Conan O'Brien could boost TWC profitability

Analyst says show could 'provide an incremental viewership'

NEW YORK -- The addition of Conan O'Brien to TBS could help boost the profitability of Time Warner's cable networks unit, according to an analyst.

It could "provide an incremental viewership, ad revenue, ad rate and affiliate fee boost to its cable networks division by bringing in Conan O'Brien as the new 11 p.m. late night host, while keeping the George Lopez relationship strong and creating a new midnight late night show with a stronger ratings lead-in," Miller Tabak analyst David Joyce said in a research note Tuesday.

He pointed to the still significant advertising rate disparity between basic cable and broadcast networks, "which a strong new show could help mitigate."

"Lopez Tonight," launched in November, has had a 1.2 million average viewership level, "and industry sources help us estimate an annualized $21.8 million in ad revenue for that show, or $18.20 per viewer," Joyce said.

His estimate for the "Tonight Show" is 2009 revenue of $176 million at almost 2.5x the viewers, meaning its annual advertising per viewer is 3.3x higher at $60.24.

"This is the potential upside that TW could experience with its new Conan show within, say, 18-24 months" of the November show launch, Joyce concluded.
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