TelevisionWeek: One of the big changes in the business is the in-house production unit, which creates shows first and foremost for the station group owned by that conglomerate. Some say that takes away shelf space and it takes away opportunities that otherwise might be there for outside suppliers. From your point of view, how do you deal with that phenomenon? Barry, what do you think?

Barry Wallach: I have been on both sides of the fence.

You go back 10 years, `Access Hollywood’ was born out of a vertical relationship, and here it is 10 years later. `Regis and Kelly’ in daytime on ABC from Buena Vista was born through a partnership.

Whether you are unaligned, a Warner Bros. or a Sony, or if you are aligned with CBS and `Insider’ or NBC and `Access Hollywood,’ you are talking with the station groups, talking about what their needs are. If we have a product that’s good, it’s going to stay on. If we have a product that’s bad, it’s going to go off.

Vertically integrated companies have been around. It seems to be sexy that it is in the news now through all of the consolidation, but some of the successful shows that have been around for decades have been born through these partnerships. `Insider’ to a degree with a partnership with CBS-CBS decided they wanted that show for probably good reasons with `Entertainment Tonight’ and so forth. There’s a partnership there. So good shows find their way on and bad programs find their way off.

Has this business changed? Yeah, clearly it has. But the risks are also a lot higher for everybody on both sides because of the failure rate and the low ratings.

So when you look at daytime, there are still half the ratings watching broadcast television. And when you look at the three networks, it’s about 11 or 12 hours of network programs. You got six stations, forget about Don’s [Corsini’s] situation with KCAL, or KRON in San Fran, those are kind of the anomaly. You are talking about over 40 hours of daytime programming that you need from the six stations. The networks produce 10 or 11.

Syndication is daytime. There are some very successful shows like the `Dr. Phils’ and `Regis,’ they’ve been there a long time. So it’s a hard business but there’s plenty of shelf space. Three-quarters of those time periods are available. And there’s no way that in-house companies, whether it’s CBS, NBC, ABC or whatever, are going to produce 30 hours or 10 hours if you each took a third away.

So there’s plenty of opportunities for good shows. The problem is it’s hard. As it is in prime time or anytime to find a successful television show.

TVWeek: I’m glad to hear there is opportunity, because sometimes it seems like a closed shop.

Mr. Wallach: There’s a lot of need. And Don’s situation is even more dramatic than the typical market.

Don Corsini: KCAL is a different type of animal and there’s not many of them around. So the needs are enormous.

TVWeek: Mark, it must be frustrating sometimes that some shows get picked up for another year even though they are kind of on the bubble or are very marginal, mainly because they happen to be produced by the same company that is distributing them and that also owns the stations. With that in mind, when you go into the marketplace, does it seem like sometimes doors are unnecessarily closed?

Mark Itkin: If you have one of those shows that is on the bubble because you’re trying to keep the real estate there, from our point of view as the packaging agent, that is more important than launching the new things. There’s a much bigger upside in trying to keep those things on the air.

When you are packaging a show and you are looking at the needs in the marketplace, there are going to be certain distributors that you might favor over others for strategic and marketing reasons. I think I’m not as optimistic as Barry. I think there may be more of the in-house self-buying of programs than of station groups buying from other distributors in the future. I just sense that is one of the things going on in the marketplace.

I hope that Barry is right about that because it helps me, but I tend to think that it’s becoming more exclusionary. So if I am going to take a show, for example to Buena Vista, today and it’s a daytime show, Buena Vista has no open dayparts, no open time periods in daytime at all. So it puts them in the same position as a Sony or a Telepictures. So then I say, `Well, if I am going to lay this show off, which is the best distributor, considering they don’t own stations. Is it Telepictures, Sony or Buena Vista?’

It really does affect where you place a show and you have to be very careful because the clients are counting on the agents to give them the right advice, to guide them to the right place, to make the right deal and to put them with a company that’s going to take good care of the show and get it on the air. It’s a long thought process in decidin
g where you are actually going to take the show. And sometimes, considering the fact that one of the places you want to sell the show has, as you asked, Alex, the doors closed, could really influence going to one of their competitors.

TVWeek: Barry, since the joining of NBC and Universal, can you help put in perspective for us what has changed in terms of what you do?

Mr. Wallach: The old company, NBC Enterprises, was basically a first-run company. We did do some off-network-`Crossing Jordan’ and some other programs. Obviously, now with the merger with Universal, the NBC Universal organization is just a tremendous library of products. There are 40,000 episodes of television that we are responsible for, some 4,000-plus movies. So the scope of our business is really three different parts. There’s the first-run business, and then there’s the off-network business, the `Law & Order’ franchises, sitcoms and so forth. And then theatrical business. All the Universal films and distributing those. … So it’s really distinct businesses that roll up to just about a $2 billion business. This is about 15 [percent] to 20 percent of all of NBC Universal.

