Skip to main content

Fasten Your Seatbelts


I would like nothing better than to start the new year by talking about one of the five soaps I watch on a regular basis: As the World Turns, Guiding Light, General Hospital, All My Children and One Life to Live. As a regular consumer of Daytime Confidential, you would like to talk about Spixie, Skate, CarJack, Craig, Shayne & Dinah, Bizzie, Rylee, David Vickers or Todd, Tea, and Marty. We are primed for more analysis and debate about the state of soaps, the ratings race, backstage gossip and industry machinations that directly affect our soaps.

However, yesterday came a series of alarming reports that every serious soap fan should take particular notice. This news is not sexy, glamorous, or particularly juicy. It seems far removed from the battle over Little Johnny, Claudia's frantic (if increasingly laughably staged) search for the incriminating DVD's , or the impending return of one Phillip Granville Spaulding. In fact, this is the type of news that most soap fans will gloss over and turn up their noses without a second thought, but we would be wise to resist that temptation. Yesterday, the automobile industry reported its worst sales in decades. While not surprising given the current state of the economy, this is one of the most problematic developments for daytime dramas that we've seen in a long time.

Let's get straight to it. According to Monday's New York Times:

Vehicle sales in the United States tumbled more than 35 percent in December, dragging the Detroit automakers’ full-year totals down to their lowest levels in nearly half a century.

"So what does this have to do with my soaps?," you rightly ask. The answer is at once complicated, yet very easy to grasp. Chrysler was down 53% in sales. Toyota lost 37%. Honda bled out 35%. Ford reported 32% sales losses, while Nissan and GM fell 31% in sales. The other car makers lost between 8%-36% in sales. The cumulative effect is that as the auto industry sales continue to plummet, so do network and independent television affiliates lose advertising. According to Automotive News and other industry sources like Media Buyer Planner, the automakers are not the only the advertisers cutting back:

Carmakers aren't the only ones trimming ad spending. Their regional-dealer ad groups, which generate a chunk of their budgets from every new-vehicle sale, are also cutting back due in part to smaller volumes, noted veteran auto marketer and agency exec Ian Beavis, now executive vice president and executive client director of Aegis Group's Carat. Beavis said the biggest drop in industry ad spending will be from individual auto dealers because "their margins are getting squeezed" and they are cutting expenses any way they can just to survive.

Those individual auto dealers account for a hefty portion of the revenues generated by your local TV station. When revenues fall, your local station starts cutting back on everything from news operations to various forms of programming for which it must pay all or at least some part of its various shows' licensing fees. Now I am sure there are people with far more knowledge about these things than I who will surely correct me (and they are welcome to do so if I am in error), but the following is not a forensic analysis of how soap operas are funded or generate revenues. It is, however, a close enough overview for our general purposes in order to see how these issues affect daytime dramas:

A soap opera's production costs are generally funded by either the network that owns them (ABC) or the production company that produces them (Proctor & Gamble, Bell Dramatic Serial Company, or Corday Productions, Inc). In the latter case, NBC pays Corday Productions a licensing fee for broadcast rights and sells advertising time during the broadcast from which it recoups its licensing costs; CBS has a similar arrangement with Bell Dramatic Serial. It should be noted here that Sony Pictures Television is the distributor for The Young and the Restless and Days of Our Lives, including domestic and international handling, while The Bold & The Beautiful is distributed by Bell-Phillip Television. The distribution arms essentially negotiate international and other broadcast rights and split the profits with the production companies. On the other hand, CBS pays P&G a licensing fee in exchange for favorable or "preferred" advertising rates for the bulk of a given shows' episodes.

In good economic times, more or less everybody comes out a winner and only struggling soaps feel the pain of budget cuts. In bad economic times, every show takes hits of varying degrees. This is why the Bell soaps seemingly are generally in the strongest financial position in terms of production since revenues are generated from a variety sources, especially international markets; the ABC soaps get hit hard across the board since the network bears the full cost of production; and the P&G soaps generally get slammed because P&G is a massive conglomerate whose fortunes are tied to directly to the economy itself. In other words, when people don't buy Pampers, Oakdale's sets shrink about a foot and a half in all directions. (continued)

Scroll to Continue

Recommended Articles

Normally, television stations can reap decent revenues from even a poorly performing soap because that soap's core audience demographic usually is consistent and is fairly easy to track in a given market. A struggling show like GL can play as long as the production costs are contained within particular parameters and an acceptable demo is reached or a baseline profit margin is achieved. This will not save a show from cancellation, but as we have seen with soaps in the past and currently on the air this formulation can keep a show at the bottom of the ratings on the air for years after other programs in other dayparts have long vanished.

When a soap epsiode airs, its primary advertising for that first broadcast generally accounts for the majority of its revenues. ABC soaps, Days and Y&R can basically generate additional ad revenue from SoapNet for multiple rebroadcast on SoapNet, but if you notice during SoapNet's serial rebroadcasts, a lot of the advertising is actually by ABC itself to promote the networks other shows or SoapNet programming.  (If you ever wondered why B&B is not on SoapNet, remember that Y&R and B&B are distributed by separate companies with different agendas, despite the fact the latter is owned by the Bell family.) Days also can be bought on iTunes. CBS soaps can generate some additional ad revenues with online streaming. Many of the shows/networks sell books, trinkets, and perfumes for additional revenue but these ancilliary products are mainly mainly used as marketing tools. Despite these additional revenue streams, when the entire advertising market falls no show is safe because practically every revenue generator falls with it. In this light, we can see how current economic conditions have a profound impact on our shows.

