Transcript: Syndication Roundtable 2008
TVWeek: Obviously the first order of business is to thank all the panelists for coming today. This is TVWeek’s ninth annual Syndication Roundtable and, in preparation every year I go back and read the previous years, and it’s always remarkable to me that each year we’ve done a really good job of identifying the business problems that are going to be on people’s minds in the next year.
Mort Marcus: What problems?
TVWeek: (Laughter) No problem here. So obviously the question on everyone’s mind this year is the economy, so I’m just going to dive straight into that. I’d just like each of you to go in a row and just say what kind of effects have you already seen in your businesses resulting from the declining economy. So, Bo?
Ms. Argentino: Actually I’m happy to say that we haven’t seen any real effects yet. Our fourth quarter was pretty good. Our upfront coming out of last year was very good and even in first quarter we expected to have cancellation options with, you know, advertisers cancel some of their inventory, and we’re still pacing a little bit ahead. However, we anticipate that that won’t last forever and so we’re doing everything we can to get ready for it.
TVWeek: And so specifically what kind of things would come to mind in terms of what might come into play?
Ms. Argentino: I think mostly it’s getting more focused on, you know, where the businesses that are supporting syndication and supporting our shows are, where we’re reading about if there are issues with domestic autos or certain categories. We’re digging to see that we maintain share and just really listening to our advertisers and making sure that we’re continuing to provide everything that they could possibly want. It’s a 52-week business so, you know, we really look forward to making sure that if we’re in a good position with them now, that they’ll come back and support us in the coming year.
TVWeek: OK. Mort.
Mr. Marcus: I have to say I’m surprised to hear that because—unless, and I don’t mean to take a shot—but unless your ratings have been so far off that you were able to make good all the upfront, because we’re not feeling that. We’re feeling that there is less revenue to be made, and particularly in programs that we didn’t sell all the way out in the upfront, because the scatter market’s very soft. I don’t do the ad sales. We farm it out and most of our ad sales is done by Twentieth Television but I can tell you that, you know, it’s not so pretty and they’re having a—you know, there is some business but they’re having a hard time and there’s not a lot of cancellations of the people that bought ads, but there’s not—there’s a very small scatter—it appears to be a very small scatter market out there. It also then—it affects the business in another way, which is that the local television stations seem to be getting hit the hardest. Maybe radio is harder, but we’re not in the radio business but similar idea, which is the local ad sales seems to be off quite a bit. You know, if autos was 40% of their business or, you know, some say 50%, some say 35%, but it’s a big number and that seems to be off about half. And then of course most categories are down. So if you take your biggest one off and then half everyone else, so the local stations are having a hard time. So I can tell you that when we go out and sell our products going forward, the local television stations are offering us less money than they normally would, even if we had a show that had three offers, which then you would almost say, well, I know we’re going to get the true, the retail price, the market price, because you have a real marketplace. All the offers are lower than they were before. So, you know, it is what it is. I mean we’re still in the market in a big way and we believe it will turn, but we see it as very soft.
Mr. Nogawski: I think for us it’s just kind of a little different business than Mort’s. You know, Mort’s more in a business that’s breaking into the business, I would say, with some newer shows. We’re sitting in a position with a little bit more of an annuity. And, you know, I wouldn’t want to sound like we’re ignoring the economy. It’s there. There’s no doubt about it. You walk through ad sales and, you know, you’ve got not a lot of phones ringing. Fortunately, we did great in the upfront and we’re able to move a lot of our—you know, through traffic, just kind of moving our business around. Eventually that’ll catch up with us, you know. So as of right now it’s just how well can you manage your traffic more than how much you’re selling. But fortunately also, ad sales only represents about 20% of my overall business. So, you know, on the other side, we’ve renewed our shows out, way out in the future, have gigantic license fees that are still going to come through our doors for quite a while and back to ad sales, you know, movie business has never been a gigantic part of our business, auto even less, you know, and so, we haven’t shown this effect. Is it going to hit us on the ad sales side eventually? Absolutely. It’s coming. Where I’m seeing it the most is with the stations. The stations are definitely feeling the pain. They’re having a lot tougher conversations. Certainly I’m glad I’m not renewing a lot of shows right now, that most of that’s locked up. You know, I’d say that anything new going out, you know, Mort’s out with a new show, we’re out with a new show—definitely a different kind of a conversation with a station right now than it was eight months ago. And it’s amazing how quickly it turned. It just all of a sudden went south.
TVWeek: Was it the October dive? Is that about the timeframe?
Mr. Nogawski: Well, you know, I think probably in the summer started sensing it coming and then, you know, as everything. I mean there’s no sector that wasn’t affected. I mean, you know, it’s a global problem, you know, and so we’re just a very small little part of the whole—you know, we’re a cog in the gigantic machine. But we as a syndication unit started really feeling it, I’d say, about—you could even go back six weeks is where I think, you know, really all of a sudden the curtain closed.
Mr. Nogawski: And again, you know, I just thank God we’re in the position we’re in. We made the right decision three years ago, four years ago, and said let’s renew our shows out—out to ’13.
Mr. Nogawski: You know, would I want to be, you know, in a market right now renewing my big franchises, you know? No. Heck, I just sold a house in Manhattan Beach for 30% less than I probably should have. But that’s, you know, like I said, it’s every sector is being affected, and for us to sit here and put a cloak on and say that we think we’re not going to be, that’s probably living in a dream world.
TVWeek: So Mort, SNTA said that syndication advertising grew in the first half.
Mr. Marcus: It’s all at the upfront. You have to deal with the fact that the scatter market isn’t there. The networks don’t feel it either, by the way. Because they sell 80% of their inventory and, not taking a shot at NBC but let’s say you’re off—let’s say you’re off 20% from what you sold at a rating, then you’re effectively sold out. So you don’t have any inventory to sell in the upfront and in the fourth quarter they can’t cancel so it’s only until the first quarter that they can cancel and they’re not experiencing huge amount of cutbacks in terms of the cancellation but there are some and ten now they’re feeling that they can’t sell the scatter. So they’re going to be off a little bit but if you only sold, you know, 50% inventory in a program or maybe 60%—because maybe you bet that it was going to go up or whatever your reasons were—you’re finding that the scatter market isn’t there. So it depends like if you’re a cable network, it depends how much inventory you sold. If you sold a lot of it, you’re in good shape. If you sold a little of it, you’re hurting.
Mr. Marcus: So the—you know, you can sit here and feel like, you know, we’re not feeling it if you sold all your money in the upfront, you’re doing fine. But if you lived in the scatter, you’re hurting. The stations live—it’s not called the scatter but the stations effectively live in the scatter market because they don’t have an upfront.
Mr. Marcus: So they operate, you know—they’re trying to sell spots for next week. Maybe I’m exaggerating by a little but not by a lot and so they are –
Mr. Nogawski: They’re selling for tomorrow.
