American Idol: Ratings Down Profits Up!
Ha ha. Those folks predicting the eminent demise of American Idol? Think again. A new report from the New York Times reveals that American Idol is raking in more moolah than it ever has– despite ratings that continue to decline–through brand extensions, marketing arrangements and licensing fees.
Robert Sillerman, CEO of parent company CKX Inc. says they’ve learned how to make money by watching the sports leagues, à ¢Ã¢â€š ¬Ã…“We have learned the lessons of the sports leagues in that they have all these ancillary revenue streams,à ¢Ã¢â€š ¬ Sillerman adds, “And frankly, weà ¢Ã¢â€š ¬Ã¢â€ž ¢re just beginning.”
Here’s a real eye-opener for those who think Idol will never reach the dizzying heights of Season 5–it did in talent (arguably) and ratings. But in revenue? Nope:
That is particularly noteworthy given that, according to Nielsen Media Research, the average audience for à ¢Ã¢â€š ¬Ã…“American Idolà ¢Ã¢â€š ¬ peaked three years ago, at more than 30 million viewers an episode. This season, each episode is attracting about 25 million viewers an episode.
Advertising revenue, which primarily benefits Fox Broadcasting, has grown in each of the last three years, according to TNS Media Intelligence, to $903 million last year. That is nearly double the level of three years earlier. Those figures do not include Foxà ¢Ã¢â€š ¬Ã¢â€ž ¢s ancillary sponsorship deals and other income, like royalties it receives from the sale of music performances by à ¢Ã¢â€š ¬Ã…“Idolà ¢Ã¢â€š ¬ contestants.
Even though à ¢Ã¢â€š ¬Ã…“American Idolà ¢Ã¢â€š ¬Ã¢â€ž ¢sà ¢Ã¢â€š ¬ ratings have declined, Fox has put more hours of the show on the air and has been able to charge a higher rate as its ratings lead over other shows has grown.
The revenue and profits of 19 Entertainment have grown even more quickly, according to the financial statements of CKX. Its revenues from à ¢Ã¢â€š ¬Ã…“American Idolà ¢Ã¢â€š ¬ alone grew to $96 million last year from $67 million two years earlier, with gross profit margins expanding to 77 percent from 69 percent in that span.
Including revenue from à ¢Ã¢â€š ¬Ã…“Idolà ¢Ã¢â€š ¬ programming in other countries, from music sales related to all the à ¢Ã¢â€š ¬Ã…“Idolà ¢Ã¢â€š ¬ shows and from à ¢Ã¢â€š ¬Ã…“So You Think You Can Dance,à ¢Ã¢â€š ¬ also on Fox, 19 Entertainment produced revenue of $223 million last year, up from $151 million two years earlier.
And, addressing that conventional wisdom that “Idol” will fold with the exit of Simon Cowell:
Even though the overall audience is declining, à ¢Ã¢â€š ¬Ã…“American Idolà ¢Ã¢â€š ¬ appears to be in little danger of losing its crown as the top-rated television series. In the 2003-4 season, the first in which à ¢Ã¢â€š ¬Ã…“Idolà ¢Ã¢â€š ¬ was the top-rated prime-time series, its lead over the second place show was about 7 percent. That margin has grown every year since and this year is 66 percent.
Mike Darnell, the president of alternative entertainment for Fox, who oversees à ¢Ã¢â€š ¬Ã…“Idolà ¢Ã¢â€š ¬ and other reality shows for the network, said that à ¢Ã¢â€š ¬Ã…“Idolà ¢Ã¢â€š ¬ could lose 12 percent of its audience every season and still be among the top 10 shows on television in 2016 à ¢Ã¢â€š ¬’ even if every other show on television maintained all of its current audience.
Unless the lucrative ancillary streams dry up, and barring a catastrophic ratings loss (not likely, even if Simon leaves), American Idol should remain a TV staple for years to come.
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14 Responses to “American Idol: Ratings Down Profits Up!”
Cheap ass production values = ratings down and profits up! Duh.
Don’t forget all the savings by not having “Idol Gives Back!”
“Cheap ass production values = ratings down and profits up! Duh.”
this.
im pretty sure they are paying some left over lab monkeys instead of real people…. it makes sense.
I guess this isn’t a dieing ship, still think this is a dyeing ship.
P.s Joridins new single is pretty good, it’s on the tube now
Maybe they could use some of their breathtaking profits to get songs cleared that were written in this century.
Or it means even though there are less viewers. the viewers that are tuning in are willing to fork out money in relation to their favourite Idols and that in turn makes the show itself more attractive to advertisers.
Has anyone seen the tour revenue numbers because I have to think last year was the best year for the tour because the talent in the top 10 was so diverse there was something for everyone.
I do agree however with all the sentiments shared that some of that breathtaking profit should be used to clear more songs because they might actually be able to improve ratings so they can charge advertisers even more.
Season 5 was the best year for the tour according to Idolchatter –
http://blogs.usatoday.com/idolchatter/idol_tour_08/index.html
Season 5 – $35.2 million
Season 6 – $20.9 million
Season 7 – $29.3 million
Someone else perhaps may have the numbers for seasons prior to season 5, but I doubt the numbers will be higher than season 7 if only because the ticket prices were lower in the earlier seasons.
