Chapter 203: Another Phenomenal Success?!
After spending another night in Melbourne, Simon and his team returned to Los Angeles, bringing with them Adam Baldwin and Valerie Golino, the lead actors of "Batman," who had been in Australia for a while. "Batman" is set to start filming early next year, and the remaining months of this year will be dedicated to casting various supporting roles and conducting rehearsals in Los Angeles, requiring the cooperation of the two leads.
Simon and the others boarded the flight back home from Melbourne on the morning of September 14th.
A day earlier, in North America, NBC's "Survivor" premiered on Monday night at 8 o'clock on September 12th, and preliminary ratings were received by the afternoon of September 13th in Melbourne time.
New York.
Although Robert Ager was equally keen on the ratings of "Survivor," he was surprised when he received a call in the early hours of the morning. Robert White, CEO of NBC, personally called him, expressing a mix of surprise and excitement about the initial ratings of "Survivor" and proposing a breakfast meeting to discuss the production of the second season.
Meanwhile, Amy Pascal on the West Coast also received the premiere ratings of "Survivor" at midnight, and Simon in Australia was promptly notified.
Early on September 13th, North American time, NBC couldn't wait to publish the ratings of "Survivor" in mainstream media such as The New York Times and The Los Angeles Times, with headlines commonly referring to it as "another phenomenal success."
Why the "another"? Clearly, "Who Wants to Be a Millionaire" had already created a ratings phenomenon, and "Survivor's" performance seemed even stronger.
After more detailed statistics, the premiere episode of "Survivor" saw its viewership soar from an initial 17.8 million to 22.65 million, with an average of 20.95 million viewers, far exceeding NBC's pre-premiere expectation of around 15 million viewers.
It was well understood within the industry that a TV show with 10 million viewers and one with 20 million viewers are fundamentally different, representing a shift from quantitative to qualitative change.
Moreover, while "Survivor's" total viewership didn't surpass "Who Wants to Be a Millionaire" from the previous day, it unexpectedly did so among the core demographic of 18 to 49-year-olds.
"Who Wants to Be a Millionaire" on Sunday had 23.7 million viewers, with a core demographic rating of 11.1. In comparison, although "Survivor" had a total viewership of 20.95 million, it unexpectedly reached a core demographic rating of 11.5, meaning "Survivor" attracted 13.8 million viewers in the core demographic, surpassing "Millionaire's" 13.3 million.
Although the difference was only about 500,000 viewers, it was significant because "Millionaire" had been building its popularity over several months of the summer, while "Survivor" was just at its premiere, and NBC had not invested as heavily in promoting this reality show as ABC had for "Millionaire."
Therefore, surpassing "Millionaire" in its premiere, "Survivor's" overall ratings were bound to be even more outstanding.
Now, NBC's only regret was that "Survivor" had only 13 episodes per season, unlike "Millionaire's" 69.
And to minimize risk, NBC had only signed a contract for the first season with Daenerys Entertainment.
Given the current pace, the first season would conclude before the winter break, and NBC was eager to ensure the smooth premiere of the second season in the spring of next year, facing a similar dilemma to ABC, which had to pay a high price to Daenerys Entertainment.
NBC was very eager, but Robert Ager was even more cautious, having never before experienced back-to-back production of two phenomenal TV shows. After breakfast with NBC CEO Robert White, he quickly boarded a flight to the West Coast.
The specifics of the collaboration would clearly need to be decided by Simon upon his return from Australia.
After an urgent internal meeting, NBC CEO Robert White also set off for Los Angeles.
Due to the 18-hour time difference, Simon and his team departed Melbourne at 10 a.m. on September 14th, and after a 16-hour flight, they arrived in Los Angeles when it was still 8 a.m. on September 14th.
Although not wanting to seem too eager, Robert White, along with several executives from Daenerys Entertainment, personally went to Los Angeles International Airport to greet them.
Simon originally planned to rest in Malibu for the morning, but seeing everyone gathered, he changed his plans, sending Janet back first while he, along with Amy, Ager, and White, hurried to Daenerys Entertainment's headquarters in Santa Monica.
In the meeting room of Daenerys Entertainment's headquarters, everyone took their seats, and Robert White got straight to the point: "Simon, I spoke with our parent company yesterday. NBC would like to secure the next three seasons of 'Survivor' in one go. As for the price, we can offer the same rate of $2 million per episode as 'Who Wants to Be a Millionaire.'"
Simon took a sip of the hot coffee handed to him by Jennifer, perked up, and responded: "Bob, considering 'Survivor's' ratings are even stronger than 'Millionaire's,' do you think the same rate is appropriate?"
