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The Family Business

It became a cultural phenomenon, but now The Sopranos is a money-making machine beyond Tony's wildest dreams 2/29/2004 07:00:00 PM Eastern

Talk on the street was a mob kidnapping conspiracy, and Tony Soprano was the target.

HBO's Courteney Monroe was startled on a Century City sidewalk last month, overhearing three men plotting how to pry open the glass case of a nearby bus shelter. The goal: stealing a giant, stark poster touting the fifth season return of The Sopranos.

"A thrilling moment," says Monroe, HBO's senior VP of advertising.

The men failed, but legions have scored. Crazed fans have snagged a third of those chilling Sopranos
posters on both coasts, and the company was forced to print more.

HBO prints something else related to The Sopranos: money. The celebrated show has morphed into a mini-industry, not just luring new subscribers but generating millions of dollars from other sources impossible to imagine when the watershed series debuted in 1999.

One big source—DVDs—is already producing big bucks. A potential gold mine is syndicating the series to a cable network and broadcast stations. The party line from HBO is there are no plans in place. "I would never do anything to undermine the future of the series on HBO," says CEO Chris Albrecht.

Other industry execs, most tellingly Jeff Bewkes, chairman, Entertainment & Networks Group, of HBO parent Time Warner, expect the series to come to market sometime in the next year. HBO made inquiries to test the syndication waters for The Sopranos
but retreated. Speculation in the industry was they pulled back when series creator David Chase committed to a sixth season. But network executives fully expect the series to come to market with a record asking price.

In anticipation of a syndication sale, the posturing has already begun. "They'll want $2 million an episode," says the president of one cable network, "though they won't get it." At a more conservative price, The Sopranos
could generate $113 million in U.S. sales.

The new revenues are essential to HBO's health. The network's subscriber growth abruptly stalled out at 27 million subscribers last year, after years of strong gains. The company is now dependent on businesses like DVD sales and theatrical movies for 20% of its revenues and has to keep the engine going. License fees from cable and DBS account for the rest. So that makes that ancillary income loom large.

Still, HBO is careful not to get greedy. DVDs don't come out while the season is still on the air, to make sure subscribers get a viewing experience they can't duplicate at the corner Blockbuster. And no one at HBO expects any other network or station to air syndicated episodes until The Sopranos' sixth season concludes.

HBO Entertainment President Carolyn Strauss says it's no mystery why The Sopranos
has become such a financial engine despite erratic production that starves fans of new episodes for a year or more at a time. "We have a different philosophy than the networks do. We don't subscribe to the notion that volume is what matters. We believe that it is quality that matters. And quality can't be mass-produced and can't necessarily be generated on demand."

Fortunately, fans' demand will be sated Sunday when Sopranos'
fifth season kicks off with a 13-episode run. HBO will hold a Hollywood-worthy screening this Tuesday at Radio City Music Hall. That kind of splash once seemed odd for a TV show but is standard for HBO, which will drop hundreds of thousands to fete Tony and his crew.

The Sopranos
has always been an expensive show—$2 million per episode in its first season. A series of salary demands by key actors has pushed that north of $4 million. That includes a big raise for Tony Soprano himself, actor James Gandolfini, who fought with HBO in court, then fired the agent who brought him into the fight.

Adding to the bottom line are sales to foreign networks, where the series has been a much more modest hit than it is stateside—more than $1 million per episode, around $75 million total.

Spinoff books like the 500,000-plus seller The Sopranos Family Cookbook
also contribute to coffers, as do more than a dozen other authorized volumes. Our personal favorite title: the Chase-edited Tao of Bada Bing,

The Sopranos
is more than a creative breakthrough for TV. The franchise has been a pioneer in the DVD market. Home video used to be an afterthought for TV shows. The Sopranos
dramatically raised the bar, moving more than 1 million copies of each season at a premium list price of $99, even with the usual retail markdown to $60.

"I think it broke open the market and proved it in one big swipe," says Jan Saxton, vice president of research firm Adams Media. "It certainly woke the studios up to an entire new segment of the DVD market." DVD retailers have sold an estimated $240 million so far and will probably push that past $360 million as future seasons are released.

The big financial question mark is syndication. When the show launched, HBO execs never guessed they could sell reruns of a raw, often-violent mob series to an ad-supported cable network, much less to broadcast stations. But The Sopranos
starting drawing record crowds.

Still, HBO faces two huge obstacles. Serial dramas that carry substantive plot lines across episodes usually fade fast in the ratings. Then there are content issues: the steady diet of swearing, strippers, and stranglings. Chase did shoot alternate footage. In a syndicated Sopranos,
expect a Bada Bing sans nudity. "You can clean it up, but will it have the oomph?" asks one cable network executive.

The Sopranos' huge financial success won't change the way HBO develops shows for its own air. Nobody will dull the creative edge because they're thinking "ancillary markets." Says HBO Video Senior VP Cynthia Rhea: "Nothing has changed except the bottom line."

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