Mr. Marcus: Yeah. Exactly. And so they’re feeling it in a big way and it’s not—and that’s why the license fees are lower. Rightly so. I mean, you know, if you were a station and your revenues are down 40% or 30% or whatever it is, and someone comes in with a new show, you’re not going to offer them the record price you’ve ever offered. You’re going to pull back and so you know it can’t just be down locally. You know it’s down nationally as well, you know.
Ms. Argentino: The other thing is scatter gets written closer into the quarter and has, with every year, you know, we’re writing scatter business closer to the beginning of the subsequent quarter, so it’s harder to read where that’s going.
TVWeek: Uh-huh. So Mitch, are there projections yet for 2009 or just based on your years in the industry, what’s your gut?
Mr. Burg: Yeah, here’s the gut. You know, you have a lot of different factors that are going on and I’m only going to deal with the national advertising side. It’s not to be myopic and say there’s not a local side and there’s not a licensing side, but it’s really not the area that we operate in. There are a couple of factors that go on. First of all, people are being very responsive to the market. And I’m talking about marketers looking at what is going on in the economy and frankly you’re seeing a lot of activity at the agencies right now revising plans and war-gaming. As they came to the syndicators and members of the SNTA, there was an increased need for flexibility and people—even as we were going through the cancellation options, we were listening to marketers and working through them. But ratings and cost are not the only factors that go through this. You’re looking to see from a marketer’s perspective how is this economy going to impact your business, how does it impact your competition, and it’s interesting. There was an article that appeared in AdWeek in May, so it even pre-dated the economic crisis, that said that television was the main driver of business. There are 40 different statistical models that were built and in every case television drove business. And I think marketers, as they are looking at their plans right now, are recognizing that. And that’s one of the reasons why you didn’t see the pullback coming through the first quarter.
Mr. Marcus: Do you think—are they pulling back more in their new media buys, do you think?
Mr. Burg: That’s certainly what’s being reported.
Mr. Marcus: I mean because realistically, even if somebody uses the Internet they’ll use it—the fact is television is more impactful, but—and you just had to feel that all the time and that’s obviously, you hope, is that ultimately the ads come back because it’s more effective but—except maybe in some instances where they could be so targeted and perfect. But I don’t know if that’s what’s happening.
Mr. Burg: Yeah. You’ll see businesses that are declining. You did see a slowing in Internet. You mentioned what’s –
Mr. Marcus: More than television?
Mr. Burg: More than television. You see what was happening in radio, the print business is frankly in disarray right now, and people are not experimenting as they would have before. So when you’re reading all the articles, what you’ll see is, hey, I would like to get some experience in this area. Right now, as a brand manager said to me, I’m not looking to do branding, I’m looking to sell something. And when you’re looking to sell something, that’s where you turn to television. The second factor of that—
Mr. Marcus: That normally—and I don’t mean to interrupt you—but that normally is where the local guy makes it. In other words, the local guy really lives in a world of Joe’s Hardware buys an ad and Joe Consumer walks in and buys a screwdriver, and that’s the true economy. And that’s where—and if you try to sell something, you buy local television, you know. Cal Worthington buys an ad and people go to his store to buy.
Mr. Nogawski: And he eats a bug.
Mr. Marcus: And he eats a bug. But that’s what’s been soft. So I mean –
Mr. Burg: Yeah.
Mr. Marcus: But I think you’re right. I think people are saying, I want to sell something.
Mr. Burg: Listen, at the end of the day, having worked for many years on the agency side and working with restaurant accounts, we knew if we had the right offer and we put in this amount of media and it was executed flawlessly, the managers would know how many burger patties to defrost, how many buns to have ready, because they’re losing a lot of money if they don’t sell that product. So we know that television works and that’s one of the reasons why I think we didn’t see the erosion that we might have seen earlier. Second factor that’s going on right now deals with DVRs. The good news for us in the syndication business is DVRs don’t impact us. You know, if you look at our business, and we’ve talked about this before –
Even for—Mort, I hate to disagree with you but even for four years where we’ve been tracking this, and if you go back and look at TiVo research and look at the current Nielsen research, what you’ll see is across syndication, about 87% of our audience is watching us live, so they can’t electronically skip commercials. For the networks and looking at prime time, only 50% of the programs are watched live and it’s even worse for dramas, which represent 55% of the prime-time schedule. When you look at—even in replay, remember only 14% are replaying—are delaying their viewership, only 75% of the commercials are being viewed. For networks they’re losing about half. So that’s a 25% displacement and when we talk about DVR levels, let’s remember for adults 18 to 49, which is the primary unit that we’re using in terms of advertising, DVR penetration is about 20% above the nationally reported levels. So I think now that we’re in this economic situation, everybody’s taking a step back. I have to tell you, one of the reasons why we were up last year is because people did take the step back because of the strike. Now they’re taking a step back because of the economy, and when they look at what’s going on economically, what they’ll say for themselves is, hey, prime time can—there was a report that just came out this morning that the total adult 18 to 49 cume rating for the five networks was a 13. “Dallas” used to do a 20, right? That’s fragmentation. All right? So when they look to see who’s delivering real ratings, we’re delivering them. We have on Friday’s—and you talk about retail—we have 10 out of the top 10 shows against adults 18 to 34. We have seven of the top 10 shows against adults 18 to 49 and we have at least three, sometimes six, of the top 10 shows every day of the week. So real ratings, DVR-proof, shorter commercial breaks that generate higher recall—those are all compelling reasons—and never mind advantageous pricing—those are all reasons why syndication, as people relook at their mix, even if the spending is down, we should be OK.
TVWeek: So your gut up, flat or down?
Mr. Burg: My gut is we don’t know how much product will be out there, but certainly I think within whatever’s there, our share will increase.
TVWeek: OK. Now, Jim, as a producer, are you seeing anything come through your experience in the last few months that changes your life in any way or through any of your other pursuits?
Mr. Paratore: Just whenever there is less money, it trickles down eventually to the production, you know, so I think in terms of shows that are on the margin, you know, those are conversations that are being had and I think as you look to launching new shows, is the marketplace going to be stepping up and paying for them to get them launched? I think that’s a question that still has to be answered.
TVWeek: Uh-huh. So everyone looking at their next year’s budget, in order to maintain margins, what do you post the likelihood of cost cuts at your company or in your division at? How likely is it that you’re actually going to be confronted with a smaller budget than you had last year?
Ms. Argentino: Very likely. Can I have a choice of, you know, one to five? Very likely.
Ms. Argentino: And we’re constantly looking at, you know, cost savings, how to generate more revenue, how to bring more value to advertisers.
TVWeek: Uh-huh. And in your operation, what is always the first thing to be cut?
Ms. Argentino: That’s going to be a new thing to look toward. I mean, you know, really production costs, where we can cut without compromising the value of the show, is always looked at. You know, that’s not really my area.
Ms. Argentino: My area is really just to sell and drive revenue and that’s where my focus is.
TVWeek: Right. Mort, what about you?