TVWeek: Mark, while there are still lots of sellers, there are very few buyers. How does that change your business?

Mr. Itkin: It makes us as packaging agents need to be a lot smarter about what we do. The process is still the same. We still have to look at the voids in the marketplace. We have to look at the resources the agency has and really educate our clients as to what the needs are in the marketplace. Then we have to craft, really carefully, shows that will entice the very, very few buyers out there today. … It’s still important to us, as it always was, that we want to continue every year to be able to bring out good product. We just have to be really careful and look at the market and make sure what we are bringing out, there really is a place for it.

TVWeek: In recent years we’ve all got a new vocabulary and learned words like `duopoly,’ which means where there used to be two television stations with two managements there are now two television stations with one management. But at the same time, there are limitations to that because as the companies got larger there are group VPs and people in other places who also get to make choices about what shows up on what television stations. Don, can you explain to us how that works in terms of when I see programming on one of your stations, how much do you get to influence that or how much of that comes down the pipe to you?

Mr. Corsini: At the station level, in terms of Viacom Television Stations Group, we are involved throughout the process. Recommendations are given, many discussions, research and analysis is done at the station. And we are in concert with our corporate execs in New York. So at the end of the day, the responsibility is still at the television station level. And group deals are done out of New York, certainly. But there are also a number of deals done at the local level. So it just depends on the deal.

TVWeek: When it comes to marketing shows, does a lot of this fall to your group?

Mr. Corsini: Absolutely. It is the station’s responsibility to market the show or shows. We look at our program suppliers as partners and you need to have those partnerships to be successful in today’s climate.

TVWeek: We talked a little bit about duopolies, which are now a fact of life in many markets. I believe there are triopolies in some markets today and other deals that allow people to control various stations in the market. When you have that, often it seems like the station group has the option to move the show. Is that good news or bad news?

Mr. Wallach: I don’t know if there’s a specific answer. It really depends on the product.

In the case of Don’s situation, at KCAL he had other game shows [besides `Who Wants to Be a Millionaire’] and he had the environment where it could work on either station. That’s Buena Vista’s show, but I think that’s a smart strategy to be able to go back and forth depending on what was working or not working.

There’s other examples where you might have a talk show that’s geared toward adult women and if you are on a UPN station or a WB station, it’s a much younger audience.

What we’ll do sometimes is we’ll restrict that in the contract as part of the selling process and each individual market will determine that. So it really depends on the product. For daytime talk it could be the kiss of death by going on the duopoly either way. It could work either way.

TVWeek: Mark, when you are doing your deals, does any of this duopoly placement come into play?

Mr. Itkin: We’re pretty far down the food chain when it comes to scheduling and placement of television shows. So we don’t have a lot of say in what’s going to happen once we’ve sold the show to Barry or Hilary and ultimately when they sell the show to the station, to Don and his associates.

We packaged `Millionaire.’ We were sort of the beneficiary of the move. Fortunately it’s been a good move. So we appreciate that.

We’ve obviously been the beneficiary of some very bad moves. Moves from Fox stations to a UPN station, and again, just as Barry said, depending on the kind of show, the lead-in, the lead-out, the adjacency, it’s the kiss of death. So if we had, if I had `Martha Stewart,’ maybe I would have some leverage power negotiating with Barry as to what I could do with that show with respect to where it’s going to air and on what stations.

TVWeek: Don, you are on the front line of this issue. When you move `Millionaire’ and other shows, what’s the thinking that goes into that?

Mr. Corsini: Fortunately, in the case of Buena Vista and `Millionaire’ the move was relatively a no-brainer, because you already had `Family Feud’ in a time period where you could create a block. And that slide has worked out very well for Channel 9 [KCAL] so the compatibility factor was that. So that helped in terms of that decision-making. If you look at secondary runs of different products, `ET’ and `The Insider’ is a very good example. We have a successful run in access, which is great. But we double-run `ET’ and `The Insider’ and we double-run it on Channel 9 in late fringe, so there really isn’t any duplication in terms of the audience. So we find that a very successful mix.

The dynamics are intriguing, because you have these two juggernaut television stations that are completely different. You have KCBS, which is a more conservative, traditional network that doesn’t require much programming because, of course, we are fed by our CBS Network, and we are very pleased that the CBS Network has done such a sensational job in prime time. We are No. 1 in Los Angeles for the first time in many, many years and we are happy about that. That transcends into other dayparts, meaning late fringe, and lately it’s been seeing some double-digit growth. Our `Late Show With David Letterman’ has been on the rise, and that’s all very positive.

