Why Supergirl’s move from CBS to CW might be more significant that you think

I have been thinking about CBS for a while now.

It’s been on my mind since December, when official word on Mike and Molly’s cancellation came through. The nagging feeling in my mind only got worse as I impatiently waited for months for the announcement of Person of Interest’s return. But now, with the news of Supergirl, it’s finally cemented in my head what’s going on.

In case you haven’t heard, Supergirl is moving to the CW next season for its 2nd season, which means:

CBS essentially just cancelled the #1 new drama of its own network and #4 overall new network series for the 2015-2016 season.

That sort of boggles the mind, doesn’t it?

You would have never heard of that ten years ago. I don’t even think you’d have heard of that two years ago. Yet here we are, and CBS has managed to cancel not one, not two, but three solid performers from its lineup, while keeping shows with lower ratings, because of “budgetary reasons.”

Welcome to the new age of television where live view ratings are no longer king.

That is not to say that ratings of live views no longer matter. They do. Just not the way they used to.

Part of that has to do with the radical changes in the way we watch television. More and more, studios are realizing that fans view television as an investment and treat it as such in how they spend their time and money. Call it the age of the geek if you want, but they’ve suddenly realized that there is a lot of money to be made from merchandising, DVD sales, and fan conventions. They’ve realized that, given the right show, fans want to see things not once or twice, but pour over things obsessively and rewatch things til their eyes bleed- and then they’ll watch it again when they recruit all their friends to join them. And the studios have finally cottoned on that fans are willing to spend their money to facilitate that obsession to get in deep into a show they’ve fallen in love with.

The problem is, they have no idea how to cultivate a fanbase or track it based on the old system.

Advertisers still don’t know what to do with the time-shifting of shows and the ability to record and fast-forward the ads. The Nielsen rating system was dated ten years ago; it’s practically gone the way of the dinosaurs now. The only reason we still use it is because no one has figured out a better system of tracking demographics to account for both older generations who still watch TV and younger generations who would rather stream it online (with adblockers). And the studios absolutely have no set formula on how to gauge fans to figure out what is a property worth investing in and what is not.  The popularity of waiting to binge-watch shows on Netflix drives them absolutely batty.

Which brings us to the CW and CBS.

For the second year in a row, the CW decided to announce the early renewal of its entire line-up across the board, with little to no regard to Nielsen ratings. At the time, Forbes posited that the CW didn’t care live ratings because its function was different than the other networks:

Unlike the big four of CBS, ABC, NBC and Fox, The CW is not a network trying to make money on a grand scale off its live viewership. Rather, it was created as a vessel for 1st-run domestic broadcast. […] The CW is a network created with the singular goal of getting the shows of its parent company (CBS) to syndication qualifying numbers. That’s why most of its programming still runs traditional 22-episode seasons and why there’s never been outside programming from the likes of 20th Century Fox, NBCUniversal and ABC Studios featured on it. 

Which, okay. Makes sense. Lower licensing fees means you can have genre shows that are geared toward building loyal fanbases where the money can be made in merchandising and syndication. At this point, the CW appears to track the ratings in so much as they use it to check that interest is holding steady and audience numbers aren’t dropping significantly. They are far more interested in online social media buzz and critical press.

But the big four operate differently. They exist to make money on live viewership, right? The whole point is to get big ratings so that advertisers invest with them, which is where they make their money.

However, given CBS’s behavior this year, that no longer seems to be the case. Slowly but surely, it’s been doing away with all non-CBS Studios produced shows. Despite being another solid performer in the ratings, Mike and Molly got axed because contract negotiations were up and they were afraid Melissa McCarthy’s shooting star would mean more costs.

And then you have Person of Interest. Here you had a solid performer in its fifth season with a loyal fanbase. It was ready to go in the fall, and filming wrapped in December, but the final season only premiered in this month. Why did CBS keep that show on its bench for so long to the point that the producers and the stars had no clue when it was coming back? Why bench it at all?

Well, because CBS doesn’t own either property. With little to no promotion and comparable budgets, POI still beat out the new CBS owned show, Limitless in the same time-slot, but that matters less to CBS because they’ve realized they can’t make as much money off POI but they *can* make money off of LimitlessNina Tassler (former CBS chairman) explained it herself last August:

“You look at a show like (CBS-owned) Blue Bloods and Elementary. Because we have very lucrative syndication deals and international sales on those projects, the shows are very profitable for us. Then there is (WBTV-owned) The Big Bang Theory, we are able to make money of it because of its success on network. It’s about balancing different ways you can monetize and generate revenue.”

CBS isn’t the only network to realize this fact. All of the big four networks have recognized the fact that owning your own shows cuts costs and allows for lower ratings. Taking a cue from their fans, they have slowly been shifting towards looking at television shows as a long-term investment: let a low-rated show grow a fanbase, make it available to them so they can watch it at their discretion and get their friends to watch as well, capitalize on the popularity of Netflix and people waiting to binge-watch a show, then monetize the merchandise (DVDs, toys, clothes, fan conventions). Pay it forward and invest now, then reap the rewards later.

But what Supergirl marks is a tipping point, where owning a show now matters more than having a desired fanbase AND decent ratings on the big four.

The whole reason they picked up Supergirl was to change their image. Tassler said that focusing on empowering women and targeting younger audiences were top priorities for CBS, whose other shows skew much, much older and much more male. By those metrics, Supergirl largely succeeded. While not a runaway hit, it still averaged nearly 10 million viewers per week and earned a 2.4 rating among adults 18-49 in a competitive time slot. Compared to all the new shows across all the networks, only three shows rank higher (Quantico (ABC), Blindspot (NBC),and Life in Pieces (CBS comedy)), and Supergirl was CBS’ youngest-skewing new drama and ranked high with women. Supergirl did everything it was supposed to do, short of being a bona-fide hit.

However, licensing fees drove up Supergirl’s costs, making it also the network’s most expensive new show of the season. Which is ultimately is why the show died on CBS: “budgetary reasons.”

All this points to the fact that live viewing is no longer the only name of the game for television shows. If the studio doesn’t own your show, nothing short of being the #1 breakout hit of the fall season can save you. Decent ratings in target demographics aren’t enough to keep a show on the air on the big four anymore, because shows and fandoms can have lives long after they go off the air – which means there is still money to be made there.

Advertisers are no longer are the only major revenue stream for studios to make profits, and if Supergirl proves anything, it’s that they might not even be the most important one anymore. There are other ways of making money.

After all, with the move to the CW, CBS gets to keep Supergirl as source of income until it reaches syndication, at a lower cost because the WB’s licensing fees are likely to go down now that it’s on the WB’s shared station.

When a show can fly again while still pouring money into CBS’s pockets, you have to wonder how the other studios are going to react to CBS having its cake while eating it too – and who else is going to jump on the train to develop new platforms to change the landscape of television once again.

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