The cost-cutters' knives are sure to swing at Universal Television, but a takeover by NBC could actually lead to the rejuvenation of Universal as a producer of prime time network television.
Whereas Hollywood is celebrated for its profligate spending, Universal Network Television has long been scaling back, producing fewer and fewer prime time programs. Universal had no broadcast outlet of its own, and ABC, CBS, Fox, The WB and UPN all favor studios inside their corporate families.
So Universal has been relatively cautious about financing deficits on network series and limiting the number of pilots bet on each winter, avoiding overall output deals with smaller producers (except Law & Order
creator Dick Wolf, fortunately). Universal executives are willing to risk the most on series that can later fit on its sibling cable channel, USA Network.
All of that means that NBC parent General Electric's penchant for financial discipline could be less traumatic than at more aggressive studios. NBC already is Universal's biggest network customer, producing the network's most profitable franchise: Dick Wolf's Law & Order, Law & Order: Special Victims Unit and Law & Order: Criminal Intent. Universal also produces American Dreams for NBC's regular prime time slate and another Dick Wolf show, Crime & Punishment, for the summer.
NBC's own NBC Studios is less a producer and more a financing arm to take positions in shows bought from outsiders, so Universal Network Television could become the full-blown Hollywood studio the network has never had.
Both companies are also active in syndication, although NBC Enterprises is new in the business. The big question is who will run the combined syndication division, with most bets on NBC Enterprises' Ed Wilson, since he is already established with the acquiring company.
But Steve Rosenberg, president of Universal Domestic Television, is a well-liked and well-respected player in syndication, and sources figure NBC will want to keep him in some capacity.
Industry insiders speculate that Universal Network Television and NBC Studios eventually will be merged into a single entity, although there are precedents for keeping both.
At Viacom, for example, CBS Productions has remained separate from Paramount Television. And ABC, it's generally believed, has leaned too heavily on its Disney studio units for show and earned Nielsen heartache from doing so.
There's also speculation around how NBC and Universal Network Television will combine on the three Law & Order programs. The network and the studio were set this spring to enter negotiations on the shows' license fees, with Universal asking NBC for more than $550 million a year for all three, according to The New York Times, although that figure is unconfirmed by parties to the talks.
The talks were tabled when NBC became a bidder for Universal. Wolf is still expected to win high license fees for the shows, but now all the fees will be paid from one division of NBC to another.
The combined Law & Order franchise is expected to net NBC gross profits of nearly $330 million in 2003, according to a Morgan Stanley report, and in 2001-02 was responsible for 27% of the network's total gross profits from all its regular series. And American Dreams, entering its sophomore season, has been a minor hit for NBC on Sunday nights.
NBC produces such first-run syndication titles as The John Walsh Show, Access Hollywood, Rebecca's Garden, The Chris Matthews Show. It has newcomer Starting Over, as well as The Jane Pauley Show for 2004. Universal has its own stable of syndies, including Maury, The Jerry Springer Show, Crossing Over With John Edward, Blind Date and Fifth Wheel.