Mr. Marcus: You know, as a smaller company growing really fast, we’re sort of understaffed, honestly. What happens is, having worked at Disney and other large companies, over time, even if it doesn’t feel that way, you start accumulating bodies and you start to—you get a large staff and even though everyone is busy, and you feel like you couldn’t possibly lose anybody, the reality is you could. I think if everybody really thought about it, they could. And when you start from scratch, what happens is that you literally have nobody and so you really only add people as you actually need a function to be done, because you’re coming at it from a cleaner slate. We’re generating so much revenue for the amount of bodies we have that it’s unrealistic for us to actually cut, and the bummer is that revenue’s going to be down—it’s going to be off some what we expected—but I don’t think we can save money by cutting bodies because we’re busy enough that we actually need every single function that’s happening. I don’t think we could operate our business at the level that it’s going in terms of activity, not in terms of revenue, with less people. We might actually even add one or two but we’re trying to be more careful maybe in marketing where we’ve been—you’ve seen we’ve been pretty aggressive in that stuff. We might cut back a little there but other than that, you know, even—again, even when we were small we don’t even really cut back on T&E because we don’t have that many people driving it, so if you say to somebody you may cut 20%, you know, we’re saving $1,000. It doesn’t mean anything. So for us it’s different I think than what these guys have to face.
TVWeek: Right. John, you’re the perfect example of the, you know, quite the opposite.
Mr. Nogawski: We’re bloated. (laughter)
Mr. Marcus: I was there, too. I get it.
TVWeek: I was going to say established and, you know, large.
Mr. Nogawski: I think it actually for us happened at the right time. You know, we put a lot of companies into one company, you know. If you look back over just an eight-year period of time, you know, Viacom and Paramount came together. That was two syndication companies that became one. Rysher became part of our company. Knock that out. Worldvision became part of our company. Knock that out. And then the big merger came along with King World and CBS, and so we’ve been constantly forced to basically have to bring it back down to one company again. It just happened every single time and, you know, I look at the wave of amount of people that have, you know, kind of gone to the wayside, you know, not just in a people standpoint but in just overall infrastructure. And everything else that came along with it, it’s been, you know, a pretty voluminous task over the last—it’s probably 10 years. Do I think that you can always find something when you’re our size that you could eliminate? Absolutely. But it’s not just headcount, you know. I mean we’re dealing with it with offices right now. Where we had bodies at, that were always there, they’ve been there for—in the King World sense for the entire time that the company was in business, and we just don’t need it any more. You know, we don’t need an office in New Jersey. And so, you know, those things are happening which really ends up, you know, being major moves for our company, you know, in downsizing and making that part more manageable. Overhead as well as fixed costs that are just being eliminated. On the production side, you know, look, the last thing we want to do is produce a show that we aren’t proud of. And so, you know, to just go making huge wide cuts across our production, you know, you try and eliminate, but, to Mort’s point, the longer any show’s on, the fatter it always gets. And so you’re almost easier when you’re first launching a show to be thin, and you’ve got to look at your more established shows as the place where there’s probably some fat to be cut, but the last thing we want to do is go to down to the bone and hurt it. Because then the ratings stink and we hurt Bo’s business.
Mr. Paratore: Especially if you believe that in a reasonable time things return, then you could get—you can gain market share by being more aggressive.
Mr. Nogawski: Right. It’s about efficiency, I think, is more what we are looking for. If we think we can zero-base our business and find the place that we can make a cut without sacrificing how efficient we are, or how good something either looks on the air or how well we represent ourselves in the market, then we’re making the move. That’s what we’re doing.
TVWeek: Not to put you on the spot. Mort, earlier I think you said—how many people do you have? About 17 or so?
Mr. Marcus: I think so.
TVWeek: So just for the fun of the comparison, John, do you happen to know off the top of your head what the rough number in your shop is?
Mr. Nogawski: You know, I mean, if you’re talking across all the shows and, you know, I mean, the staffs are huge. I mean we have probably 1,100 people that, you know, when you get to—but I also produce “Entertainment Tonight,” “The Insider”…
Mr. Marcus: How much revenue?
Mr. Nogawski: Close to $3 billion a year.
Mr. Marcus: Wow.
Mr. Nogawski: You know, so—and that’s a year. It’s not projected out over a period of time, so it’s monstrous.
Mr. Nogawski: Now we’re a profitable organization. There’s no doubt about it. It’s a big business. And, you know, so again, being penny-wise and pound-foolish, you know, you’ve got to look at everything I think maybe with a little bit different set of glasses but they’re pretty similar these days.
TVWeek: Right. And Jim, you’re working on two relatively new shows with “TMZ” and “The Bonnie Hunt Show,” so are you in the situation where we started recently so we’re not too fat yet anyway in terms of staffing?
Mr. Paratore: Yeah. I think, you know, with “TMZ,” because it started as a dot.com too, that was sort of ingrained into the culture, you know, when we started it up to be a little less traditional and a little leaner and meaner, you know, in the startup. But I think, you know, it’s all built, you know, around one infrastructure so I think that has maintained itself. I mean, still, you know, the television show is an expensive show to produce five days a week so it has it but I think, you know, overall it went a little less. Bonnie, it’s a startup show. It’s reasonable on budget, you know, compared to what those kind of shows would normally be in a startup situation. You know, clearly in success things get added onto, but in today’s market, you know, everybody knows what we’re dealing with and I think producing shows for the price in the marketplace is going to become a bigger issue. I mean, John’s got, you know, a lot of hit shows that are out there. Cash license fees renewed for a long time. You know, the question will be at the end of that cycle, you know, when those costs are here, what does the next cycle of those license fees look like and can you sustain that level, you know, in that new reality. I think that’s, you know—some companies will face that sooner than others but I think that’s the shakeout that occurs on the production side in the near term.
Mr. Nogawski: A crazy thing that I was thinking as Jim was saying that, because you face it everyday as the three of us do the most here, let’s say. Is we—three, four years ago, five years ago, I remember [Cox Television President] Andy Fisher having a conversation, who is now retiring, but his conversation was daytime is fungible and, you know, whatever show is here today, if I end up flipping it out and just putting another show in. I remember when he said it I thought to myself, that’s the end of our business as we know it, you know, because that is the only vestige, you know, of a place that you can launch a show anymore because we’ve filled early fringe, you know, we’ve locked it up between “Dr. Phil,” “Oprah,” “Judge Judy,” “Ellen,” you know, I mean all the shows that have taken on the early-fringe berth, it’s gone. And so you’re down to the daytime time period. Now you add on the economic issues, well, we’re at a point where we can’t afford to produce a show and the stations have kind of almost taken a position of, hey, I got the hammer now, and yet we could still produce a show at a reasonable price. But they even want it to be lower. That’s where I see this business going is it’s going to be now one that is, yeah, I know they’re making lots of money and we can charge less money, but I get the impression they’re even going to take it a step further and they’re going to want to do it for nothing and it’s going to put us all out of business if they don’t kind of just say, you know what? What should I really be trying to accomplish? You still need shows.
