Dancing with the Big Bucks

ABC's ballroom program is turning out to be a money spinnerand a cultural phenomenon along the lines of American Idol

It had been one festive evening at the CBS studio in Los Angeles. That is, for everyone but Las Vegas magician Penn Jillette and tennis superstar Monica Seles. The two had just been eliminated in the first week of ABC's hoof-fest Dancing with the Stars. As the crowd filed out after nearly three hours of sequins and flying dance shoes, Jillette was besieged by camera crews from local TV stations and E! Entertainment, as well as reporters from TV Guide and People. "It ended too soon, I was having a blast," the hulking Vegas performer puffed into one microphone after another. Seles, looking a bit out of her tennis-sneaker element, was telling another reporter that she never got used to moving on the dance floor in her high heels.

The fact that a passel of entertainment reporters were lined up, waiting in anticipation for these pearls of wisdom, is enough for anyone to realize that ABC's Dancing with the Stars has become a cultural phenomenon. Sure, it's no American Idol, the Fox Network (NWS) ratings monster that was being shot at the same time at another CBS sound stage next door. Imagine the crowd of microphones over there after Simon & Co. let America in on the next Carrie Underwood.

As it begins its third year on the air, the ABC show has become a money-minting machine of its own for Walt Disney (DIS). In fact, last year one of the two Dancing shows that Disney puts on each year was TV's third-highest-rated, behind only the Idol performance and the Idol results shows, according to Nielsen. The ABC show drew an average of 20.7 million folks each week. By comparison, ABC's next highest-rating show, the McDreamy-led Grey's Anatomy, drew an average of 19.5 million folks and ranked sixth.

Spring and Fall

"Dancing with the Stars is a powerhouse in its own right," says Brad Adgate, senior vice-president at ad-buying firm Horizon Media. Moreover, because ABC airs two seasons each year of Dancing, while Idol is mostly a springtime phenomenon, Adgate says the show "is a fourth-quarter event for ABC, just like American Idol is for Fox in the first quarter." And while ABC hardly rakes in the money that Fox gets from its rock star wannabes, Disney does get one benefit that Fox can't claim: It owns the show.

That's right. For all the dough and front-page headlines Fox gets from Randy, Paula, and you-know-who, it has to share a large chunk of the profits with the show's producers, British music company 19 Entertainment and TV production company Freemantlemedia. All those games (there's a karaoke version of the show), even the American Idol ice cream flavor that Dreyer's introduced last year, are licensed from 19 Entertainment and Freemantle, according to a 19 Entertainment spokesman. Rupert Murdoch's crew gets nary a cent, a Fox spokesman confirms. Yes, they clearly make tons from it anyway, with the steepest ad rates this side of the Super Bowl, and the kind of fan base that has made hits of shows like House that Fox smartly scheduled right after it.

Like Fox, ABC also has to deal with a British creator, the BBC. ABC programming chief Steve McPherson wisely bought the rights to the show after the Brit version Strictly Come Dancing, and Disney pays the BBC licensing fees. Two of the ABC version's judges, Len Goodman and Bruno Tonioli, also appear on the BBC show. But when the show sends out some of its cha-chaing stars on tour, as it did last year with a 38-city swing that included Marie Osmond and Wayne Newton, Disney gets a big chunk of the payday.

Same for the Dancing with the Stars card game, jigsaw puzzle, mug, and whatever else you can buy online. (This is, after all, the same company that markets a mouse in white gloves and red shorts.) Better yet, Dancing with the Stars generates plenty of traffic on Disney's Web site, where folks go online to vote, check out judge Carrie Ann Inaba's instructional dance videos and—what else—watch a few more ads from sponsors like American Express (AXP) and the inevitable Dr. Scholl's foot products.

Since the show started three years ago, the number of page views to the Dancing site has grown sixfold, says Anne Sweeney, co-chair of Disney Media Networks and president of the Disney-ABC Television Group. "It's become a major driver of traffic for the ABC.com site. People want to vote. They want to check on episodes that they miss."

Golden Oldies

No one at Disney is talking about how much money they're making off Dancing, but according to one ad agency, the show pulls in more than $200,000 for each 30-second slot. What's more, this year the show has been getting more than twice that amount for some of the "scatter market" commercials that weren't sold before the season started. With around 11 minutes to sell each hour (some shows are one hour, with some two-hour shows also airing), that's nearly $5 million for each high-stepping hour. (Idol gets somewhere north of $600,000 for a 30-second spot, according to the same source, and quite likely heads over 1 million a pop in the scatter market.)

The show's glaring weakness? The median age of the Dancing with the Stars viewer is around 55, according to Nielsen. Advertisers tend to shy away from viewers over 55. By comparison, the median age of American Idol viewers is 42, according to Nielsen.

Would Disney rather have American Idol? Does a Hollywood mogul spend his weekends at Malibu? Of course it would. CBS (CBS) CEO Leslie Moonves called the Fox show "a monster" at a recent BusinessWeek-sponsored conference and, only half in jest, said he would "appreciate it" if "someone would kill that show." Sorry, Les, no one is likely to kill it off anytime soon. But for the folks over at Disney, a strong second place is turning out to be fairly profitable. And it's turning out that the Mouse House has a little sashaying monster of its own.

Grover is Los Angeles bureau chief for BusinessWeek.

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