An Offer A&E Couldn’t Refuse

Feb 7, 2005  •  Post A Comment

A&E is hoping that its record-breaking purchase of “The Sopranos” will make people forget “Law & Order.”

The decision not to pay up to renew its rights to the off-network run of “Law & Order” in 1999 sent A&E into a tailspin from which it has only recently begun to recover, partly on the strength of reality shows such as “Growing Up Gotti” and “Dog the Bounty Hunter.”

“Law & Order” went off A&E in 2002. TNT reportedly paid a then record $700,000 for new episodes of “L&O,” and $250,000 for episodes that already aired on A&E. A&E had been paying $155,000 per episode for the first 181 “L&O” episodes.

A&E this season is airing the off-net run of “CSI: Miami,” and “24” will go on the air next year. But “The Sopranos,” at a jaw-dropping $2.5 million an episode, is A&E’s biggest bet yet. It’s also the biggest license fee ever paid for an off-net show.

While advertisers, who will ultimately foot much of the bill, want to see how A&E will edit the program for basic cable, network President Abbe Raven said she is certain the network will turn a profit on the acquisition.

“We are extremely confident that this show is going to not only perform, but it is a wonderful opportunity for our ad sales group to get out there and open up new categories,” said Ms. Raven, who is leading the network’s turnaround. “We believe that this show is going to do extremely well for us financially.”

For its $195 million, A&E will have “The Sopranos” almost exclusively. The show will not be sold to stations for weekend syndication for four years, and HBO will not air seasons 1-5 of the series on its linear channel for the duration of the deal. “The Sopranos” will remain available on HBO’s on-demand service.

Ms. Raven declined to discuss ratings projections for the show. “We feel it’s going to do very healthy numbers,” she said. “We’re confident it will continue to help these double-digit increases that we’re experiencing in ratings.”

Given the choice between having “The Sopranos” and “Law & Order,” Ms. Raven said she’d rather have Tony and Co. “Don’t forget, `Law & Order,’ or any off-net show, has been seen by the broad television audience, whereas `The Sopranos’ has only been seen on pay cable. You do the math,” she said.

Turner Broadcasting said similar things when it acquired HBO’s “Sex and the City.” The show is one of the highest-rated comedies on cable, but TBS’s effort to sell $50 million sponsorship packages for the show had to be scaled back.

Making It Profitable

For A&E, “It’s a risky deal,” said Charlie Rutman, president of Carat USA, which bought a significant “Sex and the City” sponsorship package for client Alberto Culver.

A&E faces some of the same issues that plagued “Sex.” “They paid a lot of money. They now have to make sure this thing is edited appropriately,” Mr. Rutman said. “If you edit it too much, it’s not the same show. Am I buying `The Sopranos’ or am I buying `The Sopranos Lite?”‘

At the same time, he warned, “more clients are moving closer to the PG zone than the R zone.”

“Their goal is to find advertisers who want to be heavily involved and are willing to pay a premium,” Mr. Rutman said. “That’s the $2.5 million question. I wish them luck. It just feels like a lot of money. They’re going to have to do pretty well to make this thing profitable.”

Jason Maltby, co-executive director of national TV at MindShare, said that while “The Sopranos” raises content issues, “You’re always going to have the group of advertisers that will embrace more edgy stuff. It’s the usual suspects-studios, beers, some of the autos.”

Mr. Maltby also said advertising decisions cannot be made until A&E’s scheduling plans are clear.

“How are they going to do it without burning it out quick?” he asked. With 78 episodes, he said, it would run out fast if it were stripped, and if it airs once a week, it will take a long time for A&E to recoup its investment.

Mel Berning, executive VP of ad sales at A&E Television Networks, said he was asked if he could sell “The Sopranos.” He said his reply was, “Happily.”

“We see an opportunity to bring a lot of advertisers to A&E or back to A&E,” he said. He said advertisers in the movie and entertainment category, the retail category and other younger-skewing advertisers “have been beginning to come back to us” because of shows like “Dog” and “Gotti.” Those advertisers left as the network’s viewership got smaller and older.

“This just gives us another property to talk to them about and to continue to grow our audience and sustain our momentum,” he said.

Some advertisers may be concerned about the show’s content, Mr. Berning acknowledged.

“We have advertisers right now who have sensitivities. This is a great show. It’s got great characters. It’s got great stories,” he said. “It’s critically acclaimed. I think that over the long haul, the kind of storytelling you have in `Sopranos’ wins out over these issues of content and sensitivity.”

Mr. Berning said A&E won’t necessarily follow the model TBS used in selling “Sex and the City,” HBO’s first series to hit basic cable. (A&E Television Networks’ History Channel was successful last year when it aired HBO’s “Band of Brothers.”)

“We’re going to try to look at this show and the categories that are going to go in there and put together some interesting packages.”