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Networks Adapt to Changing Times

Broadcasters invent strategies to keep cash flowing and viewers watching 5/23/2004 08:00:00 PM Eastern

HBO learned fast. First, it broke new ground with provocative shows: The Sopranos, Curb Your
Enthusiasm
, and Sex and the City.
Then it birthed the latest TV craze: year-round programming. Now broadcasters are taking lessons from their smaller but influential cable rival.

Proof? The upfronts, which illustrate how the networks are changing their game plan. New strategies in scheduling, finance, and production dominate the broadcast landscape.

Why the radical departure?

Network chiefs say a revamped scheduling model—having two shows share one time period, airing a show many times in the same week, and launching shows year-round—is the only way to keep viewers. Most admit it's an expensive proposition: They'll have to purchase more programs.

"It's incredibly well thought out in terms of our ability to cover these costs," promises Jeff Zucker, president of NBC Universal Television Group. He predicts that, by next year, NBC Universal will follow Fox into year-round development, as well as year-round programming.

An added bonus: It should allow networks to grab more ad dollars in the upfront. "The reason we're announcing it now and selling it now is to be able to capitalize on it now," says Zucker.

That's why NBC informed upfront advertisers it is picking up comedies The Men's Room and Crazy for You to air Thursdays after next season's second installment of The Apprentice ends in April 2005. Advertisers will know what to expect from NBC on Thursday nights for an entire year—and, the logic runs, pay more to reserve commercial space.

While networks used to amortize the high cost of programming by repeating shows later in the season, most shows fall off sharply in repeats. Viewers flee to cable if they've already seen an episode. So networks are making a practice of rerunning an original episode in the same week, exposing more viewers to the show to help recoup costs.

For example, Fox created 24
to run serially without future repeats. "People said it couldn't be done financially," says Entertainment President Gail Berman. "We figured out a way to produce the shows internally that made sense for us. We used 24
as the model, repeating the show on Friday nights in the same week as the original episode." Berman's instincts were on target: 24
drew big numbers and more viewers." Plus, the financial model was a winner. Now Fox plans its schedules around it—with other networks are following suit.

But what's good for the networks may be tough on the studios.

Nervous networks are giving studios less opportunity to bet on the next Friends, Frasier, Seinfeld, The Simpsons, or Everybody Loves Raymond. Without mega-shows that bring in billions in syndication, studios have to find other ways to finance new projects, such as DVD sales or additional licensing and merchandising, says Gary Newman, president of 20th Century Fox Television.

And networks are risk-adverse. Out of 70 comedies the studios pitched this year, the networks picked up only 19.

By comparison, they ordered 24 in 2003 and 23 in 2002. That decrease throws into question the studio-financing model of deficit spending in the hopes of seeing big returns in syndication.

"We are increasingly recognizing the challenges that lie ahead in television," says Warner Bros. Television President Peter Roth. "We have to be even more targeted and calculated in our decision-making and investments. Scrutinize every project and every financial decision in response to a changing business."

What's more, the importance of hit reality shows means there is less opportunity to schedule scripted shows. Less risk means fewer hits, and that's bad news for studios. "You have to go back to 1974 to see as few comedies on the three big-network schedules," says Paramount Television Productions President Garry Hart. "In 30 years, that's an enormous shift."

Yet several studio chiefs say 2004's comedy dearth is just a blip in the cycle.

"Come this time next year or the year after, you are going to start seeing a renaissance of the comedy business," predicts Dana Walden, president of 20th Century Fox Television. "That's the nature of the beast. You have to hit rock bottom before people start putting a little more emphasis on a certain form of television. Then you will see better, higher-quality development as a result," Walden adds.

"It's disappointing to see people cutting back on half-hour comedies," says Robin Schwartz, president of Regency Television, which landed three of its four pilots on the air for next season.

"But when there are less shows on the air, there are more people who are going to develop projects. There will be a larger pool to pull from next year."

And there is a second upfront trend: Networks were once a bit ashamed of reality shows; now, however, they revel in them.

The Apprentice
was the centerpiece of NBC's upfront, America's Next Top Model
was a star for UPN (bumping Enterprise
from its Wednesday time period to lower-rated Friday), and ABC and WB have loads of reality slated for fall. That marks a radical change from last year's upfronts, when all the networks hid from reality, except Fox with American Idol
and CBS with Survivor.

What a difference a year makes. American
Idol

remains TV's most popular show even after three years on the air, Survivor: All-Stars
turned in its highest ratings since the second go-round, and The Apprentice
completely changed the outlook for NBC.

A star reality show confers spectacular benefits. "Reality isn't the same level of big business as a drama can be, but it's a useful tool that keeps a lot of cash flow coming in," says Mark Pedowitz, the new president of Touchstone Television. "A successful reality show provides cash upfront."

While the genre's enormous popularity and relatively low (but getting less so) production price has been a lifesaver for the networks, it's still a potential nightmare for studios.

"Is disastrous too kind a word?" asks Paramount Television Productions' Hart. "If we can't get on the network schedules, we can't create hits to take to syndication to finance ourselves."

It's not TV, it's the bottom line.

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