Don’t Worry About the Oscar Hangover ABC, Sometimes Losing is Winning

Despite the bad publicity generated by the Academy’s diversity crisis, executive changes, and a drop in total Oscar viewing, the Disney-owned network is doing just fine. In fact, it even has new leverage in negotiations with the Academy on a contract extension.

The ABC Network has been on the receiving end of a lot of bad publicity lately, made worse this week by a drop in total viewership of the Academy Awards for the second year in a row. They are down eight percent - after a 15 percent drop in 2015.

However, before you start worrying about the future of the Disney-owned broadcast network, take a peek behind the scenes to see what is really going on.

But, first, the bad news.

It was only three weeks ago that ABC pushed out Paul Lee as president of the ABC Entertainment Group before his contract expired. The buzz is that he was the loser in an internal power struggle between him and his new boss Ben Sherwood. Lee took the fall because the network had sunk into fourth place this season in the important 18-to-49 year old demographic behind CBS, NBC and Fox.

It was already a nervous season. The movie Academy (which receives about three quarters of its annual budget from the Oscars show) and ABC both were shaken by the “diversity” controversy at the Academy and in Hollywood when the Oscar nominations came out. There was an uproar among some celebrities when for the second year in a row all the acting nominees were white.

The “crisis” was such a dominant topic in the media it drowned out much of ABC’s pre-Oscar promotional efforts, especially as some African- American leaders tried to encourage a boycott of the show.

This had executives at Disney and ABC worried as the show approached. Wall Street analysts warned lower ratings could be a threat to the continued viability of the Oscars, ABC’s crown jewel of live programming. It is the top rated non-sports show, generating over $110 million in revenue each year.

When the bad ratings came in after the show, it seemed the worst was confirmed.

But that’s not how Hollywood works, folks. What you see on the surface isn’t always what it seems.

Behind the negative headlines, Disney was actually able to make profit, not only off the show, but also via the programming around the Oscar broadcast.

Here’s how.

Though the numbers were down overall from the last eight years, the telecast still was TV’s top rated program of the week with over 34 million viewers (compared to about 19 million for the Golden Globes).

ABC touted the good news in announcing the ratings that viewership among the difficult to reach adult demo (18 to 34) actually improved one percent.. It was also up among all of the male demographics including an increase of 20 percent in hard to reach men 18 to 34. Oscar viewership is heavily dominated by females.

This was important because Oscar producers David Hill and Reginald Hudlin had said one of their goals was to get more youthful viewers to attract advertisers who paid up to $2.2 million for a 30 second spot in the show.

Another win for ABC was on the second screen many now use. The Oscars dominated social media activity on Sunday, with the Academy Awards the number one most social program with more than 1.8 million people sending more than 7.2 million tweets. That’s a 22 percent increase over last year’s 5.9 million tweets.

(BTW, the most tweeted moment of the Oscar show came when Leonardo DiCaprio won late in the show).

The glow also paid off for Disney’s syndicated Live With Kelly & Michael for their fifth annual post-show telecast, making it the top rated syndicated talk show in all homes, but especially in the female 25 to 54 demo (besting the usually dominant Dr. Phil and Ellen). Jimmy Kimmel’s late night special after the Oscars also got a boost, as well as Good Morning America and the various news shows with special material and guests.

As an added bonus, ABC multiple pre-shows, The Oscars Red Carpet Live, were the third, fourth and seventh highest rated programs of the week.

The Oscar telecast also ended ABC’s season-long ratings’ slump. They won the entire week in ratings, and with their first demo victory of the 2015-2016 season, achieving their biggest margin of victory over other broadcasters in 16 years. The Oscars was also the top rated entertainment show on any network in the demo since last year’s Oscars.

And all that is just the beginning of how despite bad PR and lower ratings, the Oscars actually helped ABC.

The decline in total viewers has also given ABC added leverage in on-going talks with the movie Academy to extend their current licensing agreement.

Discussions about an extension had begun last year, as the Academy looked at ways to raise more money to pay for their new movie museum being built on Wilshire Boulevard in West Los Angeles, adjacent to the L.A. County Museum. The estimated cost is $300 million.

The Academy hopes to get these funds by charging a higher fee for the broadcast and by convincing ABC to give them a huge advance payment.

Of course, the Academy has its own advantage, in that ABC needs these live events to drive viewers back to the broadcast, and away from cable, streaming and the DVR.

If the Academy doesn’t like what ABC has to offer, it is likely CBS, NBC, Fox or a digital outlet would be happy to step up with an offer to match or beat the $70 million fee ABC pays annually under the current contract.

The lower telecast numbers also provided ABC leverage to seek more creative control over the show, which is traditionally produced by the Academy, who also selects the producers, host and sets the theme.

ABC is said to want to glitz up the Oscars in the same way Dick Clark Productions has polished and pushed the Golden Globes to higher ratings.

“Given the ratings issues with recent Oscarcasts, “ Variety reported Feb. 29, “ABC has a much stronger argument to make at the bargaining table. Sunday’s 88th annual Academy Awards brought in the lowest ratings in eight years, a disappointment for Hollywood’s glitziest awards gala.”

So don’t worry about ABC.

The Oscar ratings this year are like the problems of rich people who can never be too rich, too thin or young enough. Or as author Jules Verne once observed: “You’re never rich enough if you can be richer.”