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TV in Transition: Invasion of the pod deals

Aug 19, 2002  •  Post A Comment

It’s just not the Hollywood we remember.
Once commonplace overall TV development and production deals with marquee producers and writers-often commanding multimillion-dollar salaries-are becoming a thing of the past. Growing in their place are so-called “pod” production deals.
Think of it as a constellation of producers who would previously have gravitated to the once-flourishing independent studio universe.
“What you are seeing is a drying up of the overall deal market with writer-producers as well as independents,” said a senior studio executive, who requested anonymity. “When you see a major independent like DreamWorks gravitate to a pod deal with NBC, it’s pretty safe to assume the days are numbered for some other independents left in the market.”
Polone’s got pull
Fueling the emergence of recent pod deals are the studios’ vertically integrated brethren, the broadcast networks-most of which are getting noted producers to take lower front-end salaries in exchange for greater financial rewards on the back-end cable network and syndication sales of prime-time TV series.
Containing front-end costs-especially in the current stagnant economy-is a key mandate for studio-network combines, but that’s not to say some formerly independent producers are not finding some sweet pod deals at the networks.
For example, Gavin Polone, who previously had a production deal with the contracting independent network TV supplier Columbia TriStar Television, entered a pod deal with NBC Enterprises last spring. In what was billed as a seven-figure pact by the Hollywood trade papers, Mr. Polone’s Pariah production company was said to have extracted up to 25 percent of the back-end net gross profits for any series he produces for NBC. It helped that Mr. Polone executive produces four hit TV series, including HBO’s “Curb Your Enthusiasm” and The WB’s “Gilmore Girls.”
“Gavin was dealing from a position of strength and got a huge deal from NBC,” the studio source said. “Very few A-list producers are getting those types of $4 million-per-year deals from the studios or networks. More important, Pariah is getting a significant discretionary [production] budget and a hefty chunk of the back-end profits-that’s where the deal makes the most sense for [Mr. Polone] and NBC.”
The three-year deal with NBC gives Pariah the option to sell its series projects to competing networks-if NBC passes after a first look. But as an equity partner NBC Enterprises has the rights to sell and participate in back-end distribution of shows created by Pariah. Mr. Polone has already sold three development projects to NBC.
“It’s definitely an advantageous deal for both of us, but I don’t think anyone has as large a percentage on the back-end as we do,” Mr. Polone acknowledged. “But that all has to work in success over the long term.” He declined to get into specific financial terms of the deal.
Marc Graboff, executive VP of NBC West Coast, said the significant back-end deal means Mr. Polone will be “rewarded in success.”
“In this case, Gavin wanted to roll the dice, because we did set up a relatively modest upfront [fee-based] situation,” Mr. Graboff said. “But if a show hits, he will be richly rewarded. As backer of his shows, we protect from downside risks on the front-end, so we do get to recoup on overhead, production costs and distribution fees. But Gavin gets to share in the rest” of the profits.
Mr. Graboff said DreamWorks is in a similar pod situation, except that the studio reports both to NBC Studios President Ted Harbert and NBC Entertainment President Jeff Zucker.
“What we want to have is a diversity of ideas and not series pitches going through the same filters before it gets to Jeff,” Mr. Graboff said, referring to the typical talent agency- and studio-driven projects pitched to NBC. Mr. Graboff cited Mr. Polone’s recent trip to England to acquire the BBC-based hybrid reality/comedy “The Kumars at No. 42” for development domestically at Pariah and NBC.
“It is a nonwriting producer like Gavin who is looking under the rocks for different ideas that sometimes goes against the grain of what we get through the normal channels here in Burbank [Calif.],” Mr. Grabboff said. “The guy [Mr. Polone] is like a wolf when it comes to chasing down promising concepts.”
Outsourcing development
Other networks such as Fox, ABC and The WB are also seeing the bottom-line benefit of “outsourcing” the development of a TV series. It frees the studios from having to deal with the logistics and financials of retaining writers, producers, directors and star talent for series. “Because we have the infrastructure in place as a production company and maintain the kind of autonomy we have,” Mr. Polone said, “we really can create a streamlined process in dealing with writers, producers, directors and actors.”
For example, Pariah is provided with a so-called “discretionary” budget for the development of TV series, the retention of writing and producing talent and deficit production coverage. However, the deal, like other pod deals, has set “deficit cap limits” whereby Pariah would have to cover any other deficit productions above what NBC has allotted the company.
