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Network Economics


For all that people think of network news as some kind of dinosaur, financially news is an important part of the network television bottom line. Maybe, some might argue, it has become too important.

Overall, news contributes a big part of network profits, particularly in times when developing hit entertainment shows is proving difficult and signing sports contracts too expensive.

Several things stand out.

Getting a handle on the finances of network news is difficult. The news divisions are now small elements inside large corporations, of which even the networks themselves are just a small part. Many news organizations no longer have people covering network news from a financial point of view and the companies release little information publicly about them.

What is more, events can change the finances of news substantially. For instance, executives at one of the three networks report confidentially that in 1991, their network was headed toward returning $100 million to the bottom line of their company from news before the first Gulf War began. The cost of covering that war, including the giving up commercials, reduced that number to $65 million in operating profit from news for the year.

Twelve years later, insiders report, after covering the second war in Iraq, the same news division was fighting to remain revenue-neutral, to return no profit to the bottom line, but also not fall into the red.

Becoming a Profit Center

The first great change in the finances of network news came in the mid-1980s, when the news divisions were asked to become profit centers for their companies.

Until then, network news divisions were asked to bring prestige, rather than profits, to their owners. In the language of today, prestige was essential to “branding.” News, in other words, was relevant to network economics but in a long-term and more indirect way. As the late CBS chairman William Paley once was quoted as telling his correspondents, “You worry about the news. I’ve got Jack Benny to bring in the profits.”4

News also kept the federal regulators off the networks’ backs. Today this is no longer much of a concern, not since the FCC began systematically deregulating television in the 1980s.

Evening News Economics

As is true with audience trends, the direction of evening newscast economics in recent years has not been good, but 2003 may have bucked that trend as the economy showed some strengthening.

Still, say industry insiders, the nightly newscasts remain profitable and solid part of the network’s bottom line.

Unfortunately, there are little or no public data on the operating profitability of news divisions alone. To a large extent, in trying to get a handle on finances, we are limited to looking at estimates of revenues. And even here accounting practices and bundling of ad sales make the picture fuzzy.

From 1999 to 2002, the three networks together have seen their evening advertising revenues drop 6 percent, according to data from TNS Media Intelligence, a market research firm. Most of this decline occurred in 2000 and 2001, as a slumping economy resulted in a shrinking advertising market.

But the drop cannot all be tied to a sluggish economy. It began before the economy sagged and at some points occurred even while ratings had seen an up-tick.

Both the NBC “Nightly News” and the ABC “World News Tonight” took in considerably more money in advertising revenues in 1999 than they did in 2002. In four years, NBC’s revenues fell off 13 percent and ABC’s fell 9 percent. These two programs saw big drops in 2001, around $14 million each, as the advertising downturn rippled across all media.5 But this is not entirely attributable to ratings, which were rising for both NBC and ABC in 2000. ABC saw a big ratings jump in 2001 as the revenues fell.6 The advertising slump that began in 2000 with the sharp decline in the stock market and the popping of the bubble is also a factor here, industry professionals add, making a difficult situation look somewhat worse.

At CBS, which has the least-watched nightly news broadcast, ad revenues improved: The CBS “Evening News” experienced an 8 percent jump in advertising revenues from 1999 to 2002. In 2002, CBS eked its way into the second-place revenue spot, even while it was the clear third-place finisher in ratings.7

Partial 2003 data suggest the trend may be changing. The networks saw strong advertising revenues for the first eight months of 2003 and appeared to be on course to show significant gains over 2002.8 By August of 2003 all the evening news show had taken in more than $100 million in revenues.9

According to the TNS data tracking advertiser spending, the NBC “Nightly News” with Tom Brokaw had taken in revenues of more than $110 million through August. The program was thus projected to have its best year since 2000, with estimated revenues of $165 million. CBS, which had taken in $106 million by August, looked ready to have its best year since before 1999 ($159 million in revenue). And ABC, with more $100 million in its coffers, was on track to beat its 2001 results (with $150 million in revenue).

These revenue numbers, however, need to be viewed carefully, industry insiders say. The networks, particularly NBC and ABC, are selling ads in packages. So an NBC ad buy could include, for instance, the network nightly news, CNBC and MSNBC, plus online deals with That gives networks leeway in terms of how they assign the revenues to different programs. It is possible that the revenue data, insiders say, are comparing apples and oranges.

