Television: Glee has success without viewers

Profitable brand extensions trump so-so ratings to create a new winning formula.

Glee has never boasted a huge audience, despite its water-cooler buzz, critical plaudits and attractive cast who appear regularly on magazine covers and sang for President Barack Obama at a human-rights campaign dinner. A comedy about the nonconformist choristers of a high-school glee club, the show draws roughly seven million viewers each week, less than half of a top-rated program like CSI.

It is not even the most popular program in its Wednesday, 9 p.m. time slot, regularly placing fourth behind Criminal Minds, Modern Family and Law and Order: SVU. Yet Glee was the first new show this fall renewed for a full season, a strong endorsement from its network, Fox. The reason? In an era of dwindling ad revenues and splintering audiences, Glee represents an emerging revenue model for broadcast television, where a show does not need to be in the Top 10 — or even the Top 25 — to make money. What Glee lacks in viewers, it compensates for in brand extensions. Songs from the show are hit singles, it has two bestselling soundtracks, and there will likely be a concert tour. ‘Glee is definitely a brand,’ says Marc Berman, a television analyst with Media Week. ‘It’s only been on the air for a few months … but it’s tearing up the iTunes charts, it’s coming out on DVD, it’s a merchandising bonanza.’

Fox has nurtured this revenue-generating potential from Glee‘s earliest stages. Record labels were given a preview of the show in January. By the time the pilot aired last spring, its young actors all had deals with Columbia Records.

The spinoffs outperform the show itself. The first soundtrack entered the Billboard music chart as the fourth-most-popular album, selling 113,000 copies in one week. Songs from the show — including covers ranging from ‘Bootylicious’ by Destiny’s Child to Bill Withers’s ‘Lean on Me’ — have been downloaded more than 2.6 million times on iTunes. And the cast’s rendition of ‘Don’t Stop Believin” by Journey was certified gold, selling more than 500,000 copies.

Fox will not disclose how much it earns from Glee‘s music sales and other spinoffs. American Idol, which also airs on the network, generated 11% of its revenue from music sales and 12% from concert tours in 2008, according to figures released by its parent company. Together, these ancillary products made $22 million last year.

There is no doubt Glee now emulates Idol, adapting the reality show’s strategies to its dramatic format. Other scripted shows, like Hannah Montana and the High School Musical television movies, have served as infomercials for their own soundtracks, but they targeted young teenagers and did not have to worry about pleasing critics. Glee, on the other hand, has managed to shill its wares without sullying its reputation. ‘It has positive spinoffs, but it could also win a lot of awards,’ says Berman. ‘It’s a good show. The people who watch it, talk about it — and they buy the product.’

Glee‘s audience certainly has cash to spend. The show attracts the highest percentage of viewers with an income of $100,000 or more of any current network show. If Fox’s strategy plays out perfectly, Glee‘s soundtracks, cast tours and ringtones will not only make money on their own, but attract more eyeballs to the show itself, says Larry Gerbrandt, an analyst with Media Valuation Partners in Los Angeles. ‘Glee wants to use every opportunity it can to reach audiences, because 95% of households will not have seen it at all,’ he says. ‘ Glee‘s got a hook, and they’re exploiting it.’