Similar to Pariah, a growing list of nonwriting pod production companies-such as Tollin/Robbins Productions, HBO Independent Productions and Regency Television-are guaranteed a level of discretionary financing to do most of the legwork in corralling big-name talent for TV series. In the case of Tollin/Robbins, which has its pod deal under the auspices of Warner Bros. Television, it has meant that its talent management division delivered Nickelodeon teen star Amanda Bynes for The WB’s fall 2002 comedy “What I Like About You.”
“I think this definitely coincides in the decline of the overall talent deals, which have been cut almost in half by the studios and networks,” said Carolyn Finger, VP of the Internet-based TVtracker.com development research company. “The networks know they can get a better diversity of projects and delegate more of the writing, producing and casting assignments to their pod units. It is kind of a byproduct of vertical integration, but it seeks to decentralize things and put more power in the hands of these nonwriting producing partners.”
Ms. Finger was also quick to note that new pod deals often include moves by studio development executives. Neal Moritz’s Original Films’ (producer of “XXX” and “The Fast and the Furious”) struck a deal last week with 20th Century Fox Television that included the studio’s former drama development executive Dawn Parouse coming in to serve as president of Original Television.
20th Century Fox TV is also setting up what it terms a first-look deal-though it’s not considered a pod deal-with the Los Angeles-based talent management/ production company, The Firm. In that case, 20th’s former head of drama development, Scott Vila, will head the new TV production unit.
“Think of it as a form of subvertical integration, where the studios place veteran development executives, like Parouse and Vila, to help run the pod units on a full-time basis,” Ms. Finger said.
ABC breached
The emerging pod system, which probably takes it roots more from the broadcast networks, also broke what was once interpreted as an insular studio system at ABC Television Entertainment Group. Earlier this month, ABC entered into a deal with HBO Independent Productions (the co-producer of CBS hit “Everybody Loves Raymond”), which has the AOL Time Warner-owned studio reporting directly to ABC network toppers Lloyd Braun and Susan Lyne, rather than to executives at sister studio Touchstone Television.
“This is really part of a larger move to reach out to the creative community and have them actively developing series with ABC,” said Ms. Lyne, who is president of ABC Entertainment.
“This is a deal that does not involve large amounts of [upfront and discretionary] money changing hands,” she said. “It really is about working in a concerted way to find and locate quality material that fits ABC’s br
and. If it works for us, great. But if they take it somewhere else, we still benefit” through the syndication sales rights going to Disney’s Buena Vista Television.
The earliest business model for pod deals came about five years ago from Fox Television Studios, an umbrella production unit that counts Regency Television, Fox Television Productions, Foxstar and FoxWorld as production pods. Through Fox’s half-partnership with Arnon Milchan’s Regency Pictures, the Regency Television unit has counted such hit Fox sitcoms as “Malcolm in the Middle” and “The Bernie Mac Show.”
“I’m really enjoying the fact the rest of them are calling these `pod deals,’ since it was term that I and Peter Chernin [chairman of Fox Entertainment Group] originally coined over five years ago,” said Fox Television Studios President David Grant. “It’s just interesting to see how that term has become part of Hollywood’s lexicon.”
The biggest benefit of having the pods under the Fox Television Studios umbrella, Mr. Grant said, is that “they share a common infrastructure, but we are very nonbureaucratic in letting producers direct the creative process and fulfill their visions as producers.”
‘Hidden’ benefits
Pod deals aren’t, however, automatically a big win for the smaller production company. Susanne Daniels, a former president of The WB’s entertainment division, formed Primarily Entertainment under the auspices of Turner Television, Warner Bros. Television and The WB when she left the WB network.
Ms. Daniels successfully sold sitcom “Hidden Hills” to NBC, which gave the family sitcom the choice post-“Frasier” time slot on Tuesdays. However, the company may have lost out with its “The Lone Ranger” pilot. The WB didn’t pick up the pilot for its fall schedule, instead committing to only a two-hour backdoor pilot presentation to air next season. Ms. Daniels said the expensive location shooting might have been too big for Turner Television’s “smaller” production budget.
“I really don’t know what [AOL Time Warner’s] commitment is to Turner Television, because of those rumors about it being folded into Warner Bros. Television,” said Ms. Daniels, who gets discretionary funding from both Warner Bros. Television and Turner Television. “Frankly, I would prefer that Primarily would have its pod deal [exclusively] through Warner Bros. In working under one supplier, you just better your odds in getting even more turns at bat.”