Indeed, some network news professionals say the bundling of ad sales has become an important factor in the race for No. 1 in evening news. If you are on top, you have more leverage to bundle ad sales, to tell advertisers that if they want preferred spots on the evening news, they may be forced to buy time in other programs.

According to internal network sales data provided to the Project for Excellence in Journalism by a confidential source, in fact, these public projections of 2003 revenues are close but not entirely accurate. This internal network accounting for 2003 shows the No. 1 rated NBC “Nightly News” topping $200 million in ad sales. The No. 2 rated ABC “World News Tonight” was second at more $170 million and No. 3 CBS “Evening News” took in about $133 million. It is difficult to assess which numbers are more accurate, the internal or the public estimates. Executives say the bundling of ad sales make all the estimates somewhat softer, or more a matter of accounting judgment, than they once were.

Evening News Revenue, by Network
1999 to 2003*
Design Your Own Chart
Source: TNS Media Intelligence/CMR unpublished data,
* 2003 revenue is PEJ projection based on Jan.-Aug. data.

Morning Shows

Far from the downward trend surrounding the evening newscasts, the revenue picture of morning news appears more stable. Other than “Meet the Press” on NBC, indeed, the network’s “Today” show is the longest-running program on network television.10

And today, in an age when success in entertainment programming is becoming more difficult, morning shows, with their 10 hours of programming a week (15 hours for the “Today” show on some affiliates plus four more on weekends), morning shows are more important than ever. This is why networks like ABC are trying to create weekend versions of their morning programs to compete with NBC.

Not only are the morning shows enduring, but they are also growing. In the four years of 1999 through 2002, morning show revenues are up 37 percent, according to the data from TNS.

To get a sense of their significance, consider this: Together, the three morning shows take in more than double the revenues of nightly news, despite half the ratings.11 A key reason is that the morning shows are on four times longer – two hours a day versus 30 minutes – and pack more commercial time or sponsored segments into each half-hour.

In 2002, NBC’s “Today,” ABC’s “Good Morning America,” and CBS’s “Early Show” brought in over a billion dollars in combined advertising revenues to the networks.

The national economic slowdown had only the smallest of impacts. Only “Good Morning America” had a decline in revenue from 2000 to 2001, and a small one at that ($4.6 million). In 2002 its numbers were up again.12

Morning News Revenue, by Network
1999 to 2002
Design Your Own Chart
Source: TNS Media Intelligence/CMR unpublished data,

Financially, morning is something of a two-network race. According to the data from TNS, NBC’s “Today” show and ABC’s “Good Morning America” are actually closer in revenues than they are in ratings, and have been since 1999. Through the first eight months of 2003, both programs had taken in about $300 million each.13

From 1999 to 2002, moreover, both had seen revenues grow by at least 30 percent.

CBS clearly lags behind though it has made significant gains since 1999, when the “Early Show” replaced the struggling “CBS This Morning.” Since then, it has had the greatest growth in advertising dollars among the three networks, 56 percent, although it is building on a smaller base.14

In the reverse of what we see for evening news, the morning shows are able to generate these powerful increases in revenue without increases in ratings.

Again, this has something to do with demographics. The younger viewers these shows bring in, including stay-at-home moms, may allow the networks to command more from advertisers.

Yet this is only part of it. Morning shows have also found ways to generate new revenue by creating advertising opportunities even within the content of the programs, and outside the commercial breaks. Sponsored weather spots, product-oriented gardening tips and other potential revenue opportunities are now commonplace.

How Morning News Shows Use Their Time, 2001
Division of Time, in Minutes

June 2001 October 2001 Average
Total Air Time (minutes) 120 120 120
Commercials 35 35 35
Local News 9 9 9
Products 16 17 16.5
Promotions 10 5 7.5
Subtotal 70 66 68
Remaining Time 50 54 52

Source: “Before and After,” PEJ study, November 2001

In addition, a 2001 study conducted by the Project found that, excluding commercials and local news inserts, these morning news programs dedicated 32 percent of their time, or roughly 24 minutes of program, to selling viewers something – a book, a movie, a kitchen or garden gadget, a Web site, other network programs or a segment later in the show, some of which, though not all, were sponsored segments.

Add in the 35 minutes of commercials per program, and more than half of every two-hour show was spent selling viewers something. In short, if viewers tuned in for an hour of morning news, they would get just 25 minutes of network news, weather and other features not related to products and promotions.

