COLBERT WAS PROFITABLE

The Colbert Cancellation: Dishonest Incompetence

Happy Summer Peaceniks. Ready to get canceled?

The Late Show with Stephen Colbert on CBS has been the #1 late night show on TV for nine consecutive years. Last week, Colbert broadcast his last show. Because CBS canceled TV’s most-watched late night program.

The last edition of Colbert’s talk show scored the biggest audience in the show’s history. The catalyst for Colbert’s firing, the sitting president of the United States, the world’s most powerful man, in the middle of an escalating war and a major legislative crisis, celebrated the death of the late night institution, with a social media post, at 2 am in the morning, in which he also threatened other late night comedians.

CBS claims that the decision to cancel The Late Show, its only original program left in late fringe, was “purely a financial decision.” They claim that the show lost “$40 million per year.”

This claim exposes two core principles at the heart of Paramount Global: Dishonesty and incompetence.

The series of events surrounding Colbert’s firing contradict Paramount’s intended narrative, while the fundamental economics of broadcast television wholeheartedly debunk the financial smoke screen they spat at us to excuse the shitcanning.

Combined, their decisions surrounding the demise of The Late Show demonstrate an utter lack of understanding of how TV actually works; the boundless belief that everyone else in the industry is too lazy, stupid, or sycophantic to check their dumb math; and the zero fucks the Ellisons give about getting called out for lying or failing to run Paramount even remotely responsibly.

Let’s start with balance sheets of The Late Show - which The Ellisons tell us ran at a loss.

CBS claims that The Late Show cost $100 million to produce and lost $40 million per year. The only way that math adds up is if CBS execs count only national advertising - ads running in-show - as revenue of the show. But anyone who works in TV knows that is not how TV works.

For every program, on every entertainment service, costs for each show are amortized across its useful life, and balanced against ALL REVENUES attributable to that show, wherever it runs. CBS and Paramount generate additional revenues beyond ads. When evaluating the return on any show, CBS execs attribute ALL revenues to that IP (not just broadcast advertising), weighed against the cost of the show.

Above, I’ve provided what I believe is a relatively accurate breakdown of the revenues and expenses of The Late Show.

My analysis shows a $102 million profit. Here’s how I arrived at that assessment:

• Let’s start with something we all agree on - by the end of its run, The Late Show generated around $70 million in annual ad revenue. While this is down from a peak of $120 million pre-covid, it is still a significant amount of advertising, the majority of which will disappear now that Colbert has been replaced by syndicated stand up comedy.

• While they’ve never detailed their justification, it seems clear (based on their claim of $100 million in costs and collective intelligence about their ad revenues) that this one revenue line is how The Ellisons arrived at their $40 million loss claim. But ad revenue is just one part of the P&L.

• CBS generates revenues from independent broadcast affiliates that CBS does not directly own (Nexstar, Gray, and Tegna). Research shows that Paramount allocates $0.12 per broadcast affiliate, per broadcast home, per month to “premium late-night programming.” With 35 million non O&O homes, CBS attributes approximately $50 million from this revenue to The Late Show each year.

• CBS garners over $1.2 billion per year in gross retransmission and pay TV affiliate fees. CBS models historically allocate 15% of those fees to “late night programming,” which, on CBS, for 33 years, has been The Late Show. This is a pool of $180 million in revenue. CBS traditionally diverts 72% of that cash back to their local O&O stations. The remaining 28% - more than $50 million per year - is revenue attributed to The Late Show.

• Colbert generates around a billion views per year on YouTube, Facebook, and other social media. Paramount (still) sells inventory in The Late Show content on YouTube via the Partners Program. They also packaged and sold ads connected to Late Show Programming on Facebook. Additionally, they package branded sponsorship into social video, above and beyond programmatic ads, which share no rev-split with the platforms. Paramount’s annual revenue on social video attributable to The Late Show is approximately $23 million per year.

• Paramount calculates the allocation of revenues from Paramount+ and Pluto using app launch attribution and daily user retention data. Paramount’s own models value The Late Show’s contribution to their streaming revenues at approximately $30 million per year.

• Conversely, research indicates that CBS may have underestimated the cost of producing The Late Show, by as much as 20%.

• My assumptions add up to $120 million in annual operating expense for The Late Show, including $15 million per year in salary for Colbert.

• This math all adds up to annual revenues for The Late Show of $222 million and annual expenses of $120 million: an annual net profit of $102 million.

In their haste to obfuscate away the destruction of a television institution, at the behest of their billionaire benefactor in the White House, CBS execs did some simple math to help their bosses cover their asses.

“If you look at the advertising revenue and expense, we’re losing tens of millions - it’s easy math!”

And The Ellisons ran with it.