But it is a challenge. You have two different television stations. KCAL is independent and the dynamics are so different. The requirements for KCAL, we need products. We are truly an independent television station. We program 24 hours a day. As creative as the community can be with supplying us with good programming we at the same time also have to look into the aspect of producing our own. And we do. The duopoly produces 67 hours of news a week, and we are expanding. In addition to that we also produce local specials, which helps support our network on the CBS side, and we now have gotten to some additional local programming in terms of `Nine on the Town,’ which gives us another opportunity in terms of product integration and product placement. So that’s been a fun experiment.

The reality is we combine 67 hours of news a week and we are doing over 300 hours in local sports production that we do internally. It’s a juggernaut. It’s a production juggernaut and it’s been more than an interesting challenge.

TVWeek: Hilary, you have talked before about targeting audiences. Do you also talk about targeting stations?

Hilary Estey McLoughlin: Yes, and I think the ideal is to have something that can play on both affiliates and independents.

But clearly, certain shows have more of a feel for an affiliate and certain shows have more of a feel for an independent. A talk-variety show tends to be more of an affiliate-driven show. If we do something that’s more of a reality show, like a `Judge Mathis’ or an `Elimidate,’ and `Judge Mathis’ actually probably could work on both stations, both independent and affiliates, but certain kinds of more format-driven shows tend to do better on independents.

Single-issue shows sometimes have better chances on independents, given the audience and the compatibility with other shows they are running. We try to be as broad as possible, but clearly some shows have better chances of success on affiliates and some have better chances of success on independents.

TVWeek: Linda, do you look at literally each and every market and decide what’s the best way to handle that market?

Linda Bell Blue: As a producer I don’t have a great deal of control over the clearance of the shows and which one goes first. They are both successful when `The Insider’ goes first; it’s doing very, very well. And also when `ET’ goes first. I can control converting the lead-in and holding the quarter-hours. … We do 35 satellite feeds. We feed 35 shows outside `The Insider’ and `ET’ every week, including `ET on MTV,’ `ET on VH1,’ and in January we are launching `ET UK’ on BSkyB in Great Britain, and so there’s a lot of production going on. Like Don described a juggernaut, we too are a juggernaut, pushing show out after show out after show out.

TVWeek: Don, sometimes these shows come to you and they are on two-year deals, and if they don’t perform in the first year, it leaves you with a pretty tough choice of what to do. Have you been in that situation?

Mr. Corsini: Oh, probably. I think maybe a couple of times.

TVWeek: Will you share with us how you deal with it?

Mr. Corsini: Not well. It’s difficult. You have certain expectations and you anticipate certain efficiencies and delivery, and when it doesn’t happen it’s a problem. You make your selection based upon your knowledge of the marketplace, the demography in terms of who your audience is on the television station, whether it’s an 18 to 49 target, or 25 to 54, what have you, and you make those decisions.

Sometimes, unfortunately, the results are a little disappointing. So you are locked in a two-year deal; I don’t think anybody’s real comfortable. I don’t think our producers and program suppliers are comfortable seeing perhaps the expectations not being met and therefore it’s not a comfortable situation for either party, but we move on. As I said, it’s a business of relationships and partnerships. We are in it together, as far as I’m concerned, in terms of my program suppliers and what I have to do to help my program suppliers promote their products. We all want successes. We don’t particularly enjoy the failures, and not to beat a dead horse, but frankly it gets a little uncomfortable when you are in that kind of situation. Particularly if you have a long-term relationship with your producer and program suppliers.

TVWeek: Hilary, Don just called it a business of relationships. If you have a show that you set out on a two-year deal and it’s not performing in the first year, do you fight like hell to keep it on or do you throw your arms up and say, `OK, we’ll move on’?

Ms. Estey McLoughlin: We tend not to go out making two-year deals. We like to see if the show succeeds and then try to go back in and get a better deal for the show on a long-term basis. It hurts us from a programming/distribution side in terms of just not having as many opportunities because the trends tend to be the vertically integrated companies have stuck for two years with shows that should have gone off in one year but they had the ability to keep them on the air. Then they come to the conclusion in the second year that it is not working. It hurts us more from that standpoint.

TVWeek: Linda, in your case, `The Insider’ benefited greatly from being part of Viacom and Paramount and having the station groups and so forth. `The Insider’ got a commitment from CBS well in advance, going on a year or so, which gives you plenty of planning time. So that’s really a good thing for you, isn’t it?

