Consolidation Raises Stakes for TV Indie

Jun 2, 2003  •  Post A Comment

Having emerged from the rigors of the prime-time pilot season with two NBC series pickups, one of TV’s last surviving independent production and distribution companies, Carsey-Werner-Mandabach, faces new financial challenges posed by this week’s pending media deregulation.

At the very least, the new rules will allow for more consolidation of TV station ownership, further reducing the number of TV stations to which CWM can syndicate its library of off-network series. That syndication is the company’s lifeline, generating what sources estimate as more than 70 percent of its profits and 60 percent of its estimated annual $300 million in revenues.

“I think [consolidation] makes it much more difficult for us and could potentially threaten the model we depend on, especially when you consider the increased number of duopolies in markets. Where we once had a handful of stations to sell to, we now only have one or two,” company principal Marcy Carsey told TelevisionWeek.

Ms. Carsey recently took time before beginning production on the company’s newest series-Whoopi and The Tracy Morgan Show-to reflect on CWM’s role as an independent.

TelevisionWeek: What does it mean to you to be truly independent?

Marcy Carsey: Being truly independent makes all the difference in the world to us. It always has. It’s all the difference in the world whether your agenda is simply and purely doing shows that you’re really proud of, that you think the audience will respond to with a real respect for the audience and moving a little this way or that. That is a quite pure and simple agenda, as opposed to being a unit of some conglomerate whose agendas are quite mixed and quite varied. And it has to do with synergies and volume and things we don’t ever have to consider. I’m never going back.

TVWeek: What do you bring to the table that others don’t?

Ms. Carsey: We don’t like that comedies have become more homogenized in recent years, and I don’t think the networks like it either. The more that happens, the more we try to go in another direction. After all, we’re viewers first before we are producers. We want to produce the kinds of programs that are missing in America today.

We truly are empathetic to them because we were network people ourselves once. We know what they are up against. We understand the different masters and agendas they have to serve, and that it’s difficult for them to bet on just a series pitch.

Fortunately, enough of the networks want to do business with us. We prepared five pilots this season. Two were picked up and one we’re waiting to hear on from UPN, which is an animated series called Game Over, about the home life of video game characters.

That’s a lot for us, since we’re only a creative team of five in our company. But we really felt we needed to make a push for a major hit. We needed to get product going. We haven’t had a hit since That ’70s Show.

TVWeek: There are some who would point to DreamWorks or David E. Kelley, who has a deal with 20th Century Fox, and say there still is plenty of independence in Hollywood.

Ms. Carsey: We need to distinguish between truly independent voices, of which there are not very many, and networks buying from outside their own entities. What networks have discovered in the last season or two is that they need a balance. They can’t deficit finance everything on their schedule. Most things fail, so they could and do lose a lot of money doing that, not to mention the dilution of creative resources they suffer.

Some of the networks like NBC are trying to do it a different way, like with little independent companies or pods inside their structure. They are trying to make, act and feel as independently as they can. But they still are funded by the networks, so how independent can they really be?

I will tell you something about being really independent. It’s way more fun. It’s only just us. We don’t have bosses and we don’t have a big corporation moving around and above us. And our vision and mission is so clear.

TVWeek: Are you concerned that there may come a time when other truly independent companies such as yours cannot afford to put up a shingle?

Ms. Carsey: I do worry about that. I just don’t think it’s good for any industry, let alone an industry that is responsible for information as well as entertainment, to be so narrowly focused and consolidated that you only have two or three or four voices behind every piece of information and entertainment that America gets. That’s not right. It’s not healthy.

TVWeek: What does it take to change that?

Ms. Carsey: I don’t know. But this particular state of affairs may change. Hopefully, all the new means of distribution emerging, such as video-on-demand and digital platforms and streaming media, will give rise to new independent production companies somehow, because there will be more than the standard demands for content.

TVWeek: How will deregulation impact your business?

Ms. Carsey: The core of our business and the things that keeps us alive is our syndication and our ability to syndicate our hits. I don’t know how more deregulation and consolidation are going to play out. It changes all the time. But it surely doesn’t help that you are dealing with fewer and fewer entities. Because it is competition among entities that makes the product more valuable.

TVWeek: You sell a lot of your product directly to big station groups. But what happens when those groups consolidate under more liberal ownership rules and they have digital tiers to fill?

Ms. Carsey: I think it makes it much more difficult for us and could potentially threaten the model we depend on, especially when you consider the increased number of duopolies in markets. Where we once had a handful of stations to sell to, we now only have one or two. We’re going to be OK. I think we’ll be able to do this for quite a while longer. I just don’t know how anyone else is going to do it, and that’s the point.

TVWeek: Do you think new distribution options such as VOD will help?

Ms. Carsey: With all the new options emerging, I think that in five years we could look back on this and say we were glad we remained independent and held on to our copyrights. Everything we’ve ever done, we own and we license. We’ve just started talking about how best to release these on DVDs.

All those traditional ways of distributing shows that have been important to us and always will be important to us will be changed by these kinds of developments. It will redefine what a distribution company is and the ways that it can occur.

TVWeek: How does your true independence impact how you do business?

Ms. Carsey: In terms of how we are perceived and received, that’s a more complicated issue. Obviously, the networks want to buy more of their own product from their own companies. That’s their right to do so, since the [financial interest and syndication] rules have changed. We’ve had 10 years to get over it. But they’ve learned over time they can lose a lot of money doing that. It’s very difficult to get one hit show to make [up] for all the deficits you pile up on all the others. That’s the key reason why we’re the only independent left. Because we’re the only ones crazy enough to still be doing this.

TVWeek: How important is it to get new series pickups when 70 percent of your profits and 60 percent of your revenues come from domestic syndication of your series library?

Ms. Carsey: It is hugely important. The company also has a stockpile of wholly owned shows that are a syndication gold mine and that pay its way. It allows them to deficit finance new series.

It’s what our chief financial officer calls the recurring loop theory. If we get a hit every three years, we’re OK. Longer than that, and we’re in trouble.

We just went through a longer-than-usual stretch, but somehow, you sustain them.

TVWeek: How important is it that you distribute your own product?

Ms. Carsey: The fact that we distribute only our own product is totally critical. If it weren’t for the fact that we have our own distribution company, some of these deals wouldn’t make any sense at all.

The Tracy Morgan Show is
a good example because of the number of other executive producers on that show-NBC Productions, Lorne Michaels. To get Tracy Morgan to star, we had to accommodate a lot of people. It wouldn’t be worth our while to do if it weren’t for the fact we also are getting a distribution fee.

Part of the reason I think people do business with us is not just our clear agenda but our flexibility. Our overhead is relatively low, compared to studio and network overhead. We are able to do things other people aren’t able to do.

TVWeek: How did the new Whoopi Goldberg show evolve?

Ms. Carsey: Tom [Werner] and Caryn [Mandabach] ran into her when they were Back East and talked to her about doing a half-hour series. NBC has brought us an Iranian comedian, Omid Djalili, to star in the show and Larry Wilmore from Bernie Mac to serve as executive producer, along with Terry Turner and Kriss Turner. Larry has had a development deal with NBC Studios and was brought into it after the pilot was shot.

This network has given us more on this show than any network has ever given us.

Obviously, every network would like to own 100 percent of a major hit and not have any deficits. So we try to keep as much ownership as we can and try to keep the deficits as low as we can. We are more capable of that than a bigger company.

We can make unique deals that a bigger company could not make because we are not tied to anybody and we sell to everybody-something few in Hollywood can profess. We can go to any broadcast and cable networks we want-it’s really a terrific position to be in.