The messaging is alarming in two respects: It betrays a basic misunderstanding of the TV business and assumes the stupidity of everyone reading it. Worse, for an organization that wants to run the largest news organization on the planet, it demonstrates a glib, dangerous, and blatant disregard of basic truth and freedom of speech.

Crucially, for anyone concerned about the current state of American media, this dishonest ineptitude appears to be the governing principle of The Ellison’s Paramount Global. Here are the knowns:

• Last summer, in order to get regulatory approval from the administration for their acquisition of Paramount and CBS, The Ellisons paid off the president of the United States, settling his spurious lawsuit against 60 Minutes for $16 million. While this happened before the Skydance merger, The New York Times and New York Post both reported that Junior Ellison “brokered the deal and agreed to cover the costs, in order to secure the green light required for the merger to be approved.”

• Two weeks later, David Ellison met with Trump’s FCC Chair Brendan Carr (who is currently threatening to revoke Disney’s broadcast license if they do not fire another late night comic for saying [checks notes] mean things). In that meeting, The Nepo Kid promised to get rid of Colbert and change the editorial direction of CBS News, to be far more favorable to the administration, in exchange for FCC approval of the Paramount/Skydance merger.

• The next day, CBS called Colbert to tell him the show was being canceled.

• Nine days later, the Skydance/Paramount merger was approved by the FCC.

• Just weeks later, Ellison bought The Free Press, a small, right-leaning editorial newsletter owned by Bari Weiss, for $150 million, more than the yearly cost of The Late Show. Paramount’s “CEO” then granted complete editorial control of CBS News to Weiss, an opinion writer and a noted and vocal fan of the sitting president, who had zero, real journalistic experience. While she had been on TV, Bari also had negligible video experience.

• Soon after, Weiss personally censored a story on 60 Minutes about the illegal kidnapping and torture of Venezuelan immigrants by the current administration in an Salvadoran prison.

• Yet, the Ellisons deny any quid pro quo with the administration exists - and likely will do so under oath.

• Weiss, the unqualified CBS News head, then hired the least qualified anchor in prime time news history to take over the CBS Evening News, due entirely to his Ken doll looks and rep as MAGA cosplayer.

• Live on national TV, the two of them fucked up his premiere episode so badly, it plays more like Will Ferrell than Walter Cronkite. The mishap was caused specifically and literally because Weiss has no clue how live television works.

• Please know that I am, in fact, being kind when I say that Weiss’ first major international diplomatic summit at CBS News - in China to cover her president - was a four-alarm dumpster fire.

• The CBS Evening News was the only nightly news show not in Beijing for the summit - and not by choice. Weiss sent her Ken doll anchorman to China, without any of the necessary paperwork, leaving CBS News to cover the summit from one thousand miles away. The News team was then thrown out of their hotel in Taiwan, just before their cameraman collapsed during a live broadcast, causing the show to go dark. If I made this all up to try to discredit Weiss and CBS, you’d tell me it wasn’t believable. And yet…

• In just seven months under Weiss, the CBS Evening News now has its lowest viewership this entire century. The Evening News viewership is down 25% since Weiss’ makeover: 2.5 million viewers below the NBC Nightly News and 4 million viewers behind ABC World News Tonight. CBS This Morning, also under Weiss’ purview, is down 13% during The Ellison Administration; 28% in the “news demo.”

• Simultaneously, Bari’s biased bungling has chased away experienced, talented, award-winning talent, like Anderson Cooper. This summer, Weiss plans to dismantle 60 Minutes - the original mission she was hired to do - despite the fact that the show just finished its 52nd consecutive season as the most-watched news show on TV. All of this to payoff approval of the first Ellison media merger and smooth the sailing for the next one.

• Following a string of epically bad decisions since buying the Paramount Lego Set for David, The Ellisons are now acquiring Warner Bros. Discovery for $111 billion. Less than a year ago, Disco Bros was worth just $25 billion. There is no math that makes this deal work. It will leave the company $80 billion in debt.

• While they have obfuscated and misled for months about the source of funds to close this deal, a staggering 49.5% of the acquisition costs - to buy an historic American studio and the world’s biggest news organization - comes from foreign governments. This includes 15% ($12 billion) from Mohammed bin Salman, the Saudi prince who had Washington Post journalist Jamal Khashoggi killed and chopped into pieces.

• At this point, I’ll remind you that, in addition to the historic Warner Brothers studio, WBD owns CNN. Both present massive anti-trust concerns.

• In order to get approval of this new media acquisition - which would face steep opposition in any other administration - The Ellisons have promised to give Weiss control of CNN and fire any journalists the that “say mean things” about the president of the United States.

• Despite this order of events, and mountainous evidence to the contrary, The Ellisons continue to claim that CBS News has and CNN would have “complete journalistic independence.” With a straight face, no less. Stephen Colbert could not be reached for comment.

