WB looks to Sunday to drive profits

Sep 9, 2002  •  Post A Comment

It may sound like a familiar refrain from the past few years, but The WB network brass says it thinks the network could finally turn a profit going into its eighth season of existence. Much of the renewed confidence comes from The WB’s plan to expand to Sunday afternoons with reruns of prime-time series-carving out a unique, new sales niche with advertisers.
“We’re perfectly positioned to return our first profit this year,” said The WB’s President and Chief Operating Officer Jed Petrick. “I’m not saying it a hard and fast rule, because it all really depends on the viewers response to our new programming and Sunday strategy. But we’re feeling probably the most confident than we have ever about a new season.”
Ad buyers estimate that The WB garnered $575 million and the largest cost-per-thousand increases-14 percent to 16 percent-of any network out of last May’s upfront market. Plus, Mr. Petrick and affiliate executives think they’ve found a low-risk way to build a new revenue-generating vehicle that would put the network on a par with the seven-day-a-week broadcast networks.
The WB will rerun episodes of “Everwood” and “Smallville” from 5 p.m. to 7 p.m. (ET) on Sundays. an afternoon daypart typically dominated by sports and public affairs programs, most advertisers bought into Mr. Petrick and Turner Broadcasting Co. Chairman Jamie Kellner’s pitch: A large, underserved audience of young-adult viewers, teens and kids will tune in for second runs of prime-time series.
“What we see in this block is added even more consistency with brand-recognized shows to build incremental sampling of our Sunday afternoons and into prime time,” said John Reardon, president and general manager of Tribune Broadcasting-owned KTLA-TV in Los Angeles. “It’s a great new sales vehicle in a daypart that once only offered old movies and [off-network] sitcoms as an alternative. Young males are just as available as females on Sunday afternoons, and we just see it as a natural extension of what we’re doing in prime time.”
Marc Shacher, president of group programming for Tribune Broadcasting Co., said he’s optimistic about the revenue potential for the second runs on Sunday afternoons. “As difficult as it is [to get] shows to hit like The WB did with `Smallville’ last season, and `Everwood’ to break out this season, we do think the incremental ratings and promotion exposure not only translates to new revenue but also to getting higher ratings and revenue for our prime-time shows.”
The WB 100+ group has played a big part in filling out distribution in markets 100 through 211, where it accounts for a total 8 percent U.S. coverage. Mr. Petrick said the growth of the WB 100+, with WB cable affiliates now operating in 110 of the 211 markets (or 8 million of 8.8 million available households), also ensures that the Sunday afternoon block will be carried in 87.3 percent of the United States (that also includes the top 100-ranked markets).
Doug Gealy, president and chief operating officer of Acme Communications, a group owner of nine WB affiliates, said his group is selling the Sunday afternoon block on a “cost-per-point basis between what we charge in prime access [6 p.m. to 8 p.m.] to early fringe [4 p.m. to 6 p.m.]” in the spot market to local and national advertisers. He said Acme was able to charge higher commercial unit rates than it would have been able to get with off-network sitcoms or movies in the daypart.
“In some of our markets, you would see these classic movies like `Gone With the Wind’ pulling 1 ratings in the demos on late Sunday afternoons, but when we put repeats of `7th Heaven Beginnings’ in the 7 o’clock time slot two years ago we were seeing 3 and 4 ratings popping in the demographics,” Mr. Gealy said. “We know [viewers] are there. When I first heard about the repurposing or multiplay plan, whatever they call it, I thought it was a much better idea to keep advertisers in broadcasting and to keep the brands in-house.”
The WB also thinks it took a big leap toward profitability when it drew a line in the sand over the license fee to renew former tentpole “Buffy, the Vampire Slayer.” (UPN outbid the WB by offering producer 20th Century Fox Television $103 million for a two-year licensing deal.) For the first half of the 2001-02 season, as anticipated, The WB took negative hits in the ratings-although not on Tuesday evenings, where the ongoing success of “Gilmore Girls” and breakout status of “Smallville” reversed the negative impact.
WB brass and station executives said that after six seasons on The WB, “Buffy” had reached a zenith in its young-adult ratings and did not merit a bigger payoff with little or no new upside potential.
A key Hollywood talent agency packager has the same take. He thought The WB’s “get-tough” stance on license fees “sent out a strong message to the studios.”
“The WB basically put its foot down by saying it was not going to get railroaded on a show that it really helped launch and nurture,” said the agency network packager, who requested anonymity.
“Essentially, The WB said it could survive without their show and when the ratings came back in the plus column during the May sweeps, it only justified their business plan of not being held hostage. Now, if The WB was the size of NBC, they could afford to keep a `Friends’- and `ER’-like series. But as an emerging network, they work from a different baseline on license fees, and it was time the studios and producers really take that into mind.”
Reflecting on the “Buffy” move a year later, Harry Pappas, owner and president/CEO of the Pappas Broadcasting station group (an operator of six WB affiliates), said affiliates were always supportive of WB’s efforts to contain programming costs.
“We thought it was a necessary message to send [to the Hollywood creative community], because at the end of the day the economic interests of the network and the affiliates are almost completely intertwined,” Mr. Pappas said. “So if there was not some sort cost containment put on production and licensing costs as they kept escalating annually, it would have negatively impacted other networkwide initiatives, like the rollout of digital, high-definition technology nationally.”
Mr. Pappas said he’s also supportive of how The WB has avoided getting into expensive sports rights deals with the National Football League and Major League Baseball.
“When you look at the $900 million write-down Fox is taking from football, you’ve really [got] to wonder what the trickle-down effect will be on their programming and technology initiatives,” Mr. Pappas said. “I just think that The WB has been smart to keep its eye on the ball and looking only to expand [on Sundays] on what is a logical extension of its core business.”
Mr. Petrick said that by holding the line on series licensing costs, The WB has been able to place a greater emphasis on program development for prime time and the Kids’ WB! weekday and Saturday children’s programming blocks. By his own estimate, Kids’ WB!-which is the top-ranked weekday and Saturday broadcaster in key kids demos, with hits such as “Pokemon,” “Yu-Gi-Oh!” and “Jackie Chan Adventures”-accounts for about 15 percent-or roughly $90 million-of the network’s annual revenues.