Syndication: Cash Could Be King Again - Broadcasting & Cable

Syndication: Cash Could Be King Again

Oprah's departure just one of the factors that have the syndication world optimistic
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Syndicators and station chiefs alike say they finally expect cash to return to the marketplace in 2010, just in time for the market to start scrambling over which lucky shows will win stations' Oprah time slots.

“This year, someone will finally realize that clearing all of these barter shows is catastrophic,” says one station executive. “Sometime around the tail end of summer, it will start to dawn on people that giving away half of your advertising inventory is a disaster. That will bring cash back to the market.”

Over the past year, nearly every syndicated TV show sold has gone on an all-barter basis, with distributors keeping a larger-than-usual chunk of advertising time in each show instead of demanding cash. That will have two effects on the local TV ad sales marketplace, neither of them desirable: Stations will have far less ad time to sell, and national syndicators will have far too much.

On the local level, that could drive up the price of advertising a bit, but more likely it will just mean stations have far less inventory available if and when the slumping local advertising market starts to return. Meanwhile, syndicators will be swamped with underpriced national inventory to sell.

“Both of those things add up to less of a financial commitment to new programming, both on the station and the studio side,” says Mort Marcus, co-president of Debmar-Mercury. “At the end of the day, what stations need are new investments in new programs.”

Marcus and his partner, Ira Bernstein, both believe that stations will see business pick up in 2010, with advertising money migrating to TV from newspapers and certain segments—automotive, retail and political, in particular—starting to spend again.

“As money comes back into the marketplace, the barter scenario has to leave if we're going to increase the quality and the types of shows we can produce,” says John Nogawski, president of CBS Television Distribution.

Another way the local station market might get an infusion of money is through pending retransmission consent agreements. Station groups are demanding that cable operators pay them as much as $1 per subscriber to carry their programming. While stations' affiliated networks are expected to take as much as half of that money, syndicators wonder whether any retrans cash will filter down to new-programming investments.

“I think retrans will improve the economics of TV stations, but there is a question as to what TV operators want to do with the revenue it generates,” says Ken Werner, president of Warner Bros. Domestic Television Distribution. “Some will invest in news, some will drop it to the bottom line, and some will invest in programming. What they do will be a function of that particular broadcaster's priorities and economic circumstance.

“The question is: Are broadcasters willing to invest in programming to maintain and build audiences that have been loyal to them in these dayparts? The real change comes in 2011, when all of those Oprah viewers are set free. Where do they go? Do broadcasters allow them to go to cable? If you want to build and maintain your business, you need to invest in it.”

Even if broadcasters decide to invest in original first-run programming to try to maintain viewer loyalties, they still are having a tough time competing against cable, which comes to the market with far more money to spend on expensive programs. In the off-net marketplace, no one expects broadcasters to ever again be able to afford to secure hot off-net sitcoms exclusively.

The next test of that concept will come late this spring, when Warner Bros. is expected to take CBS' hit comedy The Big Bang Theory to market. Everyone expects cable networks to offer big bucks for the show; the question is whether those bucks will be big enough to keep it off broadcast completely.

“Do stations need to make investments in their schedules? Absolutely,” says Bill Carroll, VP of programming at Katz Television Group Programming. “Still, everyone is being cautious, and they have to be. They have just lived through the worst year of their careers.”

E-mail comments topalbiniak@gmail.com, and follow her on Twitter:@PaigeA

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