Mr. Marcus: I look at it a little bit different. I think that one of the problems that we have in the market is these really long-term deals. Now I mean, again, if you have “Oprah,” you know, as your station you want to lock it up as long as you can get it but when you start to be the No. 3 station, I just never understood why a station would opt for a long-term deal to guarantee that you’re No. 3 or 4. You know, why do that? The Hollywood community—
Mr. Burg: They don’t have long-term deals if they’re No. 3 or No. 4.
Mr. Marcus: Oh, yes they do. And the time periods that you’re now competing for in the launch are challenged time periods, you know, on challenged stations where you’re not going to get the money coming out. So it’s going to take more time, which means more deficits, and more marketing money to try and build some kind of success in those time –
Mr. Nogawski: What would you put in there if you didn’t have those shows?
Mr. Marcus: Well, here’s the thing. If the marketplace was on—look, if you’re selling a show to a network, there are no long-term commitments. Zero. I don’t care if it’s the biggest show you ever have, the network controls the option for the next year. No matter what. In syndication, these deals, what happens is is that it’s like you said, it’s locked, but if it wasn’t locked, if it was yearly deals—and I think we’re going to end up in those situations—if it was yearly deals, then the Hollywood community, which would desperately love to do things in daytime and early fringe and 5 to 8 o’clock and all these other day parts, but doesn’t come to the table because, for example, in fall ’08, not counting court shows—which I don’t mean to knock them but sort of fungible with regards to one goes out, one comes in—four shows were launched. Four shows were launched. It was [“The] Bonnie [Hunt Show”], it was “Deal or No Deal,” “Trivial Pursuit” and “The Doctors,” which by the way you guys have done a great job building that, I must say. But, so four shows. So that’s not a marketplace. On the four networks there are like 50 shows launched. Now most shows fail and most shows fail in our business, as well. If there were 20 shows that were launched, Hollywood would come racing to the table. You don’t think—you don’t think the creative community wants a piece—want a chance to do “Dr. Phil”?
Mr. Nogawski: But you don’t just want to be in a situation to launch more shows, you want to launch hits.
Ms. Argentino: Yes.
Mr. Marcus: Of course. Exactly. But the only chance you can get ahead is to take more at-bats.
Mr. Nogawski: You’re professing the exact problem the industry has.
Mr. Marcus: No.
Mr. Nogawski: Dumping shows.
Mr. Marcus: No.
Mr. Nogawski: Just put them on, dump ’em. Put ’em on, dump ’em. Put ’em on, dump ’em.
Mr. Marcus: Where has there been more rating erosion? Prime time. Daytime. Come on, without—
Mr. Nogawski: There you go. Exactly my point.
Mr. Marcus: There’s been more rating erosion in daytime.
Mr. Nogawski: Exactly. What happens in daytime…
Mr. Marcus: Because it’s the same show for 20 years.
Mr. Nogawski: No, it isn’t.
Mr. Marcus: It isn’t?
Mr. Nogawski: Daytime is constantly changing.
Mr. Marcus: John, it’s four shows.
Mr. Nogawski: It’s constantly being done.
Mr. Marcus: Four shows.
Mr. Nogawski: We’re not talking early fringe.
Mr. Marcus: Four shows.
Mr. Nogawski: The fringe hasn’t changed. And by the way, I wouldn’t want to change Oprah. I wouldn’t want to change Phil. I wouldn’t want to…
Mr. Marcus: You wouldn’t want to change Phil?
Mr. Nogawski: I wouldn’t.
Mr. Marcus: You like those ratings?
Mr. Nogawski: Hey, you know what? “Dr. Phil” is still a top-rated television show.
Mr. Marcus: But it’s off so—I mean, I’m not trying to pick on Phil. It’s off so much. Come on.
Mr. Nogawski: Well, what would you replace it with? What’s better?
Mr. Marcus: Well, you have to have a marketplace. A creative community needs a marketplace.
TVWeek: So Mort, what you’re getting at is that long-term contracts slow down the market and impede new shows.
Mr. Marcus: I personally believe that in order to find a hit you need more at-bats. And the network business, the cable business, all the other businesses that we’re in take more at-bats. The movie business. If any studio only made four movies, they’d stop making it because their chances of success would be too low. It’s too big of a risk. But if there weren’t long-term deals, there’d be room to put ’em. And so there’d be more people trying, more bats, more shows in the marketplace, and you might have the same percentage of success or failure but the marketplace would come to try because they’d have a chance.
Mr. Paratore: So what’s your point? Do you think they should control long-term deals? I mean it’s a buyers’ prerogative—
Mr. Marcus: I understand the marketplace. Someone can choose to try to sell for five years and the buyer can take it for five years. But I think we’re heading into a marketplace where that’s not necessarily paying out the way they want.
TVWeek: So let me ask a question with—Bo, do you have …
Ms. Argentino: Well, I was just going to say that I think the model right now is to ensure that, in success if you have a show that’s doing a decent rating and driving demos, that you’re either breaking even at the beginning or making money and not at a deficit. I think if too many shows are being sampled and we’re not giving them time, you know. Some of our shows have taken the quarter, they’ve built over the quarter, but if you’re producing too many and throwing them up against the wall then I think we get impatient and we don’t see success quickly enough and, you know, we’re giving up.
Mr. Marcus: Do you think the syndication model is the best model? Launching four shows in an entire business?
Mr. Burg: What’s wrong with launching four shows if two of them—let me just—if two of them—because it’s not about the Hollywood community. It’s about what’s driving viewership and where you’re making money. If you have two shows this year in “Deal or No Deal” or “The Doctors” that are off to a strong start and building, out of four, that’s a pretty good success.
Mr. Marcus: But it doesn’t always happen.
Mr. Burg: But now if you look at what’s going on in network prime time, 40% of the new shows in the fall season have already been canceled. If you want to go back over the years, because we’re talking about strong franchises that generate a lot of revenue. All right? Over the last years: “Ellen,” “Phil,” “Insider,” “TMZ,” I’m sure I’m missing some.
Mr. Nogawski: “Rachael Ray.”
Mr. Burg: “Rachael Ray.”
Mr. Burg: I mean we’ve launched a strong—and from a viewer’s perspective what they’re—and I think hopefully you’re hoping that, you know, some of the shows that you’re going to bring out will get this. From a viewer’s perspective—and this is what the E score research shows—the people really like our hosts, they trust them, they’re influenced by what they say. You certainly saw that in this election. And when advertisers are looking for that type of response, they’re not sitting there and saying, “You know, I wish it was 20 shows.” What they’re looking and saying is, “You know what? That’s the show that I want.”
Mr. Marcus: I’m not saying advertisers are looking for 20 shows. I’m saying that in order to find—in order to find the best shows, in order to find a dynamic—to have a dynamic marketplace, in order to have Hollywood come to the table is about Hollywood. That’s who’s bringing “Deal or No Deal.” That’s who’s bringing “The Doctors.” That is Hollywood. So in order to have a dynamic marketplace, you need—look, if you go to the agencies like—there’s so few people that even pay attention to syndication. They don’t even pay attention.
Mr. Burg: That’s not true.
