Why The WB.com is genius

The broadband Internet is finally allowing Warner Bros. to create virtually what it could not justify creating in the real world: its own TV network with its own distribution channels.

Warner Bros. – Hollywood’s largest studio in terms of TV production– long has not-so-secretly lusted after other companies’ assets. NBC Universal, CBS, Fox and Disney-ABC all own one major broadcast network, successful cable networks, at least one production studio, a syndication arm and TV stations in major markets –essentially the requisite combination of weapons with which to attack the television business.

Impressively, Warner Bros. has managed to remain the number-one producer of TV shows even though it lacks ownership of either a major network or TV stations. What it has instead is a half-interest in The CW, which so far is struggling. Its parent company, Time Warner, owns other networks – TBS and TNT on the cable side and AOL on the Internet side – but truthfully, those don’t give Warner Bros. the same status as ABC, CBS, NBC and Fox.

What that means is that Warner Bros. has never really been the master of its own destiny. ABC can produce a show – such as Lost, Desperate Housewives or Grey’s Anatomy, all of which are produced by ABC Studios – put those shows on its own air and then sell them in syndication when the time comes. It also can decide to stream or not to stream those shows on its Web site, iTunes or wherever else. In success – and that’s a key phrase – ABC gets to keep almost all the revenues created by those very successful franchises and then invest some of that money back into new shows.

Of course, the caveat is that in failure, ABC takes all the losses. And that’s where Warner Bros. has plied its trade perfectly. On network TV, cable TV and in syndication, Warner Bros. can boast that it produces popular shows that win ratings at a much reduced risk to the network. So while ABC might be able to produce every show on its network through ABC Studios (or Fox through Twentieth Century Fox TV, and so on) it wouldn’t want to. ABC and all the others need to spread the risk around. Warner Bros. has done a great job of taking on much of that risk for networks, and then frequently turning out quality, revenue-producing shows that are wins for everyone.

That said, it’s been a bit frustrating for Warner Bros. that it doesn’t have its own network on which to place its best shows and take its biggest bets. The WB was supposed to be that, but while its shows were critically acclaimed and often beloved by fans, the network’s audience never grew to large enough levels to make it profitable, and it looks like The CW could be headed down that road as well.

At this moment in time, the Internet is the perfect solution for Warner Bros. The Internet is where The WB/CW audience lives. Gossip Girl is a hit not because of its TV ratings, but because of its online audience. Teens may not be tuning in to their TVs but they are living online. If you can produce content that draws them there, keeps them there, gets them blogging, texting and mashing-up, you have won over perhaps the most engaged audience there is. 

Even though Craig Erwich, EVP of Warner Horizon Television, flat-out denies that Warner Bros. will use The WB.com as “an incubator for cheap development,” you can be sure that if something hits big online, it won’t be long before we see it on The CW’s larger, more lucrative platform.

So, while The WB.com can use old shows to lure people to their site, it’s the original programming Warner Bros. hopes will keep them there. With creators such as Josh Schwartz (The O.C., Gossip Girl, Chuck), McG (The O.C., Charlie’s Angels) and Gary Auerbach (Laguna Hills) on the slate, Warner Bros. has a good shot at creating some original online series with serious Internet followings. If TMZ – also created by Warner Bros. — sets any precedent, the most successful of those cheaply-produced shows will head to The CW, where they will arrive with a built-in audience and take much of the uncertainty out of the development process.

With distribution deals already in place with Internet giants such as Facebook.com and Comcast’s FanCast, it’s the smartest use of the Internet by a TV studio I’ve seen.