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The Battle to 'Survive' at the Top

CBS Television Distribution's John Nogawski inherited a syndication empire. Is Jeff Probst the kind of play to keep it at No. 1? 8/13/2012 12:01:00 AM Eastern

John Nogawski needs a hit. Well,
so does the entire first-run syndication
world. It’s not a unique problem for
Nogawski, the president of CBS Television
Distribution: The last time a show broke
out in first-run was Sony’s Dr. Oz back
in 2009. Oz averaged a 2.3 live plus same
day national rating in its first week on
the air and immediately became the third
highest-ranked talk show in syndication,
behind giants Oprah and Dr. Phil.

Prior to that, the best showing came from CTD’s Rachael Ray,
which launched in 2006 to a similar rating. But compare what’s
being called a hit now to what used to be a hit: In 2002, CTD’s
Dr. Phil premiered at a 4.4, a number that no rookie first-run show
has touched in a decade. And all three of those shows had one key
thing in common—they were all spinoffs of Oprah, which ended
its 25-year run in May 2011, at once eliminating both syndication’s
highest-rated talk show and its most fertile development platform.

Heading into fall, all eyes are on CTD, and so is the pressure.
Right now, the company dominates first-run syndication with the
top talk show, Dr. Phil, which is produced by Dr. Phil McGraw’s
company, Peteski Productions; the top two entertainment magazines,
Entertainment Tonight and Inside Edition; and the top two
court shows, Judge Judy and Judge Joe Brown. CTD also distributes
the top two game shows, the Sony-produced Wheel of Fortune and
Jeopardy! Those shows are all renewed for two to three years in
the future, guaranteeing CTD’s revenue, at least in the short-term.

But what happens when Judge Judy Sheindlin, who turns 70
in October (the same month she will be inducted into the B&C
Hall of Fame), retires? Wheel and Jeopardy!, like Debmar-Mercury’s Family Feud and CBS’ Price Is Right, could arguably go on without
their respective current hosts, Pat Sajak and Alex Trebek, but no
such changes appear to be on the horizon. Dr. Phil is syndication’s
top talker, but CTD was forced to slash the show’s license fees in
2009 in order to keep it on the air through 2014. Phil’s ratings have
rebounded since then, but it was touch-and-go for a while.

Finally, even leaders such as Entertainment Tonight are losing ratings
every year, and that’s true across most of syndication. Drops in
ratings mean loss of advertising revenue, and that’s forcing Nogawski
to slash budgets on shows to make up for revenue shortfalls and to
keep margins in line with Wall Street’s expectations for the longsuccessful

One can see that CBS needs some new blood, but so too does
everyone in daytime. Industry insiders focusing on the affable
Nogawski’s need to develop something new may seem harsh, but first place in anything comes with a big target on your back. And
what makes the problem more pressing for Nogawski is his lineup is
very top-heavy. It’s like having a basketball team composed of Kobe
Bryant, LeBron James, Carmelo Anthony, Kevin Durant and Dwight
Howard and absolutely no young players coming up. Without a little
recruiting (which Nogawski is attempting with Jeff Probst this year
and Arsenio Hall in 2013), in a few years there will be problems.

And CTD has to live up to the reputation of a giant in the syndication
business: itself.

“It’s about trying to generate a revenue picture that can hold up to
the past,” says one former programmer. “It’s the curse of being the
big machine. It’s nothing against [Nogawski], it’s just the business.
The problem for him internally is that the performance of his shows
is being compared to numbers that don’t exist anymore.”

Nogawski knows this, too: “We’re a victim of our own success,”
he says. “We have so many big shows that we are at the top of that
food chain.”

0813 Syndication 8 out of 10 chartBetting on a 'Survivor'

With Oprah far behind him now, Nogawski is lining up his new shots.
This fall, he’ll premiere a talk show starring Survivor host Jeff Probst,
with the NBC owned stations as the launch group. Getting the show on
the air at all was a coup—one that some credit Nogawski for personally.

“The sale of Jeff Probst has everything to do with John Nogawski’s
skill as a salesman and less to do with the quality of the pilot,” says
one syndication producer.

Last November, when syndicators all of a sudden found themselves
playing musical chairs for time slots, Nogawski was among the lucky
distributors left with a spot, along with Twentieth’s Ricki Lake, Warner
Bros.’ Anderson, Disney-ABC’s Katie and NBCU’s Steve Harvey. Shut out,
Warner Bros. turned Bethenny into a test for this summer—a move that’s
likely to turn out well for Warners—and NBCU was forced to cobble
together a launch lineup for its new con" ict talker, Trisha Goddard.

One of the keys to Probst—and to any show Nogawski launches,
whether it’s The Insider or Swift Justice—is that they don’t lose money, he
says. “I always make sure that I have enough of a margin built in from
the revenue side versus the cost side,” he says. “After seeing my lineup,
which gets established by Joe DiSalvo, my head of sales, and I see that
the time period we’ve got typically does a 1 [rating], for example, I tell
Aaron [Meyerson, head of programming] that ‘we have to develop a
budget for this that can support a 1 rating.’ Do I want to do a 1? No,
I want to do a much bigger number. But I have to base the business
on a number that I can support.”

Industry estimates are that CTD will produce Probst for approximately
$24 million, with about $6 million added for promotion. CTD
also got added juice by promoting the new show during NBC’s Summer
Olympics coverage.

