Hollywood is facing a new kind of reality: downsizing. Sony Corp. is expected to shut down its broadcast-TV production studio, Columbia TriStar Television, within the coming weeks and focus more on cable. Also, Fox Broadcasting Co. laid off its in-house movie division, and insiders warn of more cuts at both small and large studios and networks.
The Sony shuttering brings the first real sign that there is no happy (or at least quick) Hollywood ending for the sluggish national economy and depressed national psyche.
Sony wasn't officially confirming the story last week, but insiders weren't doubting it either.
Sources say Columbia's decision to bail on prime time was motivated by several factors: rising costs, the lack of a breakout hit, no network alignment, and a change in the fin-syn rules that allow networks to take ownership in its own prime time shows.
"Back 10, 15 years ago, the company owned 100% of shows like Married…With Children
. Now, on something like King of Queens, it owns only one-third, with CBS Productions getting a third and Procter & Gamble getting another third," says a Sony executive. "In the old days, a hit like Married…With Children
could cover all of your misses for quite some time. In this world, hits no longer cover the misses."
Sony reported a $243 million net loss during the second quarter, and its stock price tumbled more than 50% this year. It is due to halt production on all new Columbia TriStar shows and is expected to eliminate up to 75 jobs at its Culver City, Calif., headquarters; dozens of writers, directors and producers with development deals may also be affected.
Word of Sony's plans to shut down its broadcast-TV production division, a studio that has produced such recent hits as Mad About You, The Nanny
and Married…With Children, caught the industry and apparently most Columbia TriStar executives by surprise.
The studio's current series are expected to stay in production: Dawson's Creek
at The WB; The Guardian, Family Law
and King of Queens
at CBS; The Tick
at Fox; and a midseason sitcom with Hank Azaria at NBC.
The move follows Sony's sale earlier this month of its ownership stake in Spanish-language network Telemundo to NBC.
Columbia TriStar is the one of the few remaining Hollywood studios that are not aligned with a major broadcast network. Rumors of a possible deal with NBC or another network have circulated throughout the industry for a few years, but a deal never materialized.
Sony is reportedly looking to focus its TV efforts in cable, where it currently co-owns The Game Show Network with Liberty Media. The company may acquire or start up cable networks: for example, a Sony Classic channel airing shows from its library and one utilizing its music division.
Sony executives are said to covet the dual revenue streams that cable offers and the more cost-effective use of library and internal components. Sony executives had no comment.
"There is a bigger, more strategic play on this, which will come out over the next several weeks," one top Sony executive said. "This has nothing to do with any outside forces or network deals. It's just kind of how everything is going to be restructured over here."
Columbia TriStar Television Distribution, Sony's in-house syndication division, has made billions of dollars for the company selling the off-network rights to shows like Mad About You
(which by itself has generated several billion dollars of revenue in syndication).
syndication unit is expected to be kept somewhat intact. The division also produces first-run shows like V.I.P.
and a number of cable series, such as Lifetime's Strong Medicine, but it is losing its source of off-network programs. Over time, that loss will hurt.
The studio currently has more than 15 shows in development at CBS, 10 at Fox and a handful at ABC, NBC, The WB and UPN. Sources say that Columbia TriStar executives are allowing the projects to proceed. If any shows are picked up, the studio will take only a passive ownership stake in them.
"We have a lot of drama projects, a handful of comedy projects with them. At this moment, we are really trying to evaluate how to best proceed," says CBS Entertainment President Nancy Tellem. "I hope they do stay in business, because my big issue is that we are losing people to do business with."
At Fox, five employees in the network's long-form programming division were let go, including Executive Vice President Marci Pool.
"It was a decision based on the economics of the situation that is in no way a reflection of the quality of work that Marci and her group did," a Fox spokesman said.