Mr. Marcus: I’m not talking about advertisers. I’m not talking about advertisers. I’m talking about the Hollywood community. They don’t pay attention. And the reason they don’t pay attention is because they don’t think they can launch a show. They think it’s too small and then once in a while something breaks out—of course, over time that happens—but if you tried 15 tries or 20 tries, you’d have a more dynamic marketplace. You’d have higher ratings. You’d have more sampling going on and you would not lose—right now you’re losing about (Inaudible, everyone speaking) cable shows on cable.
UNKNOWN: Well, isn’t that more a function of consolidation?
UNKNOWN: I mean isn’t that really what …
TVWeek: Let’s move the conversation …
UNKNOWN: Consolidation is really what jams that up.
UNKNOWN: You mean the vertical integration of the companies?
UNKNOWN: Yeah. Or just the sheer size. I mean when you have fewer …
UNKNOWN: Fewer buyers and sellers.
Mr. Nogawski: I don’t know, guys. I don’t know of anybody telling me they want to get rid of “Judge Judy.” I don’t have anybody telling me they want to get rid of Oprah Winfrey.
Ms. Argentino: Yeah, you can’t argue with success.
Mr. Nogawski: I don’t have anybody telling me they want to get rid of “Dr. Phil.” No matter what you say, they still are doing really well with those shows. And when you compare it to the next level of show down, there’s no comparison. I mean, “Judge Judy” versus almost any other court show in the business—I mean last night she had a 7.1 rating, you know, across the metered markets. It’s like—you’re not leaving that television show. So I look at it as—
Mr. Marcus: That’s great. I’m not saying you should.
Mr. Nogawski: I look at it as that’s where the early fringe is packed. OK? You’re not taking “Entertainment Tonight” off the air, you know. “Entertainment Tonight’s” going to be on for 25 more years.
Mr. Marcus: And that’s healthy?
Mr. Nogawski: I think it’s real healthy and you know what? There isn’t a station out there that doesn’t want “Entertainment Tonight” that has “Entertainment Tonight.” That’s why they renew it out as far as they do. That’s why they get the buys they do. That’s why the adjacent (inaudible) is as strong as it is.
Mr. Marcus: And the reason there’s no—I mean, “TMZ’s” done a great job of trying to get in there but the reason that there’s no new show to beat off “Entertainment Tonight” is because they control the market so strongly, they can renew it out for so many years that it’s impossible to—because it’s locked it’s impossible to –
Mr. Nogawski: What’s wrong with that?
Mr. Marcus: Because the marketplace …
TVWeek: I think we’ve covered those arguments really well. Let’s move on. John, let’s move back to something that you had mentioned, which is, you know, stations are having a hard time getting product—or affording product. Right? And there’s pressure from that side. But can you harmonize that with what you said about stations not wanting to pay more? It’s almost as if you were indicating that, yeah, they’re having a really hard time but they’re also trying to play hardball. So can you describe the dynamic between the stations…
Mr. Nogawski: There’s only so many places a station right now can make a difference on what their overall costs are. OK. They can do the same thing we all talked about here, which is reduce their own headcounts. They can try and produce their news maybe a little less expensively. Maybe get rid of the high-priced anchor. Those are the things that they can control on that side.
And then the other side is on their syndication costs. And where they have a show that’s already renewed out, you know, for a longer period of time, which is what Mort would like to get rid of, they can’t fix that right now. That’s something that’s also locked in. So where they look at it, where they can take their pound of flesh, is in daytime, which is the place that they have a show that maybe isn’t locked up as long as it is, they aren’t going to give it as long a chance as they should to grow, which is—philosophically is where I have the problem with the business is we—when you have shorter deals they just become fungible and they just blow them out. They don’t give them time to grow and to really, you know, harvest at least a couple years. I think you really need it.
I look at any of the shows we talked about here: “Ellen,” “Rachael,” “The Doctors,” it’s going to be “Deal or No Deal”—those shows need time to grow. “Ellen’s” the show that it is today because it was given time. “Rachael’s” a show that has grown into itself. “Doctors” is starting to show that it’s growing into itself. But if there was a one-year deal on those shows …
Mr. Marcus: They all would’ve made it because you know “Doctors” is good.
Mr. Nogawski: If it was a one-year deal and you got another show out there like “Dr. Oz” coming after it, it could end up being that they would say, you know what, I’ll just try that show instead. It just is kind of how the philosophy is. And then, back to where you started the point, where they would have maybe paid $20,000 a week for a show, now they want to pay $5,000. Well, that’s where our business gets fractured, because we can only produce a show for what we can produce it for. At some point it has to come down to the dollars and cents and that the biggest fixed cost you have is your production cost. So if we’re going to end up producing a show at somewhat the same levels and maybe we can, you know, try and edge out a little bit, but if they’ve taken the license fee and cut it into 25% of what they once paid, then we can’t afford to produce the show. They’re putting themselves into a situation we can’t afford to be in the business. We might as well just say, fine, take another run on my show for free.
TVWeek: Do you feel though that the overall weakness of the station business and the direction that that’s heading makes the situation you described inevitable? And if so, how does the marketplace eventually hit a tipping point and evolve to accommodate that lower revenue base that they’re going to have?
Mr. Nogawski: Well, that’s kind of where I was going is that we’re either going to be forced out of business in producing a program. You know, Mort, I’m sure you’re hitting it right now with “Wendy [Williams]” going wide. It’s got to be a whole lot more difficult launching that program than it would have been a year ago. And she’s good at what she does.
Mr. Marcus: Even six months—even six months ago.
Mr. Nogawski: OK. So here you have somebody who’s actually good at doing her show, she’s proven that she can do the job, yet it’s probably a struggle going market to market. I think, you know, we’re feeling it at Sony. You know we’re feeling it with every show that we’re going out with. You know you run into a different kind of set of circumstances and the easy solution is to say, OK, give up. Don’t produce another show and just go with another run of the court shows that you already have, another run of the talk show that you already have, another run of the entertainment shows that you have, and you can just do it for free. Well, we can never win that argument, you know. If you’re going to run “ET” and “The Insider” again, the second run of it at 9 o’clock in the morning, let’s say, or “Access Hollywood” and “Extra,” you know, on the NBC stations, let’s say, I can’t win the battle of free versus a license fee. I’m going to lose that revenue-analysis battle and right now the stations are more looking at their bottom line and the decisions are coming from how can I cut costs. And it’s an easier one to cut costs to just take a show that you already have, do another play of it, do it for free, not launch a new show in syndication. Our bigger enemy in syndication is that, than it is the fact that you might have a show that’s renewed for four years on a station. That’s the death of our business.
TVWeek: Let’s talk about NATPE. Obviously NATPE has evolved a lot since the heyday and consolidation has affected that market a lot. What would you like to see changed at NATPE that would make it more useful for you? Is there anything about the structure of the show or the content that you think to yourself, this would be an improvement. This would make it more useful to me.