Soaps are particularly vulnerable right now because each episode is basically a one-time broadcast and therefore primarily a one-time revenue generator despite other revenue opportunities. For the television affiliate, which makes the bulk of its money via local advertising and usually charges the highest rates to your local auto dealers, each soap's daily broadcast alone can bring significant dollars over time during the mid-show break where you see local ads air on your station. When the auto dealers start to downsize their advertising or pull out altogether (even the ones that don't advertise during a soap), your local station starts to look for savings and revenue enhancers elsewhere to lift the entire station's fortunes.

Therefore, it is easier for a station to move a soap to an undesirable time slot and replace it with cheaper programming or stop carrying a low performing soap altogether. As a quick aside, if you want a decent barometer of how well a soap is performing financially in your market pay attention to what is being advertised during your show. If it is upscale fare like movies, department stores, or cars, your soap is probably making some decent change for the station and the network; if you start seeing a lot of Chia Pet and K-Tel music compilation ads during the midshow break, that soap isn't doing isn't so hot in that market.

Consequently, talk shows, court shows and their ilk are cheap to produce, cheap to broadcast, and local television stations/affiliates can charge comparable ad rates as they would for more expensive broadcasting alternatives. Syndicated reruns of shows like Scrubs or Grey's Anatomy can be expensive to buy, but with dozens of airings can pay for themselves many times over. This is why affiliates always clamor for more airtime for themselves: they can make more money on programming — especially news — that they don't have to split with the network. This is why we now have local news, depending on your local stations and market, from 4AM-7AM, 11AM, Noon, 2PM, "early casts" at 3PM, 4PM, 5PM, 6PM, 10PM, 11PM and even rebroadcasts of the 10PM or 11PM newscast at 2AM.

It is in this currently depressed advertising environment that soaps crucially need not simply viewers to raise ratings, but advertising dollars from local affiliates to help prop up the whole financial scheme that makes them possible now. This is where it gets ugly:

With ad revenues from automakers and other local advertisers on track to dry up in the coming year, the pressure will be stronger than ever for poor ratings performers GL (already on rumored for an April date with destiny), Days (hanging by the skin of its chinny chin chin), and AMC (in ratings and creative flux with an increasingly noticeable budgetary ax being swung left and right) to shape up or ship out. (continued)

On a counter-intuitive note, the on-the-bubble show that stands the best chance to gain some traction out of this whole mess is Guiding Light. Comparatively speaking, Days seesaws through those coveted 18-49 females desired by advertisers but the show is currently holding steady and rising in that demographic. With its recently lowered production costs, Days could wind up having some legs and a bit of a moneymaker for NBC as long as they don't decide to cancel the show out of spite given they don't want to be in the serial market anyway. AMC, on the other hand, even with budget cuts and rumors of a move to a smaller studio, continues to field an expensive cast and has a huge problem with maintaining that 18-49 demo that doesn't seem easily overcome, which is a major liability for traditionally youth skewing ABC. Of the three, GL is already produced on a budget consisting of gum and dental floss; a modest increase in ratings could yield significant ad revenues relative to its low production cost despite the poor economic environment. And who knows? If GL can pull off a ratings increase in the next few months, CBS might keep it on the air long enough to see if ABC ditches AMC or NBC axes Days just for bragging rights. After all, just today, CBS Corp. president and CEO Les Moonvesexpressed his own bit of counterintuitive confidence that the advertising market will recover sooner rather than later, including automobiles. This could have a decent trickle down effect for the CBS soap lineup, including GL.

In the end and as hard as it may be for many of us to hear, soaps were not developed solely for our entertainment. They were developed in the 40's and 50's specifically to sell stuff, mainly to housewives. Proctor & Gamble created a whole television production arm to advertise a cornucopia of household products like dishwashing detergent, washing powder, and bath bars to captive viewers on CBS & NBC. You know these products as "soap," by which this genre gets its now accepted nickname. Single sponsors also underwrote other shows on radio and television to specifically to hawk their products right and left until the now defunct Dumont network ushered in multiple sponsors & advertisertising model for its soaps and other programming that has become standard on all of television.

Soaps did not develop into singular entertainment forms until the late 60's, a development which accelerated through the 90's when a series of structural changes in the genre and at the networks more complex than there is room here to dissect altered the economics of the soap opera business forever. In previous economic downturns, soaps were not spared budget cuts (in the 90's ABC & CBS went through horrendous budget cuts under the regimes of Capital Cities and Lawrence Tisch, respectively), yet the genre managed to soldier on. Today, we're seeing wholesale firings of entire teenage cast member groups (GL) and long-time, "untouchable" veterans (Drake Hogestyn, Deidre Hall, Don Diamont), while entire shows shrink onscreen before our very eyes (ATWT & AMC).

I know that many people who read my pieces think I'm something of a naïve optimist about the future of soaps, from individual shows to the genre itself. It is certainly true I try to look on the upside of possible outcomes, but I am also something of a realist. I predict with this news regarding the auto industry and its further cuts to advertising, we're going to see that the bloodletting on soaps is far from over. I sincerely hope I am wrong. If I'm not, fasten your seat belts. It's going to be a bumpy ride.