The Sweet Sound of Laughter

Sitcoms are back, say some syndicators who see the somewhat surprising success of Warner Bros.' Two and a Half Men and Twentieth Television's Family Guy as a sign that comedies still can do wonders for TV stations.

“These shows are successful in cable, broadcast and Internet simultaneously,” says Bob Cook, president and COO of Twentieth Television. “That's great news for the sitcom business.”

But sitcoms aren't really back. The pipeline is nearly dry, as will be fairly evident at the National Association of Television Program Executives (NATPE) convention in Las Vegas Jan. 28-31. The only new sitcom scheduled to premiere in broadcast syndication next fall is Tyler Perry's House of Payne, distributed by Debmar-Mercury.

Several sitcoms are coming to broadcast in fall 2009, including NBC Universal's The Office, Twentieth's My Name is Earl, and Twentieth's American Dad and How I Met Your Mother. There's also cable content on the way, including Showtime's Weeds and most likely HBO's Entourage and Curb Your Enthusiasm. But none of those shows can guarantee stations top-notch ratings, and stations are unlikely to get them without having to share them with cable networks.

Ten years ago, Warner Bros.' hot off-net sitcom, Friends, set off bidding wars in local markets. Stations knew that whichever outlet had the show would win the time period, and agreed to high-end license fees and extremely long-term contracts.

At the time, busting the budget to acquire the show seemed like a good idea. But today, with Friends' ratings down 59% season to date from five years ago—from a 7.0 national household rating in 2003 to a 2.9 today—keeping the show on the air is posing a problem for some stations. They are paying much higher license fees than they can get back from advertisers because ratings have turned downright unfriendly.

Cox-owned KTVU San Francisco has Friends through 2013, says Caroline Chang, the station's program director. “If you look at the numbers in this market, Friends is still holding its own but it's not where it was,” she says. “Nothing is. It's nice if you can make the [return on investment] work on it. But you have it, so you have to put it somewhere.”

Such long-term contracts can be painful. Stations that agreed to run shows such as ABC's The Drew Carey Show and Fox's King of the Hill until they exited the network suffered serious financial hardship when the networks kept running the low-rated shows long after they should have been cancelled. That's why most sitcom deals today start with a four-year term, with an option to extend for two years at a time.

“There are more and more stations saying 'I won't do a deal when I don't know what the end of the deal is,'” says Meredith Broadcast Group President Paul Karpowicz. “There is no show good enough to warrant that deal.”

Stations that are strongly invested in the sitcom business or have their heart set on a particular show don't always have that choice. Terms of each deal are set by the market. Whoever steps up with the best deal sets the terms, even if that deal is crazily out of line. And since Tribune and Fox have the most stations still in the off-net sitcom business, those groups often set the pace, with other stations forced to fall in line. Tribune stands to gain even more negotiating power now that it's being managed by Local TV LLC, bringing the combined group to 40 full-power stations covering 36.3% of the nation.

“Oftentimes the buying process gets way too emotional, and people either get too excited about a show or they get too nervous that they are going to lose a show and will somehow be disadvantaged,” says Karpowicz. “Does the marketplace set the best terms? Not at all. There's always some wild card in the market that gets way out of control, and then the perception is that since this guy is willing to pay this amount, everyone should be willing to pay.”

The desire to have a show exclusively is one of the main reasons a station group might shell out big bucks. In the past, exclusivity was stations' privilege, but today cable networks are strong competitors.

That's why nets such as TBS, which has branded itself as one of cable's go-to comedy spots, often gets the jump on sitcoms. The Office premiered on TBS this fall, two years ahead of its syndicated premiere, because TBS was willing to pay to get the show exclusively. Sources estimate that TBS anted up $650,000 an episode for the Steve Carell sitcom.

Debmar-Mercury initially planned to sell Tyler Perry's House of Payne uniquely to TV stations for its first three years, until TBS's local ratings tests went through the roof and TBS made an offer that was too good to refuse, says Ira Bernstein, Debmar-Mercury's co-president.

On the other hand, Tribune was willing to pay enough for Warner Bros.' Two and a Half Men to keep it off cable for its first three years. Men won't premiere on cable until it opens on News Corp.'s FX in 2010. Collectively, stations ponied up more than $1.5 million an episode for the show, with FX chipping in another $700,000 an episode, according to industry reports.

“There are certain shows out there for which big cable networks like TBS, TNT, USA, FX, Lifetime—the big five or six—will step up and outbid a station group because, in some cases, they want it exclusively. There isn't a rule,” says Bernstein. “We like that—it's kind of fun because it keeps everybody honest. If you want something, you bid and pay for it.”