Freston swears by ‘The Osbournes’

Jun 10, 2002  •  Post A Comment

MTV Networks Chairman and CEO Tom Freston expects all the MTV Networks to make a strong showing in the cable upfront market that began to break last week. But it’s MTV’s “The Osbournes” that’s on track to attract the industry’s highest price.
Late in the week, “The Osbournes” was commanding at least a record $135,000 per 30-second unit, sources said. That is up from an estimated $120,000 per unit in the scatter market and a paltry $10,000 a unit when the series premiered earlier this year.
“This is a hit. It’s a driver. We’re going to make money on it the first year. I couldn’t live without it. We negotiated the best deals we could,” the mild-mannered, middle-aged master of the MTV Networks said.
Industry analysts expect MTV alone to achieve double-digit growth in upfront sales and a cost-per-thousand price increase of 7 percent to 8 percent, while Nickelodeon will likely top a 5 percent price increase in a tough children’s market. MTV Networks’ cable channels overall (including VH1 and TNN) should achieve a collective 6 percent to 8 percent increase, analysts said late last week.
The added value created for MTV Networks from an unassuming series such as “The Osbournes” is gradually becoming clear. “A lot of the money I’m going to get out of `The Osbournes’ will be realized in other dayparts. This kind of appointment television gives our overall schedule heat,” Mr. Freston said.
Although MTV Networks will pay twice as much for “The Osbournes” next season-or about $500,000 per half-hour episode (see chart)-it will reap much higher profits due to varying splits on ancillary revenues. For instance, retail sales of Osbournes-related items could top $200 million just this year, analysts said. MTV Networks generally will share in as much as half of that.
Sources close to MTV Networks deny published reports that the company is paying the Osbournes $20 million outright to renew the show for two more seasons. However, a $3 million multibook deal with Viacom’s Simon & Schuster and an extension of the Osbournes franchise into DVD, syndication, foreign and other ancillary sales over several years could generate $20 million in profits for the Osbournes over time, sources said.
This whirlwind, which migrated from a first-season handshake whim that evolved from MTV’s celebrity-home-visit series “Cribs” to a convoluted process that has recently involved multiple agents, lawyers and other Osbournes representatives, is probably more than MTV Networks bargained for. The Big 4 broadcast networks were clamoring over the very real possibility they could have snatched up “The Osbournes,” bleeped expletives and all, during the cantankerous negotiations.
As MTV Networks’ guiding light for the past 15 years, Mr. Freston-who helped launch the MTV service 22 years ago and even handed out leaflets and buttons on the street-has seen big “make-it” hits come and go, from “South Park” to “Beavis and Butt-Head.” But he is betting that “The Osbournes” is about to do for MTV what “The Simpsons” has done for Fox Broadcasting, which is to become an evergreen, multibillion-dollar international hit. That could happen sooner rather than later, since MTV controls up to 75 runs of the initial “Osbournes” series in every foreign territory and will immediately benefit from the fact that 80 percent of MTV Networks’ revenues are generated outside of the United States.
Last year MTV Networks’ international operations grew 19 percent to generate $600 million in revenues and doubled its earnings to $135 million, which analysts said will double again by 2004.
Although it is not known how well Ozzy Osbourne’s questionable sensibilities will ride elsewhere in the world, the show is already is an unqualified hit in his U.K. homeland.
There is a chance at least one of the hour-long “Osbournes” specials that is part of the new deal also could air on CBS or UPN.
“We’re not sure about the risk of taking a show out of branded services to play elsewhere,” Mr. Freston said.
“There’s nothing we feel we have to be more daring about. You’re not going to build a network on bad language and explicit sexuality. We’re an ad medium. We think we’re able to ride the fine line. Advertisers don’t like this. There are creative ways to deal with it and maintain the relationships with advertisers,” he said.
Bleeping the expletives became necessary on “The Osbournes” last season, when the family unthinkingly and frequently resorted to swearing, believing that “anything goes” on cable TV, Mr. Freston said. “We don’t need sex and stuff with the Osbournes. We have plenty to work with just with their interpersonal relations. It’s `Ozzie & Harriet’ gone bad. This is the kind of show you don’t get more than a couple times in a lifetime. We have plenty of people coming in here, wanting to do surprising things with their privacy.”
Still, Mr. Freston said he is not eager to clone “The Osbournes,” and he isn’t saying how he will use the recently renewed series in MTV’s schedule to build other hits.
For now, Mr. Freston’s estimated $27 billion domain represents the single largest asset in Viacom’s stable, and its single most powerful bid for much sought-after younger viewers, and “The Osbournes” has secured MTV’s ratings and profits-at least for the moment. But Mr. Freston means it when he says about MTV Networks’ $1.5 billion annual cash flow and command of hip-hop, heavy metal, punk rock popular culture, “It’s ours to lose.”
The thought of it keeps him up nights, even in these days of Ozzy lust.
“Nothing lasts forever,” he said pensively, looking out on an expansive view of Manhattan from his 28th floor office in Viacom’s corporate headquarters in Times Square. “Sometimes, these shows don’t last very long, but while they are on top they attract new viewers, new advertisers and new talent. They become a lightning rod for other things.”