Production: Programs That Make Fiscal Sense

Mar 24, 2003  •  Post A Comment

The little company with the giant name.
That’s how MGM Television Entertainment President Hank Cohen likes to describe his division, which is run like a boutique production company but has the assets and name of one of the oldest film studios in Hollywood behind it.
MGM Television has built an impressive current roster of cable, syndicated and broadcast TV projects with a business model that preaches fiscal discipline and maximization of existing assets from MGM’s huge film library.
“The one line you will never hear out of our TV division is, Well, that’s not how you do TV,” Mr. Cohen said. “We will do it however the deal makes sense for us.”
For example, when MGM did an output deal for feature films with Showtime a few years ago, it included producing original TV movies for the pay cable channel. MGM then realized it would be much more lucrative to develop original TV series for Showtime and turned those movie commitments into television commitments. “If you take the price of 16 movies, you could do two 44-episode series for what they were going to pay you, and then you have a partner,” Mr. Cohen said.
And with 44 episodes guaranteed, MGM was able to sell those series into syndication.
After five seasons on Showtime, StarGate SG-1 moved to Sci-Fi Channel, which ordered a seventh season and is currently negotiating for an eighth season. MGM is also negotiating with Sci-Fi to do a spinoff called Stargate: Atlantis. Outer Limits ran for six years on Showtime before switching to Sci-Fi for season seven. Best of episodes continue to run in first-run syndication, and Mr. Cohen said they were still discussing ways to revive the series.
Mr. Cohen said that even though MGM produced StarGate SG-1 and Outer Limits series at a deficit, it was a good business deal because Showtime gave MGM a one-year window to wait to sell the series into syndication. Showtime recently extended that to three years on new deals.
“We are very strong internationally, and the international money starts coming in right away. So by the time the first year is up, the deficit is very small,” Mr. Cohen said.
That dual-revenue stream is key to which TV projects to go forward. “If we don’t think there’s at least two domestic markets for [a project] we won’t pursue it,” Mr. Cohen said. “We know we need the primary market and we need an aftermarket that’s going to be fairly healthy business for it or it doesn’t make sense for us.”
For example, with the Thomas Crown Affair series in development, MGM is looking to sell it to NBC and a cable partner.
MGM also keeps costs down by producing science-fiction series such as Stargate and Outer Limits in Canada, taking on co-production partners for series such as Touchstone with Legally Blonde and only shooting two-hour pilots.
“We do two-hour pilots, so if its busted we have a TV movie and we recover it and we haven’t lost any money,” Mr. Cohen said. The only time MGM will bend on its two-hour pilot rule is if it has a full-season commitment in hand from the network, he said.
For example, UPN wanted to license MGM’s Teen Wolf concept for a series, but UPN would only pay for a one-hour pilot, so MGM turned UPN down. Now MGM and UPN are looking for a separate production company that would license the title from MGM and then sell the series to UPN. MGM would get the rights fee, production credit and part of the back-end. “It’s zero risk,” Mr. Cohen said.
Mr. Cohen said expanding MGM’s licensing business is one of his focuses right now. He’s currently working on three or four licensing negotiations, but declined to be more specific.
“We’re just not equipped here to produce everything that we could probably sell,” Mr. Cohen said. “If we find producers or a network that’s really interested in one of our titles we’ll attempt to structure a deal where we just basically license it to them. It’s a smart business.