Compare that $30 million to the estimated $80 million that
Disney-ABC is expected to spend to
get Katie Couric’s show on the air.
It was those economics that forced
Nogawski to pass on Couric’s daytime
talker, even though that show could
be the hit he needs: “I think [Disney-
ABC] cut a bad deal,” he says. “They
did get very large license fees, but the
majority of those license fees are attributed
to ABC’s owned-and-operated
stations. [Katie] is going to have to do
a very large number for them to make

Nogawski already has started looking
ahead to 2013, when he will partner
with Tribune Broadcasting to bring Arsenio Hall back to late night.

“What John did with us on Arsenio was flawlessly executed,” says
Sean Compton, president of Tribune Broadcasting. “Like us, he’s taking
a risk, but he’s the guy who pulled off getting that show cleared
and getting it to a place where everyone is comfortable with it.”

“I think Arsenio’s reputation is big enough and late night is lucrative
enough that stations were willing to pay a license fee,” says a
former syndication executive. “CTD will be getting some license fees
for the show, and that’s rare these days.”

CTD is also developing a new talk show for 2013 that would star
foodies Bobby Flay and Giada de Laurentiis.

Not an Easy Road

Finding a hit in television is hard enough
these days, but first-run syndication may be
the toughest game in town.

“Syndication is worse than network television,
worse than feature films. The syndication
television business is the 98%
failure business,” says a former syndication
programming exec. “When you look at all
the different genres and shows that are tried
every year and how many of them come back
for a second year, it’s a very small percentage.”

Moreover, all of these shows attract audiences
that aged out of TV stations’ key
demographic of adults 25-54 long ago,
causing some TV stations—such as E.W.
Scripps, which has dropped Wheel and
Jeopardy!—to start seeking younger, cheaper
(and riskier) programs.

Now Nogawski’s mission is not just to
shore up the shows he has, keeping them
on the air for as long as possible for as much cash as possible, but to find the next big thing. It’s not a job for the faint of heart.

“I’m a fan of his,” says the former programming exec. “He’s one of
these guys who keeps his head down. He hires good people and is
doing his best to keep the business going. He’s been fortunate in that
he’s had some nice hits to keep him alive, and off-net always helps.
But there’s no question about the fact that launching new business in first-run is a difficult business, and definitely a struggle.”

Nogawski has not personally developed and launched any of CTD’s
big shows, a criticism that is frequently levied against him. While Paramount
produces Dr. Phil, that show was developed and spun out of
Oprah. Rachael Ray also was an Oprah spinoff. And even though CBS
Paramount Domestic Television merged with King World in 2006, Roger
King handled all things Oprah until his death from a stroke in 2007.

Other shows, such as Entertainment Tonight and Judge Judy, already
were stars in the Paramount firmament when Nogawski took over.
Since Nogawski became president of CTD in 2008, the division has
launched lots of singles—such as the late-night dating show Excused,
renewed for a second season, and the now-cancelled Swift Justice—but
no doubles, and certainly nothing that could be called a home run.
ET spinoff The Insider was developed on Nogawski’s watch, and it’s
remained on the air for eight years, but its ratings could use a boost.

Syndication insiders also still say that losing Oprah and the chance
to distribute Dr. Oz caused CTD to take a revenue hit.

“That was a big deal because having Oprah was a big stick to carry
that gave them leverage in the market,” says one insider. “Having Oprah
still looked good on the books. It was a guaranteed revenue stream.”

Nogawski dismisses that notion though.

“Our deal with Oprah was less and less profitable as the years went
on,” says Nogawski. “Financially, it wasn’t as big of an impact on us
as it would have been in prior years when the show was doing bigger
numbers. It was a time when she didn’t want to do the show anymore,
and her numbers were showing it. Would I have liked to have
Oz? Sure, it’s a quality TV show. But I don’t think Harpo is coming
out with any more TV shows. The launch pad was her.”

Still a Major
Profit Center
0813 Syndication Needing New Blood chart

Nogawski—and CBS overall—stay in the
increasingly tough first-run business because
“it’s a huge profit maker,” says Nogawski. “In
off-net, all of the money goes back to the studio.
The profit from this division is all from first-run. We represent a very large part of the
profit that comes through CBS Corp.”

According to CBS’ most recent earnings
report, released on Aug. 2, the company
earned $1.83 billion in licensing and distribution
fees in the first six months of 2012,
up 13% from the $1.62 billion earned in
the same period in 2011. Advertising,
some of which comes from first-run syndication,
makes up the largest segment of
CBS’ revenue, with the company declaring
$4.54 billion in ad revenue in the first half
of 2012, down slightly from last year. CBS’
total revenue for the first six months of this
year was just over $7 billion, with free cash flow of $1.17 billion.

How that revenue is divided between first-run and off-net is hard
to determine, because CBS doesn’t break it out. As a point of reference,
analyst David Bank of RBC estimates that off-net sales of NCIS:
Los Angeles
and The Good Wife will throw off $300 million in 2013,
and Hawaii Five-O (which is already sold to TNT) and Blue Bloods will
generate another $275 million starting in 2014. That’s in addition to
other digital licensing deals that Scott Koondel, CTD president of
distribution and CBS Corp. senior VP of corporate licensing, oversees
for the company, such as the estimated $1 billion overall deal that
CBS and Warner Bros. signed with Netflix last October.

While some say Nogawski should try to shore up his leadership
position by keeping off-net sales more firmly under his direction, he
expresses confidence in his lieutenants.

“I let Joe do the station sales and I let Scott do the digital and cable
sales,” says Nogawski. “I don’t get in the way of their negotiations. We
have strategy conversations as to what we are selling and when we are
selling it, but those are more 30,000-foot conversations….I wear a lot
of hats here. I can’t get too bogged down on any one thing.”

And now, Nogawski needs to find that next hit to ensure his entire
division won’t one day get bogged down either.

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and follow her on Twitter: @PaigeA


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