Conan Wouldn't Be So Funny for Off-Net Sitcoms
News Corp.'s decision involves much more than just its Fox network
By Paige Albiniak -- Broadcasting & Cable, 3/8/2010 12:56:05 PM
Whether that will happen is still being decided. The last public word on the subject came from News Corp. CEO Rupert Murdoch himself, who told reporters during a February conference call that his top executives were "giving it a lot of thought and a lot of examination." Since then, News Corp. has been silent on the issue, but the debate continues internally as to whether it makes economic sense for the company as a whole, including its network, stations and studio.
Much has been made about the fact that Fox-owned stations and affiliates would have to clear an hour in late night to accommodate a new talk franchise featuring O'Brien. Stations airing off-net sitcoms in late night typically keep 10 to 11 minutes of inventory per hour. Should the hour revert to the network, stations will lose about half that inventory, according to several syndication executives, representing tens of millions of dollars. So, a deal for O'Brien would have significant complexities as station business models continue to evolve.
But it's not just the stations that would suffer. Syndicators, including Twentieth, have a lot to lose should Fox decide to go with Conan. Twentieth alone has several off-net sitcoms that would be affected: It just renewed Family Guy for a second cycle; it's launching How I Met Your Mother this fall and American Dad in fall 2011; it targeted the off-FX It's Always Sunny in Philadelphia for late fringe; and Twentieth has this year's comedy hit, Modern Family, coming down the pike.
Most important, off-net sitcoms airing in late fringe would be pushed back an hour to midnight or later, reducing the size of available audiences to watch advertisements. "That would be a killer to sitcoms, particularly animated ones," says one syndication source.
Animated sitcoms such as Family Guy, American Dad and Debmar-Mercury's South Park tend to be edgier than typical sitcoms and thus are standard late-fringe players. Pushing them back an hour would certainly affect their profitability.
Top multi-camera sitcoms with broad-based humor, such as Warner Bros.' Two and a Half Men and Big Bang Theory, that are scheduled to enter the market in the next month or two are less likely to be affected, according to sources. Those high-rated shows are aimed at access time slots, where audiences are much bigger.
While many syndicators pointed at NBC Universal's 30 Rock as the most likely victim of a Conan pickup, that show has contractually guaranteed time slots in access and late fringe in all of its markets. If that were not the case, 30 Rock would be vulnerable because it's sold on an all-barter basis, meaning its revenue is completely dependent on advertising sales. Shows that are sold for cash license fees as well as barter advertising time have more of a buffer should they be moved to less lucrative time slots.
Having to move shows with guaranteed time slots presents another problem for Fox-moving those shows would open up the stations to lawsuits. To avoid that, Fox would have to air Conan in different time slots across the country, depending on each station's existing deals until those deals expired. Just the notion of pushing shows back an hour has agents and producers' representatives on edge, and they already have let Fox know that it could face lawsuits should their clients take a revenue hit, say syndication sources.
Down the road, the hour of syndication lost by adding Conan would reduce the late-fringe inventory in any given market by 12%-15%, according to one syndication executive. "That could mean a bit of downward pricing in the marketplace," the executive says.
Moreover, if the Fox stations and affiliates are effectively taken out of the late-fringe sitcom business, Tribune gains a great deal of negotiating power. Tribune's stations would be the only major late-fringe sitcom buyer in top markets. That would depress the broadcast syndication market for off-net sitcoms while sending more shows over to cable, which has more money than TV stations to spend on off-net properties.
Tribune would also be the only outlet airing late-fringe sitcoms in some markets while Jay Leno, David Letterman, Conan O'Brien and Jimmy Kimmel divide the late-night talk audience amongst themselves. It's a scenario Tribune would love to see come to fruition.
"It's a near-term versus long-term strategy," says Bill Carroll, VP of programming for Katz Media Group. "In the short term, even under the best of circumstances, Fox will take a hit if it picks up Conan, but the question is how much. In the long term, Fox would be building a potential franchise in a time period that it could program forever. That's why the other networks are in that game."
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