"This is just the first season, Simon," Robert White shook his head, "No one can guarantee that this reality show will remain as popular in the subsequent seasons. According to the usual TV show ratings curve, its viewership is bound to decline, so offering $2 million per episode is still a risk for us."
Simon noticed Robert Ager's hesitance and gestured for him to speak.
Robert Ager countered: "Bob, typically, hit TV shows follow a parabolic trajectory, not the declining curve you mentioned. With further popularity, 'Survivor's' ratings could even rise in future seasons."
Caught off guard by Ager's argument, White didn't show much embarrassment and reiterated: "Simon, compared to the production costs Daenerys Entertainment has put into 'Survivor,' $2 million per episode is already a high price."
"In Hollywood, the cost of producing films and their return on investment are mostly disproportionate," Simon countered, shaking his head, "So, $2 million per episode definitely won't work."
"If it's higher, NBC can't afford the risk," Robert White said, "Simon, we're different from ABC and others. In recent years, NBC has been performing very well, and even without 'Survivor,' it wouldn't be greatly affected."
Simon smiled, "Bob, if you continue to treat me as an outsider, there's no point in continuing today's meeting."
The competition among the four major networks was fierce. Standing still meant falling behind.
Although NBC currently ranked first among the four, losing "Survivor" would not only jeopardize its position but also allow ABC, riding on the popularity of "Millionaire," to potentially surpass NBC in viewership.
Thus, NBC could not afford to lose "Survivor."
"Alright, Simon," Robert White said reluctantly, "then, what do you think is a fair price per episode?"
"For the next few seasons, Daenerys Entertainment can voluntarily extend the length of each season to about 15 episodes. If NBC wants to secure the next three seasons in one go, I can offer a package deal of $50 million per season, totaling $150 million for three seasons."
Robert White was shocked, "That's impossible."
The jest was that Daenerys Entertainment had invested only about $5 million in the production budget for the first season of "Survivor." At $50 million per season, accounting for internal advertising rights, syndication distribution, and licensing rights, Daenerys Entertainment would gain over ten times the profit, a blatant windfall.
"Let's do the math," Simon relaxed his tone, "Based on the premiere's ratings, future seasons of 'Survivor' could reach an average of 30 million viewers per episode at its peak, comparable to some award shows. For instance, the Grammy Awards earlier this year had about 30 million viewers, with a 30-second ad costing $300,000. Thus, with 15 minutes of advertising time per episode for 'Survivor,' you could recoup $9 million. Compared to that, Daenerys Entertainment would only receive a little over $3 million."
"But have you considered the costs?" Robert White countered, "Simon, the operational costs of a network are very high."
Simon cut off White's excuses, "Bob, Hollywood's costs are actually higher. Over the past decades, most films produced by major studios have never made a profit."
Hearing this, Amy and Ager couldn't help but chuckle.
The notion that studio films never profit is a well-known inside joke, reflecting Hollywood's methods to avoid taxes and union dues, making most film projects appear unprofitable or minimally profitable.
In comparison, the financial operations of the four major networks were even more opaque.
Therefore, while Robert White's claim about high operational costs was true, Simon knew that NBC's net profit in the previous fiscal year was over $380 million, far surpassing its competitors like ABC, CBS, and FOX.
Securing "Survivor," despite the high cost, would allow NBC to maintain its leading viewership share, unfazed by ABC's competition. Conversely, losing "Survivor" could see ABC surpass NBC as soon as this fall.
The "winner-takes-all" effect in television means advertisers prefer the network with the highest market share, making it harder for NBC to regain the lead if surpassed by ABC. While NBC wouldn't immediately suffer losses, its profitability would rapidly decline compared to ABC, which could turn profitable thanks to "Millionaire."
After further negotiation, Robert White called for a temporary halt to discuss with General Electric's chairman, Jack Welch. Simon allowed Jennifer to escort White to an adjacent office for the call.
General Electric, not yet reaching its peak market value of $500 billion from the internet bubble, had a current value of less than $50 billion. Two years prior, GE had acquired NBC's parent company, RCA, for $6.5 billion, a significant investment. Thus, NBC directly reported to Jack Welch.
After a brief discussion with Amy and Ager about recent company matters, Robert White returned from his call.
"Simon, I've spoken with Jack," White didn't hide his conversation, "We can accept Daenerys Entertainment's offer of $50 million per season, but there are conditions."
Simon gestured for him to continue.
White outlined the conditions: Daenerys Entertainment must increase its production investment in "Survivor," aiming for a less rough presentation in future seasons and agreeing to a minimum of 16 episodes per season with NBC staff participating in production.
Simon, considering the adjustments and seeing no opposition from Amy and Ager, agreed to the terms, concluding the negotiation successfully.
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