Rethinking the off-net market
The buying frenzy cools as cable nets lessen dependence on syndie fare
The buying frenzy cools as cable nets lessen dependence on syndie fare
Diane Robina was tense in the final days of the cable bidding for rights to crime drama CSI: Crime Scene Investigation. The TNN executive vice president and her boss, Herb Scannell, were ready to offer the highest price ever for an off-network series: $1.6 million per episode. It was a commitment of at least $140 million, an enormous sum for a cable network, and the deal didn't even include a weekend run or exclusivity against TV stations. "Herb and I looked at each other and said, 'We're frickin' crazy.'"
|Cable's big buys|
|Series||Price per episode||Network||Year deal cut|
|Source: Company reports, Morgan Stanley analyst Richard Bilotti, published reports|
|CSI: Crime Scene Investigation||$1.6 million||TNN||2001|
|Law & Order: SVU||$1.3 million||USA||2001|
|The West Wing||$1.2 million||Bravo||2001|
|Star Trek: The Next Generation||$1.0 million||TNN||1999|
|The X-Files||$850,000||Sci Fi/TNT||2002|
|Walker, Texas Ranger||$725,000||USA||1996|
|Law & Order||$700,000||TNT||1999|
|Buffy, the Vampire Slayer||$650,000||FX||1998|
Crazy or not, they did the deal. Although the show was only in its second season, the consistency of its top-10 Nielsen ranking suggested a long run on its broadcast network, CBS. And TNN needed a high-profile "franchise" beyond wrestling that would attract young viewers.
That was spring 2001, a time when the syndication market was its hottest ever, breaking the record that historically small-time buyer Bravo had set just weeks earlier with a $1.2 million bid for rights to NBC hit The West Wing.
Today, though, the frenzy sparked by big-spending new entrants to the high end of the off-net syndication game is over. The slumping ad market makes it hard for cable networks to justify such huge license fees, particularly for shows that could run way past four seasons. In addition, some established networks are shifting strategy. FX and Court TV, for example, are lessening their dependence on syndicated fare in prime time.
Court TV broke out of the Nielsen-ratings basement by replacing taped trial coverage with Homicide, which did terribly on Lifetime. "We had to prove that that we weren't all-vegetables for vegetarians," says Court TV CEO Henry Schleiff.
But now he's more focused on original fare in prime time. "Off-network series," he observes, "are incredibly important at different stages of a network's growth."
It's second- and third-tier networks that are in the hunt now for recent, recognizable programs. TNN, Bravo, WE and Court TV have continued the pace set by USA, TNT, TBS and Lifetime. The next serious buyers are expected to include Hallmark Channel, ABC Family and Oxygen.
Also changing are the old rules of exclusivity. Studios and their primary customers, the broadcast networks, are increasingly willing to offer a "repurposing" slot, allowing a cable buyer to run an episode a week after its first broadcast. (Such deals, of course, are facilitated by the common parentage of syndicator, broadcast and cable outlets in a Disney, Fox or Viacom.) And cable networks also are starting to team up in joint bids.
"We're all faced with a challenging economy, and the reality of the economy is driving pricing down," says Jonathan Katz, executive vice president of program planning for the Turner entertainment networks.
"I think buyers are willing to pay the going rate for quality product," says Steve Mosko, president of Sony Television. "But they're less willing to pay ridiculous prices for mediocre product."
He won't specify which he thinks were bad deals, but other studio and network executives cite the Fox Family (now ABC Family) $700,000-per-episode deal for NBC drama Providence, now sitting in the network's library, and FX's $650,000-per-episode payment for Fox's Ally McBeal
as the worst examples of past excess.
Several programs have been on the market for months with no takers at an acceptable price, including Sony Television's Dawson's Creek
and Paramount Domestic Television's Becker. Network executives expected CBS sibling King World's drama Family Law
to come out months ago.
