It's not just for broadcast anymore
Syndicators turn to cable as they look to diversify outlets
By Susanne Ault -- Broadcasting & Cable, 9/23/2001 8:00:00 PM
King World, the studio that is home to Jeopardy and Wheel of Fortune, is preparing a new game show for next year. But don't yawn, this isn't business as usual for the syndicator. On the Cover, on which players answer questions based on magazine and CD covers, is earmarked for TNN, not broadcast stations.
And it's not just King World that's starting to sidestep its bread-and-butter broadcast business for other programming outlets. Paramount Domestic Television, Twentieth Television, Fremantle Media (formerly Pearson Television) and Tribune Entertainment are just some of the studios that have deals in the works with cable networks for next year.
Paramount, for example, is looking for a cable network to launch reality show The Bar, where people try to manage a Cheers-like restaurant. MTV, sources say, has optioned Fremantle's Looks Are Everything. And Tribune's MechWarriors, based on Microsoft computer game Battletech, could land on cable as easily as on broadcast.
When added to the few distributors that are already active in cable, like Columbia TriStar Television Distribution with Lifetime's Strong Medicine, it appears that every studio is looking to cable. And for good reason.
Nielsen Media Research reports that cable audiences have doubled during the past 10 years. And Lifetime is believed to be shelling out about $900,000 in per-episode license fees for Strong Medicine. In contrast, broadcast viewership has fallen about 30% over that same period, depressing syndication license fees so much that stations often don't want to pay anything for a show's first couple years.
Bob Cook, president of Twentieth, puts it this way: "When the market gets tough, that's when the mother of invention steps in. This is when you come up with a new mousetrap." Cook notes that, in bringing a few pilots to cable networks this year, Twentieth, now best-known for such court strips as Divorce Court, has spread its wings into original cable production.
The motivating factor for all the syndicators is diversification. Several years ago, you could really make money solely in straight first-run syndication. Judge Judy, it has been said, at least broke even in its first couple years, keeping production costs between $200,000 to $250,000 for one week's worth of shows. But, in 1999, when Judge Judy had skyrocketed in the ratings, New York's WNBC(TV) alone, agreed to pay $200,000 in per-week license fees. Judge Judy's per-week fees now total $1 million, sources say.
Fremantle Entertainment President David Lyle says, "It's like if you had all of your investments in blue-chip industrials. That wouldn't be as good as if you had spread your investments across a whole range of markets."
As distributors continue to make shows for little money, weaker daytime ratings are killing a lot of shows' chances to become the type of hit necessary to rake in Judge Judy-type profits. Given upfront promotional dollars, plus low fees and slim ratings, which hurt barter advertising dollars, it's not unusual now for a first-run strip to lose $10 million to $12 million in its first year, insiders say.
In comparison, things are a lot merrier over at the cable networks. There's an exploding cable landscape, with channels like FX, TNN, USA, TBS and TNT racing to distinguish themselves with original programming. That competition is boosting prices higher and higher. TBS apparently pays well north of $500,000 per episode for Columbia TriStar's Ripley's Believe It or Not. And, believe it or not, sources say Ripley was making the studio money right off the bat.
"Remember in the old days, when we called all of this ancillary activities?" asks Warner Bros. cable distribution head Eric Frankel. "The reality is everything is part of the puzzle. We need cable."
King World studio head Roger King got such a taste for cable after selling the off-net episodes of CSI for a record-breaking $1.6 million per episode that, when programming chief Nalevansky joined the company several months ago, King told him, "You want to do a show in cable? Then go do it." That led Nalevansky "to get his feet wet" with TNN with On the Cover. "That's the mandate that we've got from Roger. In many ways, it's a new King World."
It's true that off-net broadcast syndication dollars, on the other hand, aren't slipping away. Warner Bros. Domestic Television Distribution is expected to bag $100 million (license fees plus barter) over the course of Will & Grace's syndication run, which starts next year.
But, with network reality shows supplanting future scripted offerings and the cable-channel universe expanding at the same time, cable networks will be in the hunt for programming. "There's going to be more of a need for [shows] and fewer and fewer in the pipeline," says Bob Cesa, executive vice president, advertiser and cable sales, at Twentieth.
Cable license fees will likely continue to climb, whereas consolidation of the broadcast-station industry (for example, the recent Fox/Chris-Craft merger) might ultimately hurt price tags in off-net broadcast syndication with fewer people angling for the shows.
It seems like cable networks are starting to glom onto the syndicators as well. With shows such as Entertainment Tonight, Oprah and Judge Judy under their belts, syndicators are considered the early leaders in cheap-but-quality reality content.
"Yeah, talk shows are reality programming," agrees Bill Cox, TBS senior vice president of programming, suggesting that it wasn't a stretch to hook up with Columbia TriStar of Ricki Lake fame on Ripley's Believe It or Not. "They've done that so effectively, we had confidence in them."
But being courted by cable outlets has not stopped some from staying fiercely loyal to the broadcast syndication model for off-net and first-run properties. It is the case that, so far, no one has been able to persuade the cable networks to give up a significant amount of ad inventory in deals, which is why "you can still make more money in syndication," observes Joel Berman, Paramount's studio chief.
However, Berman is hoping to distribute a show both on cable and in syndication, figuring he can get the best of both worlds. Paramount hopes to strip The Bar on cable, plugging in a weekend run in syndication. That way, ratings can be cumed, leading to better revenues from the syndication side's barter component. And, using this logic, most cable off-net deals now include a secondary, weekend broadcast window in syndication.
Studios USA Domestic Television is eyeing Crossing Over With John Edward, concurrently aired this season on Sci Fi and in syndication, as a popular, ongoing model. This is how the syndicator plans to navigate "the sea of 2-rated products in syndication," says President Steve Rosenberg. "This can be another revenue source."
Another benefit: Syndicators can expect to save promotional costs by placing their shows on cable networks. The cable nets will do the syndicators' marketing work, shaving millions off studios' overall production costs.
FX programming head Chuck Saftler says that, with FX plastering cities last month with billboards shouting. " 'Ally McBeal: five nights a week at 9 p.m!,' there's a very consistent message."
Clearly, with syndicators turning increasingly to cable, the term syndication is taking on a whole new meaning.
| The top deals in off-net | ||||
|---|---|---|---|---|
| Show | Studio | Network | License Fee | Year |
| Compiled by Kagan Media |
||||
| CSI | King World | TNN | $1.6 million | 2001 |
| L&O: Special Victims Unit | Studios USA | USA | $1.3 million | 2001 |
| The West Wing | Warner Bros. | Bravo | $1.2 million | 2001 |
| Seinfeld | Columbia TriStar | TBS | $1 million | 1998 |
| Star Trek: Next Generation | Paramount | TNN | $1 million | 2000 |
| The Practice | Twentieth | FX | $825,000 | 1999 |
| NYPD Blue | Twentieth | TNT/Court TV | $825,000 | 2001 |
| ER | Warner Bros. | TNT | $800,000 | 1996 |
| JAG | Paramount | USA | $750,000 | 1998 |
| Walker, Texas Ranger | Columbia TriStar | USA | $725,000 | 1996 |
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