The shows also have become vast sources of self-advertising, or synergy, for the corporate owner. In the study, each of the morning shows did more stories about its own parent company products than it did about any other single company, especially its media competitors. Disney products were most likely to appear on ABC, Viacom products on CBS and G.E. products on NBC.15

The morning time slot is also interesting for another reason. It is the one time of day where the networks go head-to-head with cable news operations with virtually the same kind of programming. From 7 to 9 a.m. Eastern time, both cable and network air similar morning shows.16 And in this time slot the networks prevail. As we saw in nightly news, head to head, many more people watch network morning news programs than comparably styled cable news morning programs.17

Fox plays an interesting role in the morning show battle as well. On the West Coast, where the NBC, ABC and CBS morning shows are tape delayed, Fox’s affiliates offer local live alternatives.

Sunday Show Economics

When it comes to Sunday morning programs, industry insiders say that NBC’s “Meet the Press” is a significant profit producer for the network. In 2001, NBC reported that the show earned an operating profit of $50 million. That was up, reportedly, from $800,000 in 1991.18 The other Sunday shows reportedly add to the bottom line but not as significantly.

Prime Time Magazines

If morning shows show a dazzling durability, the revenue figures for prime time news magazines reveal a downward trend that suggests that the golden era of the network magazine show is over.

Through most of the 1990s these shows had been a boon to the news divisions. The genre really took off in 1992 with NBC’s “Dateline,” which used a different organizational concept to change the game. Instead of using a small staff to produce a once-a-week show as the other magazines had done, NBC used its entire news staff to churn out stories steadily. “Dateline” did not air once a week, but instead it was on more often – at its peak five times a week – and there weren’t stars. There was a rotating cast of anchors and reporters. The brand of the show was NBC news and the show name, not any specific person. The other networks began to follow suit, putting magazines on multiple nights. ABC put its “20/20” and “Primetime” together and made them into a three-night-a-week production. And CBS even took the step of expanding its news magazine franchise, “60 Minutes,” into a twice-weekly show, and its “48 Hours” magazine also aired twice a week. At the peak of the prime time news magazine craze in 1997, 10 out of a possible 22 hours of prime time network programming on the big three was filled with news magazines.19

But from 1999 to 2002, revenues for these programs fell 48 percent.20 And the most obvious reason is quantity. From that 1997 high of 10, the amount of time devoted to prime time magazines per network has shrunken to, in most weeks, two hours, clearly affecting these program’s revenues.

News Magazine Revenue, Select Programs
1999 to 2002
Design Your Own Chart
Source: TNS Media Intelligence/CMR unpublished data,

Perhaps the most interesting question is why the networks cut back on magazine programming. To some extent, the market for magazines had been glutted. There were too many of them. The history of television networks is filled with genres that were “hot” and later discarded, from westerns to quiz shows.

The issue is not how many people watch a magazine show. It is how many people might watch something else instead. And in 1999 networks found a new alternative with many of the same advantages as news magazines and a potential greater upside.

News magazines became popular as prime time programming because they were cheaper to produce than entertainment programming – sitcoms and dramas – roughly half the cost.21 Thus a network magazine could make money with a magazine show that generated lower ratings than an expensive hour-long drama or two half-hour sitcoms. In a sense, say industry insiders, networks used prime time magazines, in part, to plug holes in their entertainment schedules and tended to use more of them if they were having trouble finding successful entertainment shows.

In the last four years, the networks found even cheaper-to-produce programming – reality TV. And if one hits big, like “Survivor,” the first “Bachelor,” or “American Idol,” the upside is far greater, if more short lived.

News magazines are being supplanted, in part, because Americans prefer shows like “Fear Factor” and “The Bachelor.” As a result, NBC’s “Dateline,” which was on five nights a week in 1998, is now on only twice a week.

On the other hand, there are some, such as Lawrence Grossman, a former NBC News president, who argue that, aside from “60 Minutes,” the term “news magazine” has become something of a misnomer for these programs. They might be better labeled “nonfiction entertainment magazines.”

One question to watch is whether “60 Minutes” will continue to be the exception in 2004 and beyond with the departure, not entirely voluntary, of the founder Don Hewitt, the 81-year-old network news legend who is among the last off-air executives who was powerful enough on his own to push against the more transitory financial concerns of his business superiors.


