Fox Is Abandoning the Pilot Season Format for the Cable Model

Is 21st Century Fox smart for abandoning the pilot season format, or is it an act of desperation?

Jan 21, 2014 at 1:52PM

At a recent meeting of the Television Critics Association, 21st Century Fox (NASDAQ:FOXA) announced it won't take part in the TV-pilot process any longer. Instead, it will adopt a process similar to that of cable TV, where series are developed and released throughout the year instead of the September-to-May schedule that broadcasters have used in the past.

According to Kevin Reilly, chairman of entertainment at Fox Broadcasting, the purpose for the change is to allow the company to generate programming in a more consistent manner throughout the year.

What that suggests is that it's trying to manage the more cyclical nature of viewership, which translates into revenue and earnings going up and down in conjunction with traditional programming strategies.

This shouldn't be confused with the upfront presentations, where advertisers are shown new shows by the networks in order to make decisions on where to put their marketing dollars. Fox will continue to participate in that process.

Fragmentation
Cable channels like AMC TV, which is owned by AMC Networks (NASDAQ:AMCX), continue to chip away at the viewing audience of the major broadcasters. This is due largely to hits like "The Walking Dead" and "Mad Men" attracting huge audiences.

This is the major reason 21st Century Fox is embracing a business model that will compete with both the cable channels and the major broadcasters as well.

What's important is shows like "Mad Men" and "The Walking Dead" attract significant numbers in the key 18-49 demo, which is the sweet spot for getting the most revenue from advertisers.

Broadcast TV numbers
As is the usual result for broadcast networks, CBS (NYSE:CBS) is the top network for overall viewers. It leads by a hefty amount over its closest competitor, Comcast's (NASDAQ:CMCSA) NBC. CBS is drawing an average of 11.44 million viewers a night, while NBC is attracting 9.55 million. Coming in 3rd in overall viewers is ABC with 7.80 million, with Fox only attracting an average of 6.76 million a night.

In the key 18-49 demo it changes, with NBC in the lead with a 3.0 rating average. NBC is followed by CBS with a 2.6, Fox with a 2.3, and ABC in fourth with a 2.2 rating average.

As long as some of the broadcasters are doing well, they may decide to continue using the current TV pilot model. Although CBS rarely wins in the 18-49 demo, it does usually win the overall viewership numbers year after year; this suggests that it may decide to keep its existing pilot model until that changes. If Fox makes some headway because of its adaptations, we will probably see the other networks follow. ABC may be the next to move away from the model, with CBS and NBC waiting because of their current success.

A ratings point in the 18-49 demographic is the equivalent of 1.256 million adults in that age range. It includes Live+7 Day with the exception of the last two weeks through Jan. 12, 2014.

Outlook
Ever since Fox's "American Idol" fell from its juggernaut status and the company stopped its popular "24" series, Fox has gradually seen its viewer numbers erode. With "24" returning, it could make a nice move upward (though this will depend on the number of former fans tuning in).

Over time, the quality of shows offered by Fox during the year will determine its success. Content remains king, and only making changes to the schedule won't be enough. It must come up with big hits like AMC TV in order to rebound to its former success.

Eventually the other major networks will probably participate in similar changes that reinforce content quality. After all, they aren't going to sit back for long if Fox introduces a couple of meaningful hits that propels it to much higher ratings numbers.

Gary Bourgeault has no position in any stocks mentioned. The Motley Fool recommends AMC Networks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers