Burnett’s Ad Model Changes TV

Mar 1, 2004  •  Post A Comment

NBC’s deal last week for the “The Contender” could mark a major turning point in what networks are willing to sacrifice-such as valuable advertising time and product placement revenue-to secure the most sought-after programs.
The network will pay about $2 million per episode in cash and advertising value for “Contender,” a Mark Burnett-produced reality show about the real lives of professional boxers, in a unique deal that incorporates six 30-second commercial spots. TelevisionWeek has learned that, in contrast to other prime-time TV deals, the producers of “The Contender” will also get all the revenue rights to any product placement in the show as well as other licensing and merchandising dollars.
Factoring in the value of advertising time, the actual cash component of the deal for NBC could be around $1.2 million an episode, network executives said.
It’s the richest pact yet for a freshman unscripted drama series, and industry executives said there are likely to be more like it as TV networks fight increasingly hard for hot properties from big-name producers. Mr. Burnett’s company will produce “The Contender” along with DreamWorks Television and actor/producer Sylvester Stallone.
The broadcast networks, which already have started giving up advertising time to land big reality concepts, may follow “The Contender” deal and also start giving up product placement revenue to clinch the shows they want, executives said. In fact, the practice could also creep into scripted series deals, although networks would be loath to do that.
“The networks want a hit show, and they are looking for new models,” said Donna Wolfe, executive VP and chief negotiation officer of Universal McCann, an Interpublic Group media services firm. “There are opportunities to get what they believe will be a hit show. And they want less risk, in terms of the production costs.”
Mr. Burnett insisted from the start that advertising time be included, network executives said. They said NBC-and all networks-first offered a straight cash license fee, and CBS later raised its bid by including advertising time. A CBS spokesman, an NBC spokeswoman and Conrad Riggs, Mr. Burnett’s manager and point person in the negotiations, all declined comment. DreamWorks referred all inquiries to NBC.
All subsequent bids, including those from Fox and ABC, also contained advertising time, the executives said, adding that NBC would then agree to the advertising component only if it could share in those advertising revenues given to Mr. Burnett and the other producers.
As one of the hottest TV producers, Mr. Burnett has a strong business advantage, having two of the biggest network prime-time shows-the “Survivor” franchise on CBS and “The Apprentice” on NBC. Mr. Burnett actually bought the advertising time from NBC at a reduced rate of around $130,000 per 30-second spot, according to executives. Typically, network time sells for much more-anywhere from $200,000 to $500,000, depending on the show. NBC will help him sell the time-if the producers need it.
TV executives are now bracing themselves for the floodgates to open for all big producers-including scripted producers-to ask for advertising time and product placement revenue in program deals.
“We would resist very much a producer or anyone else doing this, because our ad sales guys don’t want to have product placement in scripted programming,” said one veteran network executive. “However, to the extent that one day someone comes to us and says, `This is the only way we can do it,’ we’ll probably talk about it, like any network would.”
Another network executive said: “It’s sort of opening a door that the networks don’t want open.”
Recently, ABC and media agency MindShare USA did a production deal that included ABC giving up advertising time. MindShare will be a producer that will provide programming to ABC for no cash license fee. Instead, MindShare will keep half the advertising time-six minutes of a total of 12 minutes of advertising time in a typical hour-long prime-time TV show. ABC will sell the other six minutes.
Networks prefer to pay straight cash license fees for shows. By retaining the advertising time, they can gain financially.
Mr. Burnett has craved advertising time before. In the first cycle of “Survivor,” he asked for it from CBS. The network turned him down, network executives said. CBS structured a joint venture in which both share in the profits from merchandising, licensing, syndication and DVD rights only, not advertising time.