Ms. Argentino: Where we get the most value out of NATPE is when we bring buyers, agencies, clients, talent, producers together for a conversation about the future of a program or an advertiser’s relationship with that program, or an agency’s relationship with that program. So, you know, we made the commitment to NATPE for this year. We look forward to getting as much done as we can. I mean it certainly is—has been challenged. It’s probably, you know, an indicator of the overall business in terms of, you know, being scaled back but we look forward to having the focused attention on syndication because for years that was really what NATPE provided us.
TVWeek: And in terms of a format and content though, structurally basically OK?
Ms. Argentino: Well, you know, I’m not sure what the answer is. I know that, you know, we have a vested interest in being there and getting the groups together, whether it has to take place in Las Vegas, in a big venue or not, because we still do get great conversations done. We did manage to do some creative thinking and some creative meeting last year for “Deal or No Deal.” You know, it kind of depends on the product and who’s in attendance.
Mr. Marcus: You know you’ve got a—I really believe—and my business is a little different than theirs but I really believe that the industry needs a meet really badly. You can’t just not ever talk. I mean, if you go to Mip, if you go to the international meets, you see the value of it. Ideas come up. Relationships are made. It has to happen. The problem that we have, I think, is because of all the vertical integration that has taken place over the last whatever 10, 12 years, the consolidation of the station groups, you know, there’s five or six companies that control the entire business. So therefore there’s not a marketplace like there used to be. So it used to be you’d sit there at NATPE and, you know, every city would come in and there was independent buyers. Whether they be affiliates or independents—I don’t mean independent stations, independent owners. Now there’s not. So one guy can come and represent 25 cities. So that’s why there’s not a dynamic marketplace at NATPE.
TVWeek: So you need a structure for…
Mr. Marcus: I don’t know. I don’t know. I’m with Bo. I don’t know the answer, but I feel really strongly that there needs to be a meet of some kind that people get together and it’s real and people walk around and there’s a—I don’t even know if you have to sell anything but there has to be something and I go to Mip twice a year and, man, that’s such a dynamic market. It’s unbelievable. And that’s because of course it’s different countries around the world so there is no vertically integrated company. Everyone’s an independent and if you went there—and I don’t know if anybody on the panel goes—your eyes would open—you wouldn’t even believe what takes place. And you’d—and I sit there and I see Rick Feldman when I’m there and he just—you know, I feel bad for him because he sees how strong the market is and how dynamic it is and it’s incredible and you get that buzz when you walk around and you feel the market and you learn what’s happening internationally and worldwide and you take that back and it really matters. The problem we have is, you know, there’s just not that dynamic, it doesn’t exist, because of the vertical integration.
Ms. Argentino: I mean our businesses have matured at NATPE. There are other businesses still—international, cable, you know—there are other businesses that have not completely gotten through with what they need from NATPE, so it’s still a viable forum for a lot of different platforms. I think just with consolidation on both sides of our business, on the selling side, on the buying side, you know, we’ve reached a stage, I think, for NATPE where it’s not as compelling for this sector of the business.
TVWeek: Jim, how about you? I mean you’re obviously a veteran in NATPE. Any structured form that you say, gosh, it would be more useful—
Mr. Paratore: Mort, you know, hit the nail on the head. You just have so few people controlling the whole business that whether or not you need that extensive, you know, of a meeting is the question. It’s hard to justify on the bottom line when you look at your, you know—if you’re running a distribution company, you know, what are you paying and what are you getting out of it. But I think everyone emotionally agrees that it does feel like there needs to be some kind of a meeting but it’s not a marketplace anymore. You’re not writing business there.
TVWeek: So when you talk about bottom line, obviously that brings up the discussion of suite versus floor. Whose companies are suites and whose are floor this year?
UNKNOWN: We’re on the floor.
Ms. Argentino: We’re on the floor.
Mr. Burg: Walking the floor (laughter).
TVWeek: Mitch is roaming. …
OK. Why don’t we start talking about some of the more kind of specific things going on in the market right now. John, you know Mr. Zaslav made a lot of headlines last week, and as I was editing that story, I said to myself, is he talking out of school or is he just saying something that had been communicated to him that wasn’t supposed to go public? What’s your read on that situation and what’s the latest you hear from Oprah or Harpo?
Mr. Nogawski: I can’t speak for David. I think Harpo made the comment that I think spoke volumes that it was obviously not on the script with what she was saying. You know from our perspective, we’re her distributor and we’re on the air through, you know, the 2010-11 season, so we still have practically three years left to go. Her show is still vital. It still is relevant and, you know, to sit here and say that we would be unhappy if Oprah said she’s going to call it a day after 10/11 is an understatement. Obviously we would be—she—the entire industry will suffer from her going away. No matter what anyone feels as far as length of deals or whatever, she still—when you think of syndication, and I’m sure in any of your conversations and if you ask any viewer or any focus group where’s the first place they turn to in daytime, the first thing they do if they’re a talk show viewer they’d look and see what is Oprah doing that day. And if they like what she’s doing, they’re staying. If they don’t, they’ll then look, you know, to the next person that they’re going to look to see what maybe services their need. So from where—whatever he was, you know, where he was going doesn’t really affect me, you know. We’re sitting here just doing what we do. We’re trying to, you know, keep her show out in front of everybody, trying and keep the ratings up. She’s doing, you know, still a positive television show that, you know, seems to still be resonating with the audience and if, you know, as we get closer to her end date, I would do anything to persuade her to want to continue to be in business with us. And if she chooses not to be, that’s her decision obviously. You know, it would just be a sad day in Mudville.
TVWeek: What are the universal possibilities, you know, other than a strip? Are there other forms in which she could stay in business with you? What might those look like?
Mr. Nogawski: You know, I mean obviously what she does for us today is a talk show and, you know, that’s what we’re used to being in business with her in but, you know, I’d rather have a little Oprah than no Oprah. And if that’s what it meant, was a way that we could find something that still provided her the forum to be able to, you know, get what it is that she’d like to accomplish out in our little small part of the business, then great. We would do that. Right now I’m just focusing on what we do day to day, you know. We have a daily talk show that still does great ratings and I don’t know. Three years out seems like a long time from now to have to make that decision.
TVWeek: Right. Mitch, you have a good overview of the market. Oprah, you know, God forbid, leaves syndication for good in ’11, is—if the viewer attrition that might occur there, is that leaving syndication altogether?
Mr. Burg: No. I think what happens is it will impact the “Oprah” station specifically and everybody’s going to be competing for the viewership that’s there. The question becomes why is that show so important? It’s so important because it’s driving audience into the news. Our access shows are so important because they’re driving—it’s driving audience into prime time. And importantly, you know, we haven’t talked about off-net at all, but you look, you know—if we’re having this conversation and you said you look back at the panels from a couple of years ago, the question that we were talking about was what happens—is the off-net sitcom dead. And if you look at last year, that’s absolutely not true because “Family Guy” came out and it’s doing great. In fact there were periods where “Family Guy” in syndication out-rates “Family Guy” on the network. “Two and a Half Men” from Warner Bros., terrific job. “George Lopez,” terrific job. And I think what happens is new programs will come out, audiences will shift, but people still want to be entertained, especially in tough economic times, and that’s what we deliver to them on a daily basis.
