CBS Renewal Of The Big Bang Theory To Continue Growing Advertising Income

March 13th, 2014 by Trefis Team
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CBS Corporation (NYSE:CBS) recently announced a multi-year broadcast renewal for the top-rated, comedy The Big Bang Theory. The show is TV’s most-watched comedy and the top-rated broadcast entertainment show among adults 18-49. The company in a release stated, the deal will further strengthen the network’s position for future seasons and marks another chapter in the great partnership CBS enjoys with Warner Bros. [1]

The Big Bang Theory has been television’s No. 1 comedy in viewers since 2010-2011 and continues as the No. 1 comedy in key demographics for a second straight season. This season, the show is averaging 19.79 million viewers (up 4% versus last year), ranking as the highest-rated non-sports program in all these demographics. [1]

This is a great move for CBS as The Big Bang Theory gets the highest ad rates outside of the sports telecasts such as NFL and the renewal will translate into continued growth in advertising revenues for the company.

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See our complete analysis for CBS

The Big Bang Theory Ratings And Ad Pricing

The Big Bang Theory is an American sitcom created by Chuck Lorre and Bill Prady. It premiered on CBS on September 24, 2007. The show is filmed in front of a live audience, and is produced by Time Warner’s (NYSE:TWX) Warner Bros. and Chuck Lorre Productions. The show has been leading the growth for CBS and helped the network remain on top in total viewers. In the current season as well, CBS leads all networks in live plus 7-day lift among adults 18-49, according to Nielsen L+7 ratings through Week 20, ending February 9.  (Briefly, on terminology: ” live plus 7-day lift” and “L+7” both refer to the ratings for the live telecast and the first seven days of viewership on DVR.) Season-to-date, CBS is averaging an adult 18-49 live plus 7-day lift of +0.6.  For the season, CBS also leads all networks in live plus 7-day viewer lift (averaging +1.86 million viewers). [2]

Now in its seventh season, The Big Bang Theory still commands a staggering $326,260 per 30-second spot, far more than NBC’s The Voice ($264,575 for the higher-rated Wednesday night show), ABC’s Modern Family ($257,435) and Fox’s The Simpsons ($256,963). The highest spot is usually enjoyed by the sporting telecasts such as NFL, which enjoy very high viewership. Fox’s late national NFC games fetches $595,000 per 30-second, while each unit in NBC’s Sunday Night Football franchise is worth around $570,000. [3]

Trends In Advertisement Spending Supportive

Television ad spending in the U.S. has been supportive for the content owners. During 2013, advertising contributed 58% to the company’s overall revenues, which were up 4% to $8.80 billion. [4] The advertising market trended well in 2013, despite the absence of the Olympics or high political spending. By the end of the first three quarters of 2013 (latest Nielsen data available), global advertising spend grew by 3.2% as compared to the prior year period. However, the North American region saw a slight decline of 1.3% during the same period. [5] This can be attributed to the absence of heavy political spending versus the prior year.

Television as a medium continues to show steady growth.  With a 4% increase in advertising spend for the third quarter of 2013, it accounted for 58% of the overall market, according to Nielsen estimates. [6] We expect a slight uptick in 2014 advertisement spending due to the FIFA World Cup soccer tournament, the Winter Olympics and the U.S. midterm elections. Content owners such as CBS will benefit from the advertising growth as more than 50% of CBS’ value comes from advertising related businesses, according to our estimates. We believe that CBS will benefit from its continued focus on original programming and the latest deal with Warner Bros. for The Big Bang Theory will provide a boost to the advertising income through 2017.

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Notes:
  1. CBS ANNOUNCES MULTI-YEAR BROADCAST AGREEMENT FOR “THE BIG BANG THEORY”, CBS Press Release, Mar 12, 2014 [↩] [↩]
  2. SEASON-TO-DATE, CBS IS #1 IN ADULTS 18-49 LIVE PLUS 7-DAY DVR LIFT, CBS Press Release, Feb 24, 2014 [↩]
  3. The Big Bang Theory Gets the Highest Ad Rates Outside of the NFL, Adweek, Oct 13, 2013 [↩]
  4. CBS Corporation’s SEC Filings [↩]
  5. GLOBAL ADVIEW PULSE LITE – Q3 2013, Nielsen, Jan 22, 2014 [↩]
  6. TV REMAINS THE REIGNING CHAMP, BUT DISPLAY INTERNET ADS ARE THE MVPS OF 3Q, Nielsen, Jan 27, 2014 [↩]