I will be the first to admit that late night talk shows, as they currently exist, are not long for this world. Neither the viewership nor the costs are keeping pace with current consumption trends. More people see the clips on social media than watch the shows themselves. The median age of the TV audience is (approximately) 112.

And yet, local CBS affiliates depend on the 11:35 programming block to generate tune-in for the late local news. They rely on The Late Show to help drive traffic to the morning news the next day. CBS relies on that program to promote its other programming. Paramount distribution depends on The Late Show in their negotiations with cable affiliates, for which 15% of their fees are attributed. And, while ad dollars are down from their peak, so are ad revenues across all of Paramount, and $70 million in lost ad revenue is nothing at which to sneeze.

What’s more, Colbert ran his show well. It was the #1 late night talk show for nine consecutive years. Despite what The Ellisons are selling, The Late Show was profitable - very much so.

Meanwhile CBS has an provably and objectionably unqualified troll running their valuable news division into the ground, costing CBS tens of millions in untold advertising and affiliate revenue losses, not to mention making “the Tiffany network” a global laughing stock. And now they are promising their benefactor in the White House, and their dangerous investors, more of the same when they take over CNN.

Regardless of what CBS and The Ellisons say, canceling Colbert was no more a “financial decision” than buying Disco Bros is “smart investing” or Bari Weiss is “a journalist.”

Before you cast aspersions on my motivations for this piece, my analysis here does not originate from disagreements I have with The Ellisons over political dogmas. My objections stem entirely from three issues important to all of us:

1. The Ellisons have no loyalty to the truth. Rather than tell us why they really fired Colbert, or why they really want CNN so badly, they feed us easily disprovable lies, believing we are too dim-witted to do the math or too powerless to do anything about it.

2. The Ellison running Paramount is, simply put, inept. Jeff Shell was a disaster. Bari Weiss is worse. Both hires were made by The Nepo Kid. But this Disco Bros maneuver puts his stupid on stilts. Ellison drove up the bidding price for WBD beyond logic, just by being an impatient brat. Now he’s going into astronomic debt, for an enterprise that any first year accounting student could see from a mile away has no chance of ever paying off. All in a pitiful attempt to get Larry to say he loves him. To paraphrase an infamous media patriarch: “this is not a serious person.”

3. The Ellison “agenda” drives everything. There are pieces at play in this game that most of us will never see - back room billionaire deals involving AI infrastructure, military contracts, TikTok, and (frankly) other crazy shit I prefer not to think about. Whatever happens on the surface, The Ellisons are exclusively about The Ellisons, and they will scorch the fucking earth digging their moat deeper, and the rest of the world can be damned.

These problems don’t make David and Larry much different from many moguls now running the world. They perfectly personify today’s Snowpiercer billionaire culture.

But this level of dishonest incompetence presents a clear and present danger - to the entertainment industry, to company shareholders, and to the state of the Fourth Estate.

So, I’ve written this piece and done this simple, rudimentary programming accounting on The Late Show, to demonstrate to Paramount investors, to regulators scrutinizing the Disco Bros deal, and to senior managers at Paramount that, based on every aspect of available evidence: The Ellisons are too dishonest and too incompetent to be trusted at their word, ever.

To California regulators and the California Attorney General: When The Nepo Kid says he will increase film output and maintain movie and television employment, he is either lying, wrongheaded, or (likely) both. Paramount’s own projections show an enormous culling of resources and staff that are in direct opposition of those claims.

To members of congress investigating the quid pro quo between The Ellisons and the sitting president to make massive editorial changes in, in favor of the tweeter in chief, in exchange for regulatory approval of their deals: When the company tells you there was no such collusion, they will be lying to your face. Conveniently, the lies are terribly easy to disprove.

To investors and executives trusting that The Nepo Kid has your best interest at heart and “only wants what’s best for Paramount and their audiences,” you have to remember that younger Ellison only ever thinks about the well-being of one person: his daddy. Larry is playing a chess match six dimensional levels above the Paramount board. It’s a zero-sum game where Larry gets the sum and everyone else gets zero.

The Ellison’s mythomania is a popular trend among the world’s elite. At OpenAI, The Washington Post, Meta, The LA Times, at Warner Bros Discovery, and rampantly across our government, self-service, at all costs - especially if those costs are exclusively incurred by the public at large - is the fad diet du jour. What’s worse, when questioned about it, the elite attack the very concepts of “fact checking,” “experience,” and “expertise.”

So, in response, we can all just throw our hands in the air and say “there’s nothing to do about it,” or, when we see this level of dishonest incompetence, we can (get this) call it out.

And that is what today’s class in basic TV accounting was intended to do. They likely would never admit it, but I’m told that The Ellisons read this publication (it’s forwarded to them). So today’s post is just a small reminder for Larry and Kid Nepo: I see you. I know what you’re doing. It’s total bullshit.

Enjoy the week!

ESHAP