Ms. Blue: Oh, absolutely. When we got off right after the start being on CBS stations in New York, L.A., Philadelphia, Boston, Miami, it gave us a great base to start the show. And it’s great to be part of this great new family because there’s always more to produce. So I say bring it on. Let’s keep doing more. We shot a network special for CBS in the rain for three nights over the weekend. All night long. In ponchos. When you have strong producers in a strong producing unit, like we have at `ET’ and `The Insider,’ it becomes an enterprise unto itself. And we do several offshoots of the brand to continue to grow the brand like we have at MTV. And this will be our second network special that we will have for CBS.

TVWeek: Let me ask you about consolidation for a moment. We’ve seen a good deal of consolidation. It’s hard to believe there could be more consolidation, and then MGM gets sold and all the distribution goes to Sony. Who knows who’s next? We are in the era of the mega-mergers. I wonder if each of you could comment on how consolidation has changed your business. Barry, obviously in a big way for you, the consolidation of NBC and Universal. Is it a good thing or should we be nervous that there aren’t enough indies out there?

Mr. Wallach: For us it’s given us a tremendous injection of product as we talked about earlier. I think it’s a sign of a mature business. On the station side you are seeing consolidation also. It’s economies of scale on both sides as cable clearly isn’t a huge factor.

I’m optimistic, Mark, but it’s also very hard. When you look at both the distribution side and the station side, the fact of life is there are only so many ratings points at the end of the day. … People have a life and they are going to work and go to the baseball games with their kids and so forth. So you are dividing that pie so many ways. With that, something’s got to give.

So with consolidation on both sides of the business, again, it’s a business and there is a bottom line to deliver. On the station side there’s been tremendous consolidation, and on the distribution side there has [been]. The benefit is the resources, like Linda was saying earlier. Being part of the CBS family, and for `Access Hollywood’ being part of the NBC family, makes the shows better. You’ve got resources to invest into them and there’s positives of it too. But it’s reality. It’s hitting this business now. But it’s hit the computer business. It hits every business. Fifty years ago it was a growth business.

TVWeek: The advantage of the consolidation of business is distribution. It’s more efficient to have one unit selling more shows. But I always wonder from the point of view of the show if it doesn’t mean less attention for each individual show. Do you think that’s true?

Mr. Wallach: No. I know in our case we have a very diversified portfolio through the Universal acquisition. The `Maurys,’ the `Jerrys,’ the `Blind Dates,’ those tend to run on the UPNs, the WBs, the nonaligned. And the other product runs on the Big 3. You see the same thing with Paramount and some of their shows, and on and on and on. I don’t think there is lack of attention. The shows are produced by Linda, or whoever the production team showrunners are, and that has nothing to do with the distribution company.

TVWeek: Mark, you look at it from a different point of view. Do you think that consolidation affects some of the shows that you have on the marketplace that you are worried about? Do they get less attention or more attention?

Mr. Itkin: I think they get more attention because there is less product out there. There is less product being sold. So as we are trying to be smarter up the food chain, Barry and the distributors, stations people, Don, are smarter a
bout what they select. Sometimes we look at it as a blank slate. When we take a show from a client and the client says, `I’ve got this show. Where should we go with it?’ and we look at it as an open playing field, could it be syndication, could it be cable, network, international? It doesn’t make a lot of difference in our life. There are a few less sellers on the syndication side, but I think the process we still go through is where is the best place to put the show.

TVWeek: Don, by definition when you have a duopoly you have a much larger territory to reign over, more shows to deal with. It is more efficient as a business model, but does it affect how you look at individual shows?

Mr. Corsini: No, we’ll buy a hit from anybody. Just make sure it’s a hit. … We do business, a lot of business, with Paramount. We do a lot of business with Warner Bros. We program 111 hours. That is our need from the two television stations: 111 hours. Which is a lot of time periods to fill. But between Paramount and Warner Bros. it’s probably 60 percent of our product. So the consolidation I don’t believe has hurt us at all. I think it kind of benefits us, frankly.

TVWeek: 111 hours includes network and news.

Mr. Corsini: 111 hours does not include news when you look at an independent and the needs of KCAL. So you combine KCAL and KCBS and that’s what we program. Other than news and other than sports.

TVWeek: Hilary, under the Time Warner banner there is The WB, but there is not a station group the way that Linda has been able to launch `The Insider’ on the CBS stations. So is consolidation a negative for you in that sense or is it an opportunity?

