The Myths of CBS…Debunked!

A few years back, I was at a party—more like a family get together—and the subject turned to TV. Everyone at the party started raving about the latest The Big Bang Theory. Then raving about other CBS shows. As an effete, Millennial, west coast liberal, with New York values, I joked about it with my brother. We don’t watch any CBS shows!

Well, that’s not quite true. I currently watch Life in Pieces. I used to watch The Good Wife. My brother watches The Amazing Race.

Hmm.

I was stereotyping. I took some data points and anecdotes about CBS from my experience—both personal and professional—and drew broad, generalized conclusions. Like most people in my social circle, I don’t watch The Big Bang Theory. So I stereotype the people who do, along with the people who watch NCIS (formerly CSI). In fact, very few coastal liberals brag about watching CBS. TV has become a cultural identifier, especially peak TV. We judge other people by the TV shows they watch.

Critics do this too. Well, especially critics.

If it ended there, in judgy cultural wars, fine. But I work in entertainment and media in a business capacity. These stereotypes inevitably infect my thinking. They infect all of our thinking. I’m saying “our” in the “we work in the entertainment industry” sense.

In business, you make decisions. You do that based on data, both good and bad. Stereotypes are bad data, and they’re a lot more common than uncommon. If you use stereotypes to make decisions, you’re likely making bad—sorry, “sub-optimal”—decisions.

On Monday, recapping the end of the Moonves era, I laid out a series of stereotypes about CBS. Broadly, Moonves made shows for “middle America”—meaning rural, white and not coastal—that were popular, but not “good” in a critical sense. That’s the general consensus. Today, I’m going to look at the data today because I wanted an excuse to reexamine these stereotypes I’ve carried for so many years.

Caution 1: I’m going to primarily use Nielsen data for today’s post. I used Nielsen data in past research projects at my former company, but I don’t currently have a Nielsen subscription. This means I’m relying on websites that do, that also publish their results. This makes it tougher to interrogate the data. Further, I wasn’t a Nielsen ratings expert by any means. (I was focused on streaming data, you know?)

Caution 2: This is also going to be a lot of selective data pulling. I’m not setting out provide a definitive answer. Instead, I want to pull just enough data to make you question your own assumptions and stereotypes.

Myth 1: CBS was popular with middle America, meaning not the coasts or not the cities.

If you think middle America, you think the middle of the country, not New York and Los Angeles. Fortunately, New York and Los Angeles are large enough markets that Nielsen could tell us how well shows performed in those specific geographies. Unfortunately, as I mentioned above, I don’t have a Nielsen account.

Here’s what I did find. Joe Adalian of Vulture used Comcast Xfinity data to pull the most popular shows by city. Here are three cities as an example (but seriously read the whole article):

Chart 1 City View 3

Source: Xfinity viewing data via Indiewire

The first lesson is that different cities do have different tastes, and likely these differ even further from rural tastes. America isn’t some uniform blob. Obviously. That’s what makes this a great country.

But…and here’s the huge but…notice that The Big Bang Theory is just popular. It made every city list except one (out of 16). Blue Bloods made a bunch more. (The data is from 2016.) My guess is CBS would do pretty well in the top 25 and top 50 lists.

The lesson is that sure CBS “over-indexes” in the middle of the country. But CBS still has a lot of fans in cities. And in all the states. That’s what blockbusters do. Besides Game of Thrones, The Walking Dead, and, I presume, Stranger Things, CBS is the closest thing to blockbusters in TV.

Myth 2: Middle America means old people.

CBS is an aging dinosaur and no one who is under 50 watches the channel.

That’s the stereotype. While it is true a lot of cord cutters are young people, a lot of cord cutters are also older people. Another stereotype for another article. But just because CBS over-indexes on older viewers, which it does, doesn’t mean that no young people watch the network. That’s a fallacy. For this data point, I used Michael Schneider’s summary of TV network performance from 2017. Here’s the broadcast channels:table-2.jpg

Source: Nielsen via Indiewire

It isn’t that CBS under-indexes on younger viewers—it has roughly the same as ABC and Fox—but that it has such an over-index on older viewers. More young people watch CBS than watch any cable channel on average.

Again the lesson isn’t that CBS doesn’t favor older viewers or favor rural areas versus cities. But it’s much too simplistic to say CBS is only older viewers, which is the stereotype. We need to be careful moving from a “trend” to to “no one” or “never”. That’s when evaluating data turns into stereotypes. (And bad decisions.) A lot of young people still watch CBS, not zero.

Myth 3: Middle America means white people.

Don’t get me wrong: I’m not setting out to prove that CBS is the most popular TV network for viewers of diverse backgrounds such as African-Americans or Latinos. I don’t think I could prove that because it isn’t true. But is the converse true, that no African-Americans watch CBS, which is the stereotype?

No. Here’s from Nielsen directly, their top 10s of a given week, broken down by demographic:Table 3

Source: Nielsen

Do you see differences in viewing habits? Yep. Only four shows overlap between the two lists. That said, a CBS show makes the cut for African-Americans, and I bet if we saw the top 25 or top 50 we’d see some other CBS shows make the list. Yes, CBS skews older and whiter, but it isn’t a monolithic blob. It’s heterogeneous, like America.

Myth 4: CBS has underperformed financially.

Okay, this isn’t a widely repeated myth, but it is the analysis I read in two critiques of Moonves, one by Richard Rushfield in Vanity Fair (which I said you should read on Monday) and one by Joe Nocera in Bloomberg. Both articles cited CBS stock price lack of stock growth as evidence of Moonves’ failure as a CEO. Nocera used a pretty blunt headline for this, “Moonves was not a good CEO”. Here’s their evidence in two charts:

Pic 4

Source: Bloomberg.

