Lost in the Web Shuffle?

New-media options could shift the sales model
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TV's mad rush toward the Web, which gains greater momentum each week, continues to throw a spotlight on the networks. There is endless optimistic talk by them about the Internet and the myriad ways viewers will consume programming in the future, including the impact from the predicted convergence of computers with TVs.

Lost in all this high-watt verbiage is the murky long-term picture for the syndication business. The disparity points to possible new kinks in the traditional sales model for program distributors in the next five to 10 years.

The chance of having a negative long-term impact on syndication profits failed to dissuade News Corp. and NBC Universal from unveiling plans for what they promise will be the largest Internet video-distribution network ever. Simultaneously, the networks gave advertisers a glimpse of fall development slates comprising edgier, younger comedies—along the lines of NBC's The Office—that appeal to Web users but could weaken rerun sales dollars.

The networks and studios' excitement stems from their recent success with streaming full-length episodes of series, rather than just two- or three-minute promotional “Webisodes.” By carving out additional distribution windows, they smell new ways to generate short-term profits.

Cable networks and broadcast stations represent the biggest portion of the multibillion-dollar rerun market, and syndicators think it will stay that way. One or two more narrow distribution windows, they believe, will not spell their doom.

New-media experts beg to differ. If current comedies geared toward younger viewers are allowed to gain massive exposure on the Web, in addition to their network runs, syndicators could face license-fee reductions, according to Dennis Miller, a partner in the venture capital firm Spark Capital, which has invested heavily in companies involved in the intersection of media and technology.

“I don't think it will be an overnight occurrence … [but] it's not rocket science that it is going to make a dent on the traditional sales model,” says Miller, who held high-ranking positions at Lions Gate, Sony and Turner.

Miller sees reruns of midlevel sitcom performers likely taking the biggest financial hits as more long-form content, including movies, makes its way onto the Web for on-demand viewing by 90 million unique portal users.

“If I'm a station buyer looking for young men after my news,” he says, “I am going to take an extensive look at that before entering a long-term contract.”

Syndicators say business will get more difficult—as it did when stations started paying less for sitcoms after losing time-period exclusivity to cable networks—but they aren't sweating it.

“The other media platforms will be used as a negotiating wedge by stations, but at the end of the day, off-net sitcoms are their bread and butter,” says a high-ranking exec at a major syndicator.

Miller believes that stations will continue to go after the “must-have” comedies, regardless of whether they have had online or mobile exposure, which still command better ratings than they can get with local shows.

As for the less popular C-product, which is sold on an all-barter basis, questions remain about whether there will be any “on-demand” for series that have little demand.

But buyers are concerned; they do best with broad sitcoms like Everybody Loves Raymond and Two and a Half Men. These shows appeal to older viewers who are often ignored by network developers in favor of the Web-savvy younger demo, which views less TV.

Other factors, such as socio-economic differences, are often overlooked in the debate. “We're talking about two different audiences,” says a another syndication executive. “You've got the beer-can crowd who like to watch sitcom reruns on TV. The Web has a different audience.”

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