Standing apart from most of these characterizations is “Nightline.” It does not air in prime time and it does not follow the traditional news magazine format. As many of the magazines have gone more infotainment-oriented and sensational in content, “Nightline” has resisted. It also has changed its format and updated its look and feel a good deal more than some might imagine, without changing its seriousness, becoming much more flexible than its original format of a six-minute set-up piece followed by 15 minutes of interview. And while it has also seen its revenues decline in recent years, it has been far more stable than most news programs and much more than entertainment programming.

But avoiding the problems and resisting the pressures that have beset other network shows has not entirely protected “Nightline.” In 2002, ABC considered luring David Letterman away from CBS to fill the 11:30 p.m. Eastern time slot. The deal eventually fell through and Letterman stayed with CBS, but the fact that ABC pursued him suggests that “Nightline’s” approach to a weeknight magazine may be threatened. The problem wasn’t that Nightline wasn’t profitable or that its audience was too old. According to internal numbers from ABC Nightline at the time was expected to make $13 million in profit.22 The problem was merely that Lettermen might have made more money and attracted even younger demographics. The issue becomes one of purpose. If a network’s owner feels that it gains something from offering a “Nightline” program to the society, it will view things one way. If it feels it gains operating income from offering “Nightline” and little more, it will view things another way.

The Value of News

This raises the question that ultimately will face all network news programming. To what extent are the news divisions important to the viability of television networks and their conglomerate parents as a whole, even if they do not happen to be significant profit centers? To what degree are the lead anchors, for instance, major faces for the brand? How much does a strong news presence makes the network more attractive to affiliates? To what degree is news less vulnerable than entertainment programming to fads and strong-arm negotiations from Hollywood stars? How important is it that, because news is a capital-intensive form of programming, once the investment has been made, the incremental cost of producing more news – be it a special report or an added night of prime time magazine programming – is relatively low while the cost of entry for competitors is high or a new entertainment program is high?

These are more subtle issues than how much a nightly news program or a morning show adds to the bottom line. These are intangible matters of judgment, even intuition. They come down, to a greater degree than some other choices, to the values of the people who run the company. Yet they play a role in the strategic planning of a network, in the willingness to invest in news content, in budgeting and in what new business models a media conglomerate might want to invent.


1. TNS Media Intelligence/CMR unpublished data,; PEJ research.

2. Nielsen Media Research unpublished data,; TNS Media Intelligence/CMR unpublished data

3. PEJ research; TNS Media Intelligence/CMR unpublished data.

4. Interview with the former CBS correspondent Marvin Kalb by the author, Tom Rosenstiel, director of the Project for Excellence in Journalism.

5. TNS Media Intelligence/CMR unpublished data.

6. Nielsen Media Research unpublished data; TNS Media Intelligence/CMR unpublished data.

7. TNS Media Intelligence/CMR unpublished data; Nielsen Media Research unpublished data.

8. TNS Media Intelligence/CMR unpublished data.

9. TNS Media Intelligence/CMR unpublished data.

10. “Morning television programs,” Encyclopedia of Television, online at

11. TNS Media Intelligence/CMR unpublished data; Nielsen Media Research unpublished data.

12. TNS Media Intelligence/CMR unpublished data.

13. TNS Media Intelligence/CMR unpublished data.

14. TNS Media Intelligence/CMR unpublished data.

15. See section on “Corporate synergy” in Project for Excellence in Journalism, “Before and After: How the War on Terrorism Has Changed the News Agenda,” November 19, 2001, online at

16. CNN’s morning show goes until 10 a.m.

17. In summer 2003, for example, the three morning cable programs (CNN’s “American Morning,” Fox News’ “Fox & Friends,” and MSNBC’s “Imus in the Morning”) drew just 2.3 million viewers all together. See Peter Johnson, “Fox wakes up morning TV,” USA Today, August 17, 2003, online at

18. Lisa de Moraes, The Washington Post, “Tim Russert signs record deal with NBC News,” December 12, 2001, p. C1.

19. Elizabeth Weinreb, “The News About News Magazines,” unpublished essay.

20. TNS Media Intelligence/CMR unpublished data.

21. “Newsmagazines woo viewers as must-see TV drama,” Christian Science Monitor, February 20, 1998, p. B1.

22. Tom Rosenstiel and Bill Kovach, “Why We Need ‘Nightline’,” The Washington Post, March 6, 2002, p. A19.