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Broadcast nets cozy up to cable

Jul 23, 2001  •  Post A Comment

Not quite ones to cry poverty, the broadcast networks-owned by multiplatform media conglomerates-nevertheless claim that escalating programming costs and a sluggish ad market are forcing them to find newer, better business models to keep the lights on.
That was the topic du jour for network executives at the Television Critics Association press tour in Pasadena, Calif., last week. The four networks first up on the TCA circuit-The WB, UPN, Fox and NBC-professed desires
to contain star talent/producer costs, limit the poaching of popular series and further develop shared cable-broadcast network windows for big-budget series.
It was the early buzz from TV critics over the incoming big-budget drama “24” that prompted Fox network executives to confirm its discussions with sister cable network FX for a shared exhibition window. Citing the higher producing costs for hourlong dramas and declining ratings for repeat programming, Fox Television Entertainment Group Chairman Sandy Grushow acknowledged that producing a serialized assassination drama that unravels on a 24-hour, real-time basis may call for repurposing “24” on cable and local TV stations to compensate for the fact that the show isn’t a good candidate for repeats later in the season.
“I think that the network television business is more challenged than ever before as it relates to trying make sense out of its cost structure,” Mr. Grushow said. “You look at the way dramas are repeating today. In the summer, it’s frightening. We’re going to have to figure out a way to make sense out of our business.”
Mr. Grushow said Fox is trying to get a staggered cable window for “24” on FX, which could air it in nonprime-time berths on the cable network within days of its original airing on Fox. Although it comes down to feeding the 20th Century Fox Television-produced “24”to another News Corp.-owned network, Mr. Grushow estimated that the typical cable network pays about $150,000 per episode for a broadcast-originated series-such as NBC’s pair of “Law & Order” series in nonprime-time windows on USA Network and ABC’s “Once & Again,” which has a second window on Lifetime.
“I think we’ll know in the next year or so whether or not cable networks will deem there is sufficient value for money they’re paying,” Mr. Grushow said. “If you look at ‘Once and Again’ and ‘Law & Order’ and some of the other things that I believe are taking place, I don’t think that we can go to sleep at night assuming that the money’s going to be there forever. Let’s hope it will be, because if it’s not, we’ve got some real issues.”
Gail Berman, president of Fox Entertainment, later said the repurposed run on FX could be delayed a certain number of days after Fox’s first run to address affiliate concerns and contractual obligations. Nevertheless, Ms. Berman said Fox is floating another proposal to affiliates, offering the stations a second run of “24” locally for either the 10 p.m.-to-11 p.m. time period the network currently doesn’t program nationally or key late-night and weekend afternoon time periods.
“There are a wide number of different business models we’re looking at, and there could be a number of different cable/broadcast permutations we can take toward fulfilling the needs of everyone involved,” Ms. Berman said.
Over at The WB, Jamie Kellner, chairman and CEO of Turner Broadcasting System, blamed vertical integration as one of the reasons The WB lost its hit show “Buffy the Vampire Slayer” to UPN, which agreed to pay $2.3 million per episode for the series. He charged that in addition to UPN paying the large license fee for 20th Century Fox-produced “Buffy,” the deal was tied to News Corp. extending its affiliation agreement with UPN on it’s newly purchased Chris-Craft Industries stations for two more years.
“I think we are going to see the industry polarize toward a vertical structure, which is not good for the industry,” Mr. Kellner said. “I think it’s much better if we can find ways to deal with various, different program suppliers. Hopefully what will happen is that we’ll be able to create new business models that will allow [broadcast] networks to acquire programs from other suppliers that will prevent programs jumping from one network back to the studio-supported network.”
However, it was somewhat ironic to hear Mr. Kellner tell TV critics that the conflicting interests of the five major media conglomerates are dividing the TV business, considering that Mr. Kellner works for the largest of them all-AOL Time Warner.
And in his new position, Mr. Kellner is charged with integrating the Turner cable networks with The WB to capitalize on synergies by cross-promoting, selling and marketing the networks.
Last May, Mr. Kellner said he was interested in multiplexing several of The WB’s series on a sister Turner cable network to air during the same week of the initial telecast. Sources say, Mr. Kellner is currently working to get a cable window for The WB’s drama “Charmed” for TBS or TNT from series producers Aaron Spelling Television and Paramount Television Group.
By selling second windows of popular network series to cable networks, both Fox and The WB would look to that cash infusion to help pay for the ever-increasing costs of producing a hit show.
Two leading cable and syndication consultants, Gary Lico and Chuck Larsen, agreed with Mr. Grushow’s estimate that cable networks pay about $150,000 per episode for a cable window. They both said they think the cable networks could conceivably sustain paying such fees.
But Mr. Larsen, who serves as president of October Moon Television, also noted that the basic cable networks have been spending record dollars in recent years for overall back-end licensing deals on dramas (such as the $1.6 million an episode TNN will pay for “CSI: Crime Scene Investigation” repeats), which in some cases could include staggered front-end windows.
“What’s really interesting is that the cable network used to come begging for second windows, and now it’s the broadcast networks and studios who come offering it to them,” Mr. Larsen said. “So what we are seeing is the development of three revenue streams, where the networks and studios can possibly count on concurrent and back-end windows from cable and even a weekend broadcast syndication run generating additional barter ad money.”
Mr. Larsen, who also serves as a producer’s representative in back-end negotiations, said he believes broadcast network dramas are being adversely affected in the ratings due to the continuing “fractionalization” of the TV universe, causing downward pressures on advertising revenues as well. He said that if a typical “A-list” drama averages a 10 rating in households on the broadcast network, then gets a 2 rating on cable and a 5 rating from a weekend run in broadcast syndication, the show is still only reaching 17 percent of U.S. television households.
“In this cluttered environment, having a second venue means broader promotional reach, and ultimately more viewers will find the show,” Mr. Larsen said.
Mr. Lico, who is president and CEO of cable consulting firm Cable Ready, suggested the cable networks may be doing themselves a “disservice” by carrying more broadcast network series-at the expense of creating original, “brand-building” programming of their own.
Louis Chunovic contributed to this report.