TNT’s Billion-Dollar Bet: Behind Network’s Plan To Reduce Ad Load In Drama Series

After attempting to shake up the broadcast model by trying to bypass pilot season, Kevin Reilly is looking to do the same on the cable side with his announcement Thursday that TNT plans to cut the ad load on three new 2016 drama series by 50%, or eight to nine minutes. I sat down with the TNT and TBS president after his TCA presentation to talk more about the new initiative.

The three new drama series Reilly was alluding to are the straight-to-series The Alienist, which he said will implement the reduction for sure; the recently picked-up-to-series Good Behavior, starring Michelle Dockery; and Animal Kingdom, toplined by Ellen Barkin, which are very likely to do it. All three are owned by TNT, which is why the network can manipulate its running time. For The Alienist, which is yet to go into production, the adjustment is easier, while there are conversations underway with the producers of Good Behavior and Animal Kingdom as both shows made standard-length pilots. But as Reilly put it, “no producer has had a hard time doing longer episodes.”

Ad clutter in basic cable is a problem, with Kantar Media recently reporting yet another all-time high as paid ad time on cable networks rose by 4.8% over the past year alone, hovering over the 20-minute-per-hour mark, which five networks actually crossed. “We have overstuffed the bird,” Reilly said onstage. Basic cable networks have suffered, with ratings declines across the board. Turner first signaled a change by vowing to cut in half the ad load on the smaller TruTV network in 2016, but doing it with high-end dramas on one of the biggest basic cable networks certainly got industry types’ attention.

Kevin Reilly TCA 2“We have to do it, we have to do deeper partnerships,” Reilly said. “People do watch ads, but there are so many and there is such clutter, I think it will be a better TV environment for advertisers and a better viewing experience for consumers.” While other networks have taken small steps — pushing the first ad pod further into the show to try to cut down tune-out or shaving 10% or so of the ad inventory — “most people are just optically moving things around and not really reducing the load,” Reilly said. In contrast, TNT’s 50% ad drop is  a “massive move.” So far, feedback from partners has been positive, he said.

But it is a big financial gamble. “The problem is that it is a multibillion-dollar issue for us, so we can’t just wave a wand,” Reilly said. “I can reduce the ad load tomorrow, but if I do it, a billion dollars will get off my book. So we are not going to do that, but the way we are selling the network in general is changing as we get more data-based.”

The basic idea is that if the ad load shrinks, advertisers might be wiling to pay premium for the better exposure. That and a potential uptick in ratings from consumers attracted by the better viewing experience could partially offset the losses from the halved ad inventory. But that might not be enough to balance the sheet, at least not in the short run.

Alienist“We’re working on the whole formula right now, but certainly with an uptick in ratings and pricing, that takes one step in that direction,” Reilly said. “We may need to subsidize it in the short term, just to close the gap, but I think it is going to be profitable and good thing overall.”

For the plan to work, advertisers will have to come on board. It’s possible that they’ll say “it’s your problem, we want to reduce (ad load), but we don’t want to pay,” Reilly said. But he added that he is hopeful media buyers would understand that “frankly it’s not going to be good for the industry and for them” to continue the status quo.

As for how the ad load reduction will be implemented — by trimming the length or the number of the existing ad pods, “I think that’s what we need to explore – is it better to have more breaks that are much shorter or less breaks that are perhaps longer,” Reilly said.

He hopes to expand the reduction to more series. “It’s the beginning of change for better viewing experience,” he said.

Cutting ads by half had been attempted once before on Reilly’s watch. In May 2008, a year into Reilly’s tenure at Fox, the network announced a new initiative dubbed “remote-free TV,” with two new drama series, Fringe and Dollhouse, set to air with half of the regular ad inventory. The practice was short-lived.

Other basic cable networks, including USA, also have been studying the issue of curbing ad clutter, though none has committed to a drastic step of the magnitude of what TNT is doing.

WGN America is experimenting with commercial-free telecasts on a one-off basis, airing the first episodes of upcoming dramas Outsiders and Underground ad-free and without sponsorship for all runs on their premiere nights.

OutsidersThere will be some loss of revenue, but “it’s well worth the sacrifice,” WGNA President Matt Cherniss said, hoping that viewers will get hooked after watching the pilot episodes and come back. “Both shows are designed to be provocative. I kept watching the pilots and didn’t feel I was comfortable going to a break. We want viewers to go into those worlds and stay there.”

As a basic network that derives a big chunk from its revenue from ads, WGN America will return commercials in Week 2 of the series, but Cherniss, who worked with Reilly at Fox, sees potential in a model where ad load is reduced.

“If the business model makes commercials more valuable for advertisers while giving viewers more content, I don’t thinks that is bad thing,” he said.

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