I have two responses to this. First, yes, the stock price has been flat. That said, if you have faith that the stock market is a good predictor of future performance in particular (meaning for individual stocks) then you have a lot more faith in the market than I do. (Also, if you pick and choose dates on the stock market, you can rig the outcome.)

Moreover, when judging firms, I hate just using one metric. This comes from my unwavering belief in “the balanced scorecard” approach to most problems. If you just focus on stock price, you’ll get executives focused on inflating that. If I had to pick one metric above all else, though, I’d pick cash instead of stock price. Specifically free cash flow. So here’s a comparison of the CBS Corporation and, oh say, Netflix in the terms of free cash flow:table-4.jpg

Source: MarketWatch.com and Annual Reports

I’d love to include other broadcast channels such as Fox, NBC and ABC, but they’re so encumbered by their large conglomerates it would be too tough to untangle. (And I didn’t do this analysis, I relied on others, either the company’s own annual reports or MarketWatch.) Either way, to call CBS a financial disaster is disingenuous at best and flat wrong at worst. It generated at least $3 billion for shareholders in the last three years, whereas the main tech giant in tech lost at least $4 billion, and plans to potentially double that number this year.

But this myth isn’t really about the numbers, but the narrative. Let’s get to that.

Myth 5: CBS is old broadcast, not new tech.

This accusation was leveled by Rushfield, Nocera, and I’d add most importantly, by Rich Greenfield, the most quoted analyst in entertainment. Here’s the money paragraph from the Nocera article, citing Greenfield:

There were no larger ideas — no sense that Moonves had a plan for competing in a future where Netflix has size CBS can’t match (130 million subscribers), HBO has content it can’t match (“Game of Thrones”), and AT&T-Time Warner has revenue it can’t match ($158 billion vs. $14 billion). Nor was there any inkling that he might invest for the future if it meant taking a short-term hit to earnings, something Netflix does as a matter of course. Rich Greenfield, the BTIG analyst who has been a rare Wall Street voice critical of the CBS chief executive, says that Moonves has long preferred to “focus on short-term cheerleading actions versus real long-term strategy.” Greenfield is right.

First, saying CBS didn’t have a strategy is my pet peeve. Clearly they had a strategy to generate about a billion in cash each year. You may not like it; you may not be able to define it, but they had a strategy. If you want to criticize someone’s strategy, define it first, then criticize it. Otherwise you’re building a straw-man.

Second, wait, it doesn’t have the content? That’s Nocera’s second point, but honestly, CBS makes more popular series than HBO, so that’s just not factually accurate. Both NCIS and The Big Bang Theory have viewership comparable to Game of Thrones. It also took a huge swing with Star Trek: Discovery.

Third, size isn’t a strategy. Ask GE. Conglomeration goes in waves, as I predict this wave of consolidation will do. (Also, I hate industry consolidation. Bad for consumers, good for stock prices. More in future articles.)

Fourth, it’s all moot because of the broadcast channels, CBS was the most forward looking. Alone among the broadcast channels, CBS had an independent streaming platform.

Disney still doesn’t have a plan for ABC with streaming, NBC has been trying to figure out a digital strategy since Comcast acquired them—and they have so many stakeholders they still haven’t figured it out, though they are hinting in recent interviews they have—and who knows what Fox’ plan is now that Disney is buying almost all of 21st Century Fox except for the broadcast.

So it can’t be about the tech. What really bugs Nocera/Greenfield about CBS?

That CBS won’t burn cash to grab market share.

Really, that’s what separates CBS from Netflix. They could have taken the $1 billion in free cash flow and made say 40 additional shows and put them on their streaming service, and poof cash gone. (Or ten shows at Netflix/Amazon Prime/Video/Studios prices.) Amortize over long enough it may not even hit the net profit line.

But Wall Street would have crushed them with that approach. Only Netflix gets away with that in today’s stock market. If you’re criticizing CBS for having a flat stock price, what would you have done if the stock price had tanked?

To sum up, was CBS the best streaming platform? No. Was it the most dinosaur-ish of the broadcast channels? No. It was somewhere in the middle, in that it was actually small enough to be able to launch CBS All-Access, even if it was late to the streaming party compared to Netflix, Hulu and Amazon.

Myth 6: CBS makes bad TV shows

Listen, I’d love to find an absolute ton of links with critics saying this, but I think this sentiment is, if anything, more popular in quiet discussions at entertainment shindigs than it is something said out loud. In the entertainment press you don’t want to burn too many bridges or future places of employment. The best summations were Todd Van der Werff’s three articles on the subject from 20152017, recapping each year’s upfront.

The problem is “bad” is just so darn subjective. So we need to find a way to prove this. I have two definitions that get semi-objective: awards and critical acclaim (which is usually the forerunner to awards). For the last time, and fifteenth time this article, I’m not setting out to prove that CBS is the best at making award winning shows—it clearly is not—but that it hasn’t completely struck out. (This is probably the most “accurate” myth.)

Awards

Reviewing the Emmy nominees for drama and comedy (the Golden Globes aren’t a real award show) since Moonves took over in 1995, CBS popped up regularly. Not the most, but not the least. In comedies, Everybody Loves Raymond won twice, Two and a Half Men was nominated, along with How I met Your Mother and The Big Bang Theory. The Good Wife was one of the few broadcast dramas nominated for several years.

In smaller categories, David Letterman won for talk show until Jon Stewart took a stranglehold. (Colbert and James Corben have both been nominated recently.) The Amazing Race, though, had a similar stranglehold on the reality-competition award for years.

Critical Acclaim

Okay, I’m not going to fight this battle. Most critics hated everything on CBS. This stereotype is accurate that critics just hate on CBS.

  1. […] thought of this, but stumbled across ratings by network when I was looking for data in my “CBS Myths Debunked” article. Here you […]

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