TVWeek: Right. Jim, you recently had news of an extension on “TMZ.” Any changes coming in the programming? Would you like to share any plans in terms of how you might be tweaking the show?
Mr. Paratore: No. Nothing specifically. It’s all of those shows, they’re constantly evolving, but nothing radical. It’s evolutionary, not revolutionary in that case.
TVWeek: Uh-huh. And how has the relationship between the on-air product and the digital product evolved over time? And is that going to kind of remain the same essentially?
Mr. Paratore: I think it is. I think what we tried to do is to uncomplicate it when we launched the TV show and rather than try and think too synergistically about it was just to say, how do we make a TV show that has a place in the marketplace that viewers want to watch. And if we get that right, over time we’ll figure out how the two work together and I think that’s what we have done, you know, is to really concentrate on making the show first and then figuring out how the two work together.
TVWeek: Uh-huh. And what’s the relationship in terms of kind of the business functions of the TV product versus the Web product? Is it a classic case of, you know, dollars in television and pennies on the Web? Is the Web element viewed as a revenue driver or just a programming augmentation?
Mr. Paratore: No, the Web was a successful and profitable business before we launched the TV show and it continues to be.
TVWeek: Uh-huh. So Bo, what about digital sales? How is the syndication marketplace changing in that regard?
Ms. Argentino: Well, our example in “Access Hollywood” is just the opposite. We had the show first and then launched the Web site. We sell them hand-in-hand. They don’t always get sold together, but generally speaking they’re presented together. There is a demand for both. You know the show can only be on once a day or sometimes twice, but the Web site is constantly breaking news and providing updated stories, updated videos. We use it actually to provide content for our local stations. So the model for digital sales is, you know, different by program because the Web sites have different value by program but I—you know, we work closely with our digital sales team at NBCU Digital Sales. We also have an embed. We have a person who is on our staff helping to drive revenue and it’s absolutely a revenue-generating business. There’s no peeling off. There’s no, you know, added value.
TVWeek: So do you—if you had to characterize kind of the digital sales business, is it an infant, a toddler, an adolescent?
Ms. Argentino: I guess I’d put it as a toddler. A mature toddler. It’s—
Mr. Marcus: Do you allow your local affiliates to use “Access Hollywood” on their Web site?
Ms. Argentino: Yeah. I mean it depends.
Mr. Marcus: Can they sell it, too?
Ms. Argentino: It depends on, you know—we provide them with original content, breaking stories and video that’s unique for their use. But we also have content on our site that lives there. We have—in the case of “Deal or No Deal,” we had—we provided the stations with a contest and a $10,000 winner on a weekly basis which kind of mirrors the Lucky Case Game in prime time, but that was something that we gave to the stations for their use and the viewer enters through the station Web site. So, again, it differs by show. We have interest from all different types of advertisers, in every category, to try and do things online. In some cases they are still experimenting, because while online is very much the buzz and, you know, every year gets a little—I think everybody gets a little bit further into it, it still doesn’t reach, you know, what a broadcast television show can reach.
TVWeek: Sure. How about something that’s obviously grown phenomenally in the prime-time broadcast world, integration deals. How are you all working integration into your businesses?
Ms. Argentino: Well, integration is—first of all, it’s answering a consumer’s need, because our clients are looking to integrate their products into the shows, whether it’s to offset DVR use or just get a better connection with the viewing audience. So wherever we have an opportunity to do that, we’re doing it. In the case of “Access Hollywood,” we do sponsorships and that’s where online can really help because it extends the platform and allows you to do something on-air, online, and there’s a greater engagement when they’re seeing something on-air and online. Integrations for us are tremendous because in a time when it’s costing more and more to produce programs, that helps us frankly with some of our production costs and if we can do integrations that are, you know—that are organic to the show and make sense for the show and bring value to the advertiser, then it’s a win for everybody.
TVWeek: Who’s starting these conversations?
Ms. Argentino: They come out in all different ways whether it’s in RFP, through the marketing group. We have, you know—we’re going to our clients all the time, directly to the clients, to the agencies, to have those conversations. Sometimes it’s about us having something we want to sell. If we have an opportunity, for example, on “Access Hollywood,” we were going to Cannes, we wanted to go to Sundance, we went to the Super Bowl, we’ve covered Beijing. We have an opportunity to sell. So sometimes that works for a client, but more often than not we’re responding to their creative request.
TVWeek: Jim, integration on “TMZ”? Anything on those online sponsored segments?
Mr. Paratore: We haven’t found a lot that we felt really were organic enough to the show. I mean there’s been some attempts at it but I would say that show has a very distinctive style and voice that makes it a little more difficult to find a way to do it.
TVWeek: What about “Bonnie”?
Mr. Paratore: Well, I think all the talk shows, you know, particularly the celebrity entertainment talk shows that are more variety-driven have opportunities, you know. Rosie, I think, started the whole thing with the Tickle Me Elmo, you know, 12 years ago. You know, whatever it was, 15 years ago. And I think it works better in those kind of shows. You can find opportunities where it really does, you know, and Bonnie and Ellen.
Mr. Nogawski: We haven’t been able to get out of the way in that part of the business. I mean it’s just been phenomenal and we’re growing 25%, 30% a year in that arena. The Doctors is going to be surpass $5 million alone…
Mr. Marcus: That’s amazing.
Mr. Nogawski: … which is phenomenal. And, you know—I mean it would get to the point where we’re turning away business. I mean we could probably do $10 million on “The Doctors” if we wanted to, but it would just, you know, become an infomercial. So, you know, kind of back to Jim’s point. You want it to be organic. You want it to certainly look natural on-air. But the amount of advertising response has just been phenomenal. “Entertainment Tonight” and “The Insider”—“The Insider” got launched as a result of being able to put some integration in there. You know, it was a deal with T-Mobile that we marched up to Seattle and had a great conversation with them up there and it ended up, you know, being the difference of making no money and making money. Because that money just drops to the bottom line. So I think integration is an important part of our business going forward.
TVWeek: Obviously “The Doctors” has been very promising for you. Any content changes coming in that regard, with regard to the programming? Any tweaks to kind of goose it or are you locked down?
Mr. Nogawski: Kind of the same thing actually Jim said. It’s—it is evolutionary and you know you start finding out what’s working, what’s not working, and you just kind of move in that direction. We know it’s resonating with the audience every day. You can—all you’ve got to do is look at a rating book, speak to enough people, and you really start sensing what is seeming on a quarter-hour to be affecting your number. We’ve certainly found what is successful on “The Doctors” pretty quickly and it is food for them to take and actually either solve something they’re dealing with, something that they’re just keenly interested in, not too obscure, it needs to be something that hits, you know, obviously—that’s on all of our minds. And a great thing about anything in the medical industry, you know, we’re all either getting older or we’ve got something showing up on our body that wasn’t there before or we’ve got some kid that’s affected by something that you wish you knew how to solve it and, you know, everything’s relevant. If anything is eye candy for the woman at home, it is something about their medical issue.
