Ebersol, the NBC Sports chairman who has also
been involved in the network’s late-night programming
over the years. NBC wanted O’Brien
to make changes to appeal to viewers in Central
Time Zone markets like Chicago.

TBS doesn’t plan to tell Conan how to do his show. “Conan’s been
doing this for 17 years, and he has so honed his act and his voice,”
says Wright. “They don’t need me to tell them how to be funny or how
to make that television show.

“I hope what the audience gets and sees is Conan unfettered and unworried.
There’s nobody peering over this guy’s shoulder saying do it this way
or that way, or worse, do it this way or else,” adds Wright. “What Conan
has is a huge amount of support around him right now. And the message
he’s getting from us creatively is we 100% believe in what you do.”

Wright says that when he watches rehearsals he feels blessed to have
O’Brien on the network. “I sit there and think, man, this is fantastic.
Here’s my note: ‘Do more of that.’”

Critics also hope it will be a loose, funny Conan on TBS. “My hope
is that Conan does something entirely different from both Late Night
and Tonight,” says Alan Sepinwall of “I want him to maintain
the same comic sensibility, as well as the heartfelt quality of those final Tonight episodes, but the world needs another traditionally structured
late-night talk show like I need a hole in my head. Conan got
much better as an interviewer as he went along, but comedy has
always been his strength, and I’d like to see a show that has more
comedy in it—even, to borrow a concept from Conan’s Late Night successor,
if that means involving the guests in the comedy, rather than
just sitting down for 10 minutes to run through rehearsed anecdotes.”

The Bottom Line on ‘Conan’

Turner is making a humongous bet on Conan. Airing four nights a week
gives the show a bigger footprint than other original series, so it’s likely
to generate incremental ad revenue. It might also be a bargaining chip in
negotiations with cable operators. Still, it’s unlikely to have a big impact
on the finances of TBS, Turner Broadcasting or parent Time Warner.

In the third quarter, TBS was the fourth-ranked cable network among
adults 18 to 49, but its viewership was down 9%. Among 18-to-34 yearolds,
it was down 52%. So TBS is really counting on Conan to have a halo
effect over its entire schedule, including Glory Days, which begins Nov. 16.

“I think Conan becomes something of a lighthouse with the harbor
being TBS,” says Wright. “Whether it’s the viewer who doesn’t know
us or the viewer that doesn’t know us well,
you come to that [show] and you start developing
a better sense of what TBS is.” Wright
believes having Conan on the TBS schedule
will also help attract more comedy talent to
the network.

So, will it work? “It’s a big investment, but
they got pretty solid pricing and I am guessing
the ratings guarantees were realistic,”
says David Bank, managing director, global
media and internet research at RBC Capital
Markets. “The big question is, will there be a
‘ratings spillover’? Remember, TBS has been
a terrible ratings performer. Could Conan be
something that lifts the schedule across the
board? That is the real question.”

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