“Even though à ¢Ã¢â€š ¬Ã…“American Idolà ¢Ã¢â€š ¬Ã¢â€ž ¢sà ¢Ã¢â€š ¬ ratings have declined, Fox has put more hours of the show on the air and has been able to charge a higher rate as its ratings lead over other shows has grown.”
This is the key graph.
Longer shows in the final rounds (e.g., two hours for Top 10 night v. one hour in seasons 4 and 5; an hour and a half for Top 9 v. one hour for Top 9 in previous seasons) means shows that are tediously paced and unnecessarily long – but shows with far more commercial time to sell. If they can get away with it, of course they will. So a bloated, less popular version of Idol can gross more ad dollars than the leaner, higher rated version of the past. That’s good news for the Fox, but for the audience, not so much.
Idol is lucky, it seems, that for the moment, other shows are declining faster than it is, as ad revenues seem to be in part dependent on the distance between it and its competition.
One factor not mentioned here is ad rate inflation, which is constant and substantial. You have to bear that in mind when comparing revenues from this year against prior years. If Season 8 was generating the same audience as Season 5, just imagine how much greater the ad dollars – and ancillary revenues – would be.
It’s natural – inevitable – for a hit show to lose some of its audience as it ages. Idol is doing well for a show in its eighth season, and it’s hard to imagine Fox coming up with something that could do anywhere near as well in Idol’s timeslots, so I expect the show to last a long time. How much change can it sustain while remaining at the top of the ratings? It’ll be interesting to see. Simon may stay a while longer, but he won’t stay forever. Same for the rest of the panel, and even Ryan will eventually tire of doing the show someday, I suppose.
Season 1: $8.1 million
Season 2: $15.6 million
Season 3: $11.3 million
Season 4: $16.9 million
Yes, the average price of a ticket in Season 1 was $31 while last year it was closer to $61. The tour has also gotten a lot longer. While the tour only had 30 shows in Season 1, it has gotten to be double that (59-60 shows). The big jump came in Season 5 when Idol added shows to address demand for tickets (initially, the tour was about the same size as AI4 with its 42 shows). They sold a whopping 96% of all tickets that year (and the venues were bigger – they release differing number of tickets depending on demand). Total attendance was 646K. The second highest capacity season was Season 2 with 89.3% of tickets sold. Seasons 5 and Season 2 also had the highest average attendence per concert (10,945 and 10,446 respectively) as well as the most numbers of sold out shows (19 and 17)
Live TV viewership and network TV viewership is down. But at least part of the ratings issue is a Neilson issue.
Since 2004 Neilson has been shifting from the old paper diaries to electonic “people meters” and whenever a market shifts, viewership drops overnight. So it’s difficult to compare this year’s Nielsen ratings to other years. At the end of April, 2009, Nielsen informed TV networks that it had recognized an undercount among users of its people meters, a device for measuring ratings. Members of the Nielsen panel are supposed to press buttons on the people meter when they start and stop watching TV. Nielsen said à ¢Ã¢â€š ¬Ã…“an in-house study showed 8 percent more people were watching TV in Nielsen households than had been measuredà ¢Ã¢â€š ¬ by the meters.
Here’s a specific case from Ed Ansin the station manager at Miami-Ft L. Fox Affiliate:
Plus, Neilson only measures Live in-home TV viewing (and they now do some adjustments to pick up college dorm resident). They don’t measure other viewship — from bars and churchs to “on demand” to online. As more people shift from traditional live TV viewing, watch for even more in-show product placements. Like the Coke cups on the judges desk.
i dont know why you post this crap
You have the number for total attendence for all the tours? So far we have -
Season 5 – 645,782
Season 6 – 349,583
Season 7 – 482,870
I don’t think this year the total attendence will be higher than Season 7 because I think Adam is the only one who can draw the big crowd (last year the two Davids, and possibly Jason can), but I hope to be proved wrong on that.
More info on the issue with Neilson Ratings and American Idol. This
May 8, 2009, from TV By the Numbers (a site a lot of Ad media people read):
Here is the link: http://tvbythenumbers.com/2009/05/08/conspiracy-alert-fox-to-challenge-nielsen-over-american-idol-ratings/18320
Thanks for the numbers on the tour, I guess since Season 7 was the only time I was interested in the tour or followed it at all and I knew that was the same situation for many people I knew I made the wrong assumption, and since our venue was indeed packed to the rafters, but then again it was the only Canadian date on the tour. At least this year they have 2 dates in Canada. They should do especially well since there is no Canadian Idol this year.
Does Nielsen then not take into account TIVO or PVR recordings of the shows as well as other formats? With the availability of that technology I have to think that is likely a very large number. With digital technology I am sure all those numbers are available to TIVO and the digital cable companies though I imagine satellite is hard to measure at all. So indeed the lower ratings numbers might not be legit at all or I should say complete, comprehensive, accurate because the competing technologies have been exploding in the last few years.
Though number of votes cast I would argue is also not necessarily an accurate reflection of ratings because you can cast more than one vote so you have powervoting blocks along with new tools to faciliate that. There is also apparently a way for people who live outside the US to vote in American Idol anyway though indeed they are also people not included in US ratings numbers like Canadians.