The next big tests will be the cable window for King of Queens, cable exclusive rights for Warner Bros. Gilmore Girls, and what could be a truly hot property, NBC Studios'Crossing Jordan.
Since Crossing Jordan
has strong women demos and a female central character, Lifetime is expected to come off the sidelines and bid hard for the show.
Even that won't be a true market test, says Eric Frankel, president of Warner Bros. Domestic Cable Distribution, because Crossing Jordan
isn't as hot as the past record-breakers. "Since The West Wing
and CSI, there haven't been any shows that were necessarily deserving of that lofty status."
The cable syndication market has a few different strata. The highest, of course, is fare still running on the broadcast networks. Because hour dramas don't repeat well on local broadcast, cable gets first crack there, with many shows fetching $500,000 to $900,000 per episode. Even at top prices, however, cable networks typically get only weeknights, because syndicators collect more license fees by selling weekend runs to broadcast stations.
Still, "cable's pretty critical," says Morgan Stanley media analyst Richard Bilotti. "Without the cable networks, there wouldn't be big buyers for this stuff, so they wouldn't get made for broadcast in the first place."
When it comes to sitcoms, however, cable plays second banana to local broadcast stations. Cable nets can't come close to matching the average ratings. Stations collectively pay $3 million to $4 million per episode for hit sitcoms like Frasier. Cable ad rates are lower, too: $5-$6 per thousand viewers vs. $20-25 for a big-market broadcast station. At best, a cable network will buy runs of a sitcom after three years or so in syndication and, even then, share the runs with stations. The best example is TBS's scheduling of Friends
in the same slot when local stations might be showing it.
Then there are shows no longer on broadcast-net schedules. Ratings for off-net fare on cable hold for about a year. That's why off-CBS Walker, Texas Ranger
went from USA Network's early-evening slot to the afternoon, where it airs three times daily, and USA is burning off NBC's canceled Veronica's Closet
at 4 a.m., where it can't do any ratings damage.
Relatively recent shows can still be expensive; Lifetime is paying $400,000 per episode for The Nanny. But many canceled shows on cable nets' daytime schedule are just $50,000-$125,000 an episode; Sci Fi, for example, is paying $125,000 for Roswell, which kicks off in January.
At some point, however, a show might be considered a classic and command big dollars. One cable-network executive predicts the next cycle of Roseanne
will fetch $1 million an episode because it still holds a rating.
The biggest change in the market is the sharing of shows by two cable networks. TBS and Tribune Broadcasting pioneered sharing of theatrical movies a decade ago.
Of late, cable networks have similarly teamed up to split a syndication window. Court TV and TNT currently share NYPD Blue
(Court TV in prime, TNT during the day), paying a fat combined fee of $850,000 per episode. Both nets are subsidiaries of AOL Time Warner, but TNT cut a similar deal with Vivendi Universal's Sci Fi Channel for Twentieth Television's The X-Files, at $550,000 an episode.
"It's a natural evolution because the economics dictate that we use new models," explains Turner's Katz.
However, TNT's plan to bid on Twentieth TV's Judging Amy
with WE: Women's Entertainment shattered, industry executives say, when WE submitted a solo bid without informing TNT. Turner executives angrily topped WE's bid and secured exclusive rights to the show for $525,000 per episode. Neither TNT nor WE would comment on the joint bid.
The bad news is that some players are backing away from the syndie market. FX, for example, is relying on theatrical movies in prime time, after an embarrassing ratings experience with all-in-the-family syndication deals for The Practice, Ally McBeal
and, to a lesser degree, Buffy the Vampire Slayer. All, of course, are distributed by FX's corporate sibling Twentieth Television. FX plans to keep a high profile with original programming, like its huge hit The Shield.
FX Senior Vice President of Programming Chuck Saftler considers movies a less volatile way of drawing a steady audience. "I feel that the movie strategy is a very reliable strategy, where acquired off-network series is more risky, given the competition from broadcast network and other basic-cable networks."