Ms. Estey McLoughlin: Obviously, with most of our competitors being vertically integrated, we like to say we are everyone’s second choice because once they figure out whether or not they are going to go forward with their projects and/or keep them on the air, then we tend to think we offer the best opportunity for them to come to a distributor and launch shows. So it has made it more difficult for us, definitely. It’s been tough on the business because the stations are now having to pick shows that maybe they wouldn’t have bought if they had the choice.

TVWeek: Because those shows are coming from the parent company?

Ms. Estey McLoughlin: Yes.

TVWeek: So does that affect the way that you do business?

Ms. Estey McLoughlin: They are waiting to see what happens. So it’s a later season; it takes longer to get a lineup. It makes it more difficult and challenging for an independent like us to get shows on the air.

TVWeek: Linda, I would think consolidation has been kind of a good thing for you, but looking back over the 10 years you have been involved with `ET,’ has it meant more resources or changes in terms of `ET’ by having another larger parent company that you are involved with? Or does it really make any difference?

Ms. Blue: `ET’ has a very healthy budget, as does `The Insider,’ so we have many directions that we can go with the show and I think that CBS sees `ET’ and `The Insider’ as such assets that they have called upon us in many ways to produce a product for them. So I think it’s great.

TVWeek: I’d like to open it up to questions from the floor.

Paul Ryan, Paul Ryan Productions: I am just curious if there is any talk for the future for more consciousness in television? Is there talk about creating something that may infuse optimism, personal growth, health or making a difference in people’s lives, like `Starting Over’ is actually doing?

TVWeek: I think `Starting Over’ does fit that mold, doesn’t it, Barry? He’s talking about shows that incorporate a higher level of consciousness along with other entertainment content and so forth, but you’ve had `Starting Over’ and that strikes me as that kind of a show that not only entertains but inspires women to think about their own lives, doesn’t it?

Mr. Wallach: It’s reality but last year a couple dozen women had new lives from it. Some very successfully. Some fell back, or whatever is going to happen is going to happen, but it was a great experience for these women and some of them really turned their lives around. And I think that there’s a very loyal audience that watches it because it hits your point-that they really care about these women and what’s happening.

So, yeah, I think there’s opportunity out there for that kind of programming, but it’s called broadcasting for a reason. There’s all different types of shows and people want to watch all different types of things. And there’s a lot of good stuff out there in syndication. Oprah Winfrey does a lot of great things; newsmagazines will very often cover things of a lot of interest to people. Martha Stewart next year is going to be in that sort of inspirational vein that you are talking about, about giving advice and that kind of stuff.

Some shows work, some don’t. It’s not all bad, and look, there’s a lot of closet watchers out there, like Mark said, who want the other stuff. And a lot of that stuff is on cable now. A lot of that is really what we are talking about here, in syndication.

Bill Schwartz, managing director of Schwartz & Co.: Do you take into account ancillary markets like DVD when you make decisions about your programs?

Mr. Itkin: Sure, because it’s another revenue source, which is important today. It’s always been important, but it’s extra important in today’s world.

I think that I tend to think more about that in prime time because of the back-end value of a show you are going to package, particularly in the reality business, in which it has been questionable whether there has been back-end value to certain shows. I think that it can be a great business. The syndication of `Fear Factor’ has been a great business so far. I think `Extreme Makeover: Home Edition’ will have a back-end life.

There’s room for our shows in prime time but if you can devise a show that is self-contained and that repeats well and get a really solid wide demo, there’s a good business there and there’s a good ancillary business there. I think that when you are packing in cable and syndication you try to find anything you possibly can because it is rough for the Hilarys and the Barrys these days. It costs a lot to launch it, it costs a lot to promote it, it costs a lot to keep driving the buyers to see it, and so if we can help with helping them place something on the basic cable network or bringing additional revenue to the table, it’s important.

TVWeek: Hilary, how about you? When you look at a show do you worry about maybe there’s DVD sales to be done off of it or licensing sales to be done off of it? Or is it just about the show?

Ms. Estey McLoughlin: Obviously our focus is getting the shows to work and making them work. We do look now at other ways to merchandise the shows, whether it be pay-per-view specials, VOD, wireless, and trying to incorporate the brand extensions into the wireless world. But right now those are young businesses.

The DVDs, from a strip standpoint, is tough. You have to come up with some sort of angle on it to package shows by some sort of strong suit that they have. You can’t just package strip shows as DVDs. … That will probably be difficult to do. You have to come up with some kind of hook for them. But clearly we are looking at all that stuff and other ways to maximize revenue on these shows and come up with new ways to create revenue streams.

Part Two will appear in the Jan. 3, 2005, issue of TelevisionWeek.