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Digital Turf War

Studios and networks are still far apart on rights 5/19/2006 08:00:00 PM Eastern

There was something conspicuously missing from the hundreds of millions of dollars in commitments for the upcoming fall season: digital-rights deals between the studios and the networks.

ABC has no rights to stream Warner Bros. Television Studio's The Nine on ABC.com. NBC has no right to sell episodes of Sony Pictures Television's Kidnapped on iTunes. CBS can't offer episodes of 20th Century Fox Television's Shark via cable operators' video-on-demand (VOD) systems.

The networks have that flexibility only for new shows that come from the studios that they actually own. When it comes to deals outside the corporate family, networks and the studios supplying shows remain locked in a turf war, hardened in their financial demands for creating digital “windows” for top-notch prime time programming.

Ambitious visions for the world of broadband TV remain delayed, and unless someone budges, it will remain a pastiche: a smattering of high-grade cable and broadcast networks' shows, an array of lesser cable gardening and home-repair programming, and a flood of birthday-party videos uploaded to YouTube.

To studios, the threat of Web video remains potent. Repeated viewing of streamed sitcoms on network Web sites could chisel away the programs' value in broadcast, cable and, ultimately, international syndication. Permanent downloads of dramas to PCs threatens to eat into the $2 billion annual market for TV series on DVD.

If they're going to jeopardize those revenues, the studios want to be paid. They want a license fee or either a slice of ad revenues for “airing” their shows on Web sites. For iTunes sales or other download-to-own options, studios want more than a taste; they want the bulk of the revenues.

“The new business models are quickly evolving,” says Bruce Rosenblum, president of Warner Bros. Television Group, whose studio will again be the largest supplier of prime time series next season. “It's incumbent, however, on the networks to share some of the revenue from the new business opportunities with their suppliers of their content and, in some cases, to their [station] affiliates.”

The potential revenues from online-TV services are too uncertain to force the issue right now. “I don't think any of the networks felt they wanted to take the risk of trying to acquire digital rights from a studio and risk not being able to close a show,” says Gary Newman, co-president of 20th Century Fox Television.

There will still be plenty of online content, even from studios outside the family. But it will take full episodes to truly transform television.

Production Scorecard

According to the production scorecard, Warner Bros. remains the leading supplier to broadcast networks. “We are having a very good week,” says Warner Bros. Television Productions (WBTV) President Peter Roth.

Roth's big score includes Studio 60 on the Sunset Strip. Set behind the scenes at a Saturday Night Live-esque TV show, it was created by much acclaimed—and famously troubled—Aaron Sorkin and stars Friends' Matthew Perry and The West Wing's Bradley Whitford.

NBC slotted the show for Thursday at 9 p.m. ET. But in the boldest move of the fall season, ABC surprised the industry by moving its hit to the same period. Now Roth finds his highest-profile and most expensive show up against two giant hits: TV's top drama, CSI, on CBS and Grey's Anatomy on ABC. A new, textured series like Studio 60 doesn't stand much of a chance.

Roth hopes NBC Entertainment Chief Kevin Reilly moves it to another time slot: “It makes little sense for a show of the quality to be put against two of the most successful shows on television.”

WBTV landed 11 new series, with returning shows giving the studio a total of 23 prime time shows. CBS Paramount has four new shows, 14 total; Touchstone landed six new series, 11 total; NBC Universal 6 new series, 10 total; Sony Pictures Television has four new series, five total.

Warner Bros. and Sony sold shows to every network. CBS Paramount, NBC Universal and Touchstone sold new shows only to corporate siblings. Networks reached beyond their in-house studios for product. Half of ABC's and Fox's new shows come from outside the family; NBC stepped outside for 40%.

“The good news there is they're picking the best shows,” says Steve Mosko, president of Sony Pictures Television. “That means they're doing the right thing, not the corporate thing.”

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