Back End Driving More Scheduling Moves

CBS' Medium move is one of several upfront-week decisions helped along by vertical integration

Executives at CBS are calling Medium, which it acquired last week after NBC passed, a perfect fit for the network. And it is—both creatively and financially.

CBS snatched up the five-year-old show, about a happily married psychic, but the network's motivations weren't purely content-driven. CBS' television studio produces Medium, and in 2005 Lifetime anted up $1.3 million an episode for exclusive rights to the show, which it began airing in spring 2006.

CBS wouldn't confirm details, but cable syndication deals usually require buyers to agree to purchase the rights to every episode that's produced, typically up to a cap of eight years. Canceling Medium now would have meant the end of that revenue. It was a nice instance of financial intuition for the network.

“If I'm CBS, of course I would pick it up,” says one studio executive.

The Medium deal demonstrates one of the advantages of vertical integration: When a studio produces a show for its co-owned network, the company has much more control over that program's fate and thus its revenue. On the other hand, TV companies get into trouble when their networks are too dependent on their own studios' shows. If those shows fail, the company takes the entire financial hit instead of sharing that loss with the producing studio.

“The nightmare scenario is you have a show that you own stay on for two years and then you cancel it,” says one network chief. “That's when you get hammered financially.”

Studio executives and syndicators say networks' programming decisions are still largely based on what they think viewers will watch. “The networks' perspective is, 'Will this show get me ratings tonight?'” says a studio executive. “Occasionally, considerations of the back end will creep in, but network chiefs hate it when they have to pick up shows just because the back end is in question.”

Just because network chiefs hate that dynamic doesn't mean they don't deal with it. “There's usually a green-eyeshade accounting person in the room when these decisions are made,” says Chuck Larsen, president of October Moon Strategies. “Supposedly these decisions are made for creative reasons only, but the accountants often weigh-in.”

“We are always running revenue models on the back end when considering whether to produce additional seasons of shows,” says one syndicator. “Studio chiefs want to know if it makes sense to push networks to pick up a show, or if they should reduce a show's license fee to stay on the air another year. In some instances, the answers are yes; in others, no.”

CBS Entertainment President Nina Tassler believes her new get will attract an audience. “It's a blend of two genres,” she said of Medium during last week's upfront presentations in New York. “It's got a similar sensibility to Ghost Whisperer, but it's also got a crime-solving element. If Ghost Whisperer and Numb3rs had an offspring, it would be Medium.”

Other upfront-week pickups and cancellations have plenty of ramifications for shows' syndication prospects. Two of 20th Century Fox's programs—The Unit and My Name Is Earl—were canceled last week. Both shows aired on competing networks—CBS and NBC, respectively—which may have hastened their departures. Neither network had a financial interest in seeing them continue.

It's that interest that fueled rumors of Fox perhaps picking up Earl. Those chances are now looking slim. Keeping Earl on in primetime would likely improve the show's syndication ratings, where it's premiering this fall on Fox-owned TV stations in key markets. It would also give TwentiethTelevision more episodes to offer to its station and cable clients, keeping the show fresher. Still, Earl is cleared in more than 90% of the country and will premiere this fall.

Twentieth was prepared for the possibility that The Unit might be canceled, and thus took it out for sale early. Right after the news broke that The Unit wouldn't be coming back, Twentieth announced that the action hour was cleared in 56% of the country.

Conversely, CBS' pickup of Warner Bros.' New Adventures of Old Christine means the show will make it to four seasons, and thus syndication. Warner Bros. had been sure the show would go forward because ABC had agreed to pick it up if CBS passed.

Finally, ABC's Scrubs is one long-running show whose ninth-season pickup seemed motivated by a back-end payoff, but wasn't. Scrubs' syndication deal expired after the show had aired on network TV for eight years, so its back end is now in decline. Still, Scrubs has long been profitable, it attracts young men, and it's a personal favorite of ABC chief Steve McPherson—so it's staying on ABC's schedule.

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