Keith Olbermann’s effect on Current TV’s bottom line
After two weeks of speculation, Keith Olbermann announced he will host a new nightly hour-long primetime news and commentary show on Current TV, the low-rated network co-founded by former Vice President Al Gore. During today’s conference call, the network did not specify exactly when the show, billed as an “amplified and stronger” version of Countdown with Keith Olbermann, would air other than to say “later in 2011.” Olbermann will also have an equity stake in the company and serve as Chief News Officer, working with Current TV’s staff and developing new content for the network.
The move comes after a recent announcement that the former ESPN sports anchor-turned-liberal MSNBC commentator had agreed to exit his latest post as anchor of Countdown with Keith Olbermann. The open time frame also likely allows for MSNBC’s rumored non-compete clause to expire, which has barred him from appearing on TV for an indefinite period of time.
“Nothing is more vital to a free America than a free media, and nothing is more vital to my concept of a free media than news produced independently of corporate interference,” Olbermann said in a statement. “In Current Media, Al Gore and Joel Hyatt have created the model truth-seeking entity. The opportunity to partner with Al, Joel and Mark Rosenthal makes this the most exciting venture in my career.”
Originally founded in 2003 as a run-of-the-mill news program, Countdown with Keith Olbermann evolved into a left-leaning show that eventually averaged 1 million-plus viewers. Olbermann himself became one of the most recognized liberal commentators in media, and was oftentimes viewed as one of the major contributors, alongside Rachel Maddow, to MSNBC’s identity as a progressive outlet.
His departure did not surprise some media pundits, but his abrupt sign-off one Friday evening caught his loyal followers off-guard, spurring speculation that Olbermann was forced out due to growing friction with MSNBC management. Given Comcast’s (CMCSA) acquisition of parent company NBC Universal, some speculated that Olbermann’s leanings and Comcast’s reputation as a conservative entity were not a good match. (The cable company’s 10% stake in Current TV seems to give credibility to its claims that it had nothing to do with Olbermann’s departure from MSNBC, which occurred days before Comcast assumed control over NBC Universal.)
According to Politico, Olberman made three campaign contributions to three Democratic candidates — Arizona Reps. Raul Grijalva and Gabrielle Giffords, as well as Kentucky Senate candidate Jack Conway — last October. Notably, the maximum donation of $2,400 to Grijalva occurred the same day as his appearance on Olbermann’s show. As a result, Olbermann was suspended without pay due to NBC’s rule against employees contributing to political campaigns. The journalistic breach could have been the ammunition needed by MSNBC president Phil Griffin and other execs to jettison Olbermann.
Others speculated the decision to part with Olbermann was based on economics. Olbermann was reportedly due $17 million over the next two years for his work. Instead, he walked away with a reported $7 million buyout package.
What it means for Current TV
Co-founded by Gore and businessman Joel Hyatt in 2005, Current TV was originally intended as a public affairs channel aimed at young Internet-savvy adults that mixed user-generated content with short segments called “pods.” The network claims it’s available in 75 million households in the U.S., U.K, Ireland and Italy.
Back in 2007, Current TV floated around the idea of an IPO, which stalled after the network failed to make a big splash. According to the Wall Street Journal, the company’s IPO filings in 2007 revealed that Current Media reported total revenue of $63.8 million with just 16% of that being advertising. Operations loss that year totaled $6.1 million.
Though the addition of Olbermann could give Current TV a much-needed public face and offer the anchor an outlet with wide berth for him to strut his prickly personality, it’s worth noting that Howard Stern’s recent contract renewal with Sirius (SIRI) for $400 million — $100 million less than his original contract five years ago — has done relatively little to alter Sirius’ corporate fortunes to date. Lazard Capital analyst Barton Crockett told Fortune recently that Stern’s presence was likely responsible for between 1 to 2 million subscribers — basically a wash given how much Sirius has to spend to keep him.
“I think from Sirius’ perspective, trend costs overall are trending down and Howard Stern’s a very big component,” Crocket said. “Historically, they’ve been spending $350 million a year on programming, of which $80 million in cash was Howard. … If he left and he lost all of those subscriptions, you’d have to lower subscriptions, but you’d also have to lower revenues and costs, which would also be close to awash in terms of earnings.”
Though details of Olbermann’s deal with Current TV have yet to surface, you can bet he’s being paid no small sum, perhaps less than the amount he received from MSNBC, but Current TV is a far leaner operation to begin with. The question moving forward will be whether Olbermann’s arrival translates to a bump in overall viewership — Current TV brings in a paltry 23,000 prime time viewers a night — and justifies his paycheck. Ultimately, Stern’s relative failure for Sirius could prove a prescient indicator of Olbermann’s trajectory, too. It remains to be seen whether resting the future prospects of a media outlet squarely on the shoulders of one public individual can be a recipe for success.
UPDATE: A Current TV spokesperson writes in to say that Current TV is profitable and is the fastest growing cable network in history. Tomorrow, Current TV will announce its new programming slate, but it’s unclear whether they’ll release more details on Olbermann’s forthcoming show.
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