TV IN TRANSITION: NBC lowers the bar with $500,000 hours

Jan 14, 2002  •  Post A Comment

The broadcast networks, all pinched by double-digit ad revenue losses this season, are floating trial balloons about dramatically cutting the license fees on scripted series.
As part of NBC’s presentation at the Television Critics Association press tour in Pasadena, Calif., last week, NBC Entertainment President Jeff Zucker caused a major stir in Hollywood by saying that NBC is looking to cut drama license fees to $500,000 per episode-that’s more than half of what the broadcast networks typically pay for hour-long shows.
Mr. Zucker claimed that several scripts-though he did not identify them-were working their way into the development cycle budgeted on a “low-cost” basis for next season.
“We are particularly keen, especially on the drama side, in developing some lower-cost dramas,” Mr. Zucker said. “We have several in development right now. We can tell you it is a major priority for us, and we have been inundated with companies in this town who want to be in that business with us. We have big priorities, and that is one of them.”
NBC West Coast President Scott Sassa elaborated that the $500,000-per-episode figure being laid out for dramas did not relate to production costs but to license fees NBC would actually be seeking to pay the studios and other independent producers. In conceivably saddling program suppliers with more of the production deficit on a series, Mr. Sassa hinted that NBC would be willing to “sell off” international distribution rights as a trade-off.
“One of the benefits of having Ed Wilson [president of NBC Syndication] and Ted Harbert [president of NBC Studios] on this [from] the studio side is [that] we can sell off international pieces and get the license fee down pretty significantly,” Mr. Sassa said.
However, upon being asked about NBC’s $500,000 figure, CBS Television President Leslie Moonves appeared to shoot down the notion, suggesting it is not going to attract very many A-list producers to NBC’s new low-budget economic model.
“That doesn’t work. I don’t think you can say to an Aaron Sorkin [“The West Wing”] or John Wells [“West Wing,” “ER,” “Third Watch”] or Don Bellisario [“JAG”], `Here’s $500,000, go do an hour,”’ said Mr. Moonves, who said CBS has not made any cuts in the number of scripts it has in development currently.
“We frankly have not done a whole lot to reduce our production costs,” added Mr. Moonves, who also reiterated that the only cuts CBS has made have been on long-term talent holding deals. “We’ve done basically as many pilots as we did last year. I remember way back when Jeff Sagansky [former president of CBS Entertainment and now CEO of Pax TV] did some $600,000 hours in Australia. None of them worked.”
Fox Television Entertainment Group Chairman Sandy Grushow said the network-studio conglomerates need to find a way to bring down production costs and license fees without affecting the quality of scripted dramas.
“All networks, absolutely categorically, can’t continue to pay $1.5 million per episode on first-year shows,” Mr. Grushow said, referring to high cost vs. the high failure rate for new series. “I am not saying it is incumbent upon us to be where we get out of the high cost of the programming business with the likes of John Wells or Aaron Sorkin, David Kelley [“Ally McBeal”] or Chris Carter [“The X-Files”] or Joss Whedon [“Buffy the Vampire Slayer”]. But what that means more than anything is figuring out a way to make shows that balance out the overall costs of the schedule.
“It has to be done across the board. To do a television show that costs $500,000 is an arbitrary number. Whether it is $600,000 or $700,000 as opposed to $1.2 million to $1.5 million [per episode], you have to attack from an above-the-line to below-the-line standpoint.
“We have made a couple of pilots whose pattern budgets would have been about $1 million with a network license fee at about 65 percent of that. We are not enamored of the shows creatively … but I do think it is only a matter of time until somebody cracks this, and we’re certainly out there trying to do it.”