Originally Posted by mlt11:
“Now that BB has finished, perhaps rzt can have a go at calculating the gross margin again - he did this a few weeks ago so would be good if calculation could be updated.
(NB. rzt - only if you can spare the time!)”
As Dancc says, it's difficult to get too accurate a number without knowing exactly how much BB is costing C5. But it's fair to say that the £40m number has been quite widely reported so let's take that value for the purposes of working this out:
So if C5 are paying £40m per year for BB, some of that would be for the spin-offs too. I would estimate that the spin-offs are costing about £5-10m of the £40m (certainly no more than that), therefore for the actual proper show it's possibly C5 paying about £33m or so. There have been about 92 hours of BB this year so per hour, it's costing about £360k/hr. It's in that mid £300k ballpark.
CBB and BB (i.e. the brand entirely on C5 so far) has averaged 1.61m overall over the 92 hours. About 30-35% of that audience are aged between 16-34: let's take the middle number (33%), meaning that on average there has been about 530,000 16-34s watching per night. As I explained in
this post, the cost per thousand 16-34s on C5 is likely to be around £20 based on figures which rival broadcasters use, maybe slightly more. But let's be generous and say it costs an advertiser £30 to reach 1000 16-34s on C5.
With that being the case, BB (i.e. CBB8 & BB12) with the ratings it's had, would be generating ad revenue of about £380k per hour. That's at a cost of £360k per hour, meaning it's a ratio of 1: 1.1.
Let's take other things into account such as sponsorship, voting and product placement revenue into account. It really doesn't make much of a difference: at BB's peak (2005-2007), sponsorship was costing £3m for a series. I can't imagine Freederm paying that much for BB's current sponsorship. Even if they did, however, that's basically equivalent to £33,000 per hour (in addition to ad revenue). Voting makes little difference: BB9 had 3m votes in total throughout that series, there's no way the CBB+BB12 with the reduced viewership would've got as many votes. Let's say 2m votes were cast, with C5 netting 10p per vote, that's £200,000 from voting revenue for the whole of BB+CBB, equivalent to £2000 per hour. Let's be generous and just add on £50k per hour for other sponsorship deals and product placement, even though in reality they won't be getting this much money. Add all those up together and you go from £380k for just ad revenue to about £465k of revenue per hour for everything (adverts/phone/sponsors/product placement).
So, by generating £465k/hr at a cost of £360k/hr, it's a ratio of £1 spent to £1.3 return (1: 1.3). And this is by being rather generous with the high CPT, high voting numbers and high product placement values I used - realistically it may well be a lower ratio than that. So while, I can see the show making C5 a profit, it's not really the cash cow that a flagship show like this could/should be making. Even in BB's final year on C4, I would estimate the ratio would've been about 1: 1.5 just for ad revenue alone, based on the same method. I dunno, however, how 1: 1.3 compares to former C5 programming in the same slots this time last year- it may well be an improvement, or on the flipside, it could be down. I can't say. I think overall, they may have been hoping for an overall 2m average for CBB8+BB12 which would've resulted in a ratio of 1: 1.6 - they fell short of that by 0.4m. Room for improvement next year though, with BB returning to its usual slots.
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