Even on Cable, Conan’s Worth Just as Much as Jay or Dave

TBS already is reaping economic rewards from its bold embrace of NBC’s late-night reject

Last Updated: November 4, 2010 @ 8:22 PM

Before telling a single joke on cable, Conan O'Brien is proving that a cable star can be worth as much in commercial rates as his broadcast counterpart.

The NBC outcast, who debuts on TBS on Monday, is selling a reported $30,000 to $40,000 for each 30-second commercial — similar to ad time for Jay Leno and David Letterman — dealing another blow to the cable discount traditionally fetched by advertisers.

In that, O'Brien has established himself as the face of television's scrambled economics.

His show precedes Oprah’s launch of OWN in January and lands after the $10.8-billon joint purchase by a cable network — once more, TBS — and broadcaster CBS of rights to the NCAA basketball tournament, once the exclusive programming of CBS.  

“It’s another indication that the cable world is on a par to a great degree with broadcast,” a senior executive of a rival network told TheWrap.

Hoisting CPMs — cost-per-thousand impressions — to parity with broadcast has long has long been a holy grail of the cable industry. For good reason: Cable programmers combined now attract more than half of overall TV ad revenues, said David Carr, TargetCast’s senior vice president and executive director of National Broadcast.

Turner has been in the vanguard, having long seen itself as a broad-reaching full-service entertainment network with scripted dramas, comedy and sports. Indeed, it leapt into the latter with multi-billion-dollar rights fees.

Sports “gave us a wonderful platform” for launching, Steve Koonin, president of Turner Entertainment. told TheWrap. “When we first talked to [Conan], we talked about the NBA, Major League Baseball and March Madness.”

And now O’Brien allows TBS “to be on even ground" with broadcast CPMs, Koonin said.

“The whole concept of paying differently always eluded me,” Gavin Polone, O’Brien’s manager, said of the disparity between broadcast and cable ad rates. “Why is a 27-year-old male with  $70,000 income more valuable if he’s watching Conan on NBC than if he’s watching Conan on TBS?”

Without offering details of its ad sales, Turner began trumpeting the triumph during the summer in an early demonstration that O'Brien was paying off. Time Warner CEO Jeff Bewkes even took note of the feat during his second-quarter earnings discussion with financial analysts.

True, some rivals question that Conan truly is fetching broadcast-level ad rates. The show, they say, is packaged with other programming — "The George Lopez Show," for example — allowing Turner latitude to attribute any value it wants to the highly anticipated late-night show.

But Carr of TargetCast noted the likelihood that O’Brien, when sold as a stand-alone program, matched Jay Leno and David Letterman. The show, he said, was sold to advertisers during the hot upfront market this year when pricing across the late-night television schedules and networks was robust.

Still, close observers of Turner Broadcasting and Time Warner say both are likely wary of over-hyping Conan. (“We won’t know for a long time,” says Steve Koonin, president of Turner Entertainment. “This has never been done before.”)

Neither would be anxious to have any single product or network, for that matter, to have a disproportionate impact on the overall enterprise. For example, they “don’t want CNN’s woes to influence the whole,” said a senior former Turner executive. “And because Turner Broadcasting is such a huge percentage of corporate earnings, certainly Time Warner doesn’t want it to look that way.”

Indeed, Time Warner had planned a company-wide, cross-divisional blitz for Conan’s launch. It was billed as a showcase example of the new Time Warner, in which corporate siblings could cooperate behind a goal deemed valueable for the whole. But according to one executive, Time Warner backed off the plan, although the reasons aren’t entirely clear.

One divisional executive said it was to accommodate O’Brien, who wanted to go in a different direction with promotions. But, says Koonin, “it’s not as if Warner Brothers Studio is going to make a movie about“ the launch of O’Brien’s show.

Regardless, O’Brien is in a great place. “In some regards, he’s looser,” Polone says. “These people are treating him in a very different way. It’s about delivering the best show.”

And if audiences deem O'Brien a hit, television economics will take care of themselves — at least for one redheaded broadcast-cable breakthrough.