Mr. Marcus: They’ve done a really good job. I mean I have to say I thought the show was not going to work. It actually—when I watched it the first week it looked like an infomercial to me and the audience didn’t come—they didn’t get sampling out of the box, but you’ve gotta give them credit because they’re really growing. I mean every week, every day, they’re really growing. That’s the one show that is—we started noticing it, you know, after—and it was about a month it didn’t (laughter). I mean, you know, hey. When you got it, you got it, man. But I mean that one, you know—I really, really didn’t think it was going to happen because they didn’t get sampled and they spent a lot of money but then they just—they figured it out. It’s definitely growing. I don’t know how big it’s going to get but it’s growing for sure.
TVWeek: Genre competition is on its way with “Dr. Oz.” Some people have said, you know, are the Fox stations the right fit for “Dr. Oz.” How do you kind of perceive the competition there coming along and what do you do in reaction?
Mr. Nogawski: I’m glad we were first out and I wish them all the success. Our business always needs hits, you know, and it really is. And, you know—I wear a serious competitive hat, you know, and I’m the first to, you know, want to pull out the gun, you know, or the bat, and if the bat’s not big enough, pull out the gun. But at the same time I think our business needs success stories, and so if that show works, it’s only better for our business. You know, I don’t look at it as a competition in that sense. I look at it more of a competition, you know, in my time period, certainly, you know, I don’t want to have them taking my time periods at the sacrifice of my show. But if they get launched and they do well, I think it’s good for all of us sitting here that another show got launched successfully.
TVWeek: “The Doctors” seems like it could be, given time, another launching pad-type show if it gains enough momentum and mass. Have there been any talks about spinning off some of the doctors into their own deals?
Mr. Nogawski: It’s too early for that, you know. Right now the main focus is, you know, keep evolving the program. Find out what’s working. Do more of that and do less of what’s not, you know. I thank Mort for the compliment, but I’ll tell you it doesn’t come without a lot of work every single day over there.
TVWeek: So, I’m sorry. I’ve broken my own time deadline on this, so we’ll wrap it up very quickly. But just as the parting question, I’ll return to something we ask every year: How do you launch a successful show in this environment and how has it changed since last year? So, Mort, why don’t we start with you?
Mr. Marcus: We’ve done two things that have worked out really well. We tested “Tyler Perry’s House of Payne” sitcom in 10 cities and it turned into “House of Payne” and it’s doing very well for everybody. And we tested the Wendy Williams talk show and that appears to be working out really well. I believe really strongly, and I appreciate that, why they would prefer it to stay the way it is, but maybe it’s even self-serving, but I believe really strongly that testing talent or shows in the marketplace before any long-term decisions are made is the right way to go. Every single program that airs on a cable network or a broadcast network is a test. It’s six episodes, it’s eight episodes, it’s 13 episodes. They don’t give 22 to the biggest name, the biggest showrunner—nobody gets 22. Certainly not 44, which is what in syndication many stations commit to two years based on a four-minute tape. We believe that’s the wrong way to go. We just really believe it’s wrong. We believe in testing. We’re willing to put our money where our mouth is. We think it’s the right way to go and we think everybody should do it and we think higher-quality shows and a more dynamic marketplace would exist. So that’s where we’re heading.
TVWeek: Bo, obviously you’re in a different position but what—how does your pitch change next year?
Ms. Argentino: Well, what we try to do is respond to what our advertisers are looking for. So if they’re buying a category of show and it’s working for them, that’s the kind of show that we’ll continue to develop. I mean, we do testing as well. It’s on a smaller scale. We also really are looking to be smarter about our productions. If we can save money by working on two shows together or launching a show that’s an extension of an original show, so I think we have to be creative and smart and work with the advertising partner in terms of developing shows so that we are going out with things that are going to just be a little bit more certain if we can.
Mr. Nogawski: You know I—it’s funny. As Mort was saying that I thought—we actually do what he says, we just have the luxury of doing it inside our own franchises.
Mr. Marcus: Yeah, you’ve got to let the stations—well, inside the franchise that helps. So like “Dr. Oz.”
Mr. Nogawski: Right. Well, I would go back to “The Insider.” “The Insider” we tested on “Entertainment Tonight” and we established the brand. We understood what we were going to do before we launched the show. “The Doctors,” we established those personalities on “Dr. Phil” and then with the great work of Jay McGraw over there, now doing what he’s doing, has evolved the program and made it what it is today, but it got tested before it was on the air. Rachael was tested on cable and was tested even on appearances on “Oprah.” And our greatest successes are kind of coming out of the testing. I agree with that completely. I don’t think we should be putting shows on the air and testing it on their air. I think what you’ve done with Wendy Williams, though—if you can get a group to do it and be able to produce it economically, then I don’t think that’s a bad way to go either. But I don’t think the two philosophies conflict with each other. I think it’s just they’re complementary in a way in philosophy, they just aren’t complementary in the amount of time that’s committed to it. It’s really the only difference that we’re—I think where Mort and I maybe have a differing of effect, I just happen to have the luxury of some franchises I can do it in and he needs to do it from the grassroots. And, you know, so I think we’re kind o f going down the similar path and that’s where I—you know, I’m glad we can kind of end maybe with—a little closer than the great divide.
TVWeek: So, Jim, if you were to launch a show in 2008, what watchwords would you have, having, you know, gone through “Bonnie” and gone through “TMZ” in the last couple of years, what would be different?
Mr. Paratore: I think you have to have some sort of a hook coming in to sell off of. I don’t think you can just take something from scratch and sell it in the marketplace. Either through a test, having a name, having some kind of franchise attached to it that has some value to the buyer. I just think that the stations are gun-shy, they’re conservative. That’s why they’re making the long-term deals and sticking with the stuff that’s working, and when you come in to sell to the stations, I think you’ve got to bring an idea to the table that you can show them is worthy and going to get sampled, as well as your ability to sustain it and have an idea behind it, but I think you’ve got to have some kind of a compelling look to get it sold in the first place.
TVWeek: And, Mitch, you get the macro view at the end. What’s syndication’s best pitch vis-à-vis alternatives going into 2009 that everyone expects to be very rough?
Mr. Burg: It’s a very easy solution. One, is—and we really haven’t discussed this yet—a much younger skew as network television, especially prime time, skews older. We’re able to deliver more consumers that the advertisers want to reach. Higher ratings, lower DVR, better communications in terms of having shorter pods so that people can actually see a commercial and remember it. And, you know, it’s interesting that the—there was research that was done on the effectiveness of a 60-second pod relating to “Fringe” and it said higher interest, higher recall and significantly higher scores. Of course we do that every day, five days a week, on our strip programs. In fact, we have 16 programs on air right now, and in terms of programs that are going to be introduced for next year, where we deliver that every day, a 60-second isolated break and there’s no better place in a cluttered advertiser environment to deliver a message.
TVWeek: OK. Well, thanks everyone. Another year under our belt and looking forward to a very interesting one, and we really appreciate your support. So thanks for coming out.