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The good, the bad and the `Buffy’

Apr 30, 2001  •  Post A Comment

UPN would have to convince advertisers to pay more than $100,000 a spot in its new acquisition, “Buffy the Vampire Slayer,” to break even on the series.
Break-even was the sticking point for WB CEO Jamie Kellner, who said he wouldn’t lose money on the series renewal. The WB said its break-even point was $1.6 million but it did up its offer to $1.8 million later in negotiations.
A senior-level WB executive said the network sells 20 national spots per episode, at about $80,000 each. That works out to $1.6 million of ad revenue per episode. The WB pays $1.1 million per episode to series producer 20th Century Fox, and at $80,000 a spot actually makes money-about $500,000 an episode.
If UPN offers the same number of spots, advertisers would have to pay $115,000 per unit for the network to break even.
However, senior UPN officials say they think they could garner between $60,000 and $80,000 per unit for “Buffy” in next month’s upfront market. Based on 20 spots per episode, that would equal about $1.2 million to $1.6 million in gross ad revenue per episode for the series. That could translate to
a shortfall of about $700,000 to $1.1 million per episode, or $35.2 million to $48.4 million over the two-year licensing term. UPN’s 44-episode deal is currently valued at $102.3 million over the two-year term of the pact.
Mike Mandelker, UPN’s president of sales, while declining to discuss pricing for “Buffy” or how it will be packaged with other series, said his network would be “ecstatic” to get anything approaching The WB’s unit pricing for the series.
“The response from the buying community has been very positive about the acquisition and about how [“Buffy”] will raise our visibility, particularly in the female demographics,” Mr. Mandelker said. “We have promoted ourselves as the `testosterone network,’ but we do have a Monday that reaches women, and `Buffy’ will allow us to broaden our base with clients.”
Some ad buyers think UPN’s rates for “Buffy” could go higher if the network acquires current WB series “Angel” or “Roswell” to lead out of “Buffy.” (There’s speculation The WB could retaliate against 20th Century Fox by canceling the two series produced by the studio.)
“Every negotiation is different, but if UPN can package `Buffy’ with `Angel’ or some other drama like `Star Trek: Enterprise’ they have in development, it could certainly boost their pricing position on whatever evening it’s scheduled,” said John Rash, senior vice president and director of national broadcast buying for Campbell Mithun. “I don’t think positioning `Buffy’ as a stand-alone sale would fly with buyers, and UPN knows it would better serve them to elevate the packaging of their entire prime-time inventory.”
Some network watchers suggest, however, that UPN will have to deliver up to 50 percent higher ratings to break even on its “Buffy” investment. Conversely, as WB sources noted, “Buffy’s” 3.8 rating/13 share average this season among female teens represents a 30 percent drop year to year, according to Nielsen Media Research. The signature 5-year-old WB drama is also down 7 percent year to year in persons 12 to 34 (2.7/8) and 6 percent in women 12 to 34 (3.2/9) this season.
“Certainly, to us, it did not make sense to bid more on a series which is beginning to show some [weakness] in teen and young-female demographics,” said a senior-level WB executive, who requested anonymity. “I’m not saying that `Buffy’ is not a great show, because it still is, but we just could not see the economic justification of paying more for a show which is on a slight downward trend. All I can say to UPN is good luck trying to get more out of buyers at the negotiating table next month.”
Along with Mr. Mandelker, another senior-level source close to UPN countered that the teen ratings losses have been exaggerated at all the broadcast networks (except Fox) because of “consistent rating issues” they have with Nielsen over the measurement of the children and teen demos.
However, though breaking even was The WB’s goal, it apparently was not UPN’s priority.
Several ad buyers compared the deal to the $395 million-per-year deal that brought the NFL to Fox. Even though buyers say Fox lost up to $110 million on National Football League games in its first four-year deal (1994-98), the games raised the network’s prime-time ratings and gave it a broad new promotion vehicle for series.
“To weigh the cost vs. revenue nature of this might not be as important as what it does to positively elevate UPN’s prime-time ratings and [give] it more promotional clout for the rest of its schedule,” said John Lazarus, senior vice president of national broadcast operations at TN Media.
“Sure, Fox overpaid somewhat for football, and NBC got held up a few years ago on its [$13 million per episode] renewal of `ER,’ but those deals still made sense in terms of protecting their positions in prime time. What we are looking at is two networks moving on vastly different growth curves, where The WB has more building blocks and was not willing to pay more [for “Buffy”]. But UPN was willing to take a risk on something which may be accretive in other ways outside of direct revenue.”
Still, some buyers think UPN could be severely challenged to surpass last year’s $130 million to $155 million in bookings for the 2000-01 season upfront market. (All the broadcast networks had to revise their upfront revenues because some advertisers exercised cancellations on some hold orders due to the economic slump at the beginning of the fourth quarter last year.)
In fact, most pundits in the ad community expect the six major broadcast networks to realize a 6 percent to double-digit decrease in total revenue from the upfront, which last year sank to just below $8 billion because of canceled orders.
“Let’s just say even if UPN is selling at a slight loss [in the overall upfront], the additional gross rating points `Buffy’ brings to their schedule could improve the network’s position in future scatter markets, where more money could be laid down if the economy turns around,” said Tom DeCabia, executive vice president of Schulman/Advanswers New York. “That has to be the long-term strategy here: Bring in the building blocks like `Buffy’ and start turning the boat around with the female demographics. From that standpoint, [`Buffy’] is a very positive acquisition for them.”