Carsey-Werner Tinkers With Indie Formula

Jul 11, 2005  •  Post A Comment

The news last week that one the of the last independent TV producers and distributors, the storied Carsey-Werner Co., is changing the way it does business raised the question in Hollywood of whether non-aligned prime-time producers can build a business without the corporate ownership of one of the major entertainment conglomerates.

After 24 years in business, close to 2,000 hours of programming and a slate of comedy hits that includes “The Cosby Show,” “Roseanne,” “Cybill,” “Grace Under Fire” and “That ’70s Show,” the company’s principals, Marcy Carsey and Tom Werner, will begin working independently of each other and will scale back their development.

“Given the odds of getting on the air, that model had to be thrown up into the air,” Mr. Werner said.

Mr. Werner confirmed reports that he has had “conversations” with Mosaic Media Group’s Jimmy Miller and Eric Gold about forming a production company, but said he is “open to any kind of alliance that will make it easier to negotiate these choppy waters.”

However, press reports last week speculating that Ms. Carsey might be retiring were exaggerated, Mr. Werner said.

“We continue to be in business on some projects,” he said, noting that he and Ms. Carsey are developing comedy series ideas with former “’70s” executive producers Jeff and Jackie Filgo, as well as projects at The WB and ABC that were rolled from the previous development season.

The company, which is located at the CBS Radford lot in Los Angeles, has 75 employees, the bulk of whom work in the company’s domestic and international distribution divisions. A company spokesman said co-President Dirk van de Bunt would leave Carsey-Werner along with other staffers, but the total number of downsized employees has not yet been finalized. Carsey-Werner’s distribution arm will continue to exist, Mr. Werner said, adding that business is excellent for sales of the company’s TV library.

“We are very clear we are going to retain all the rights for a long time,” he said.

The company’s feature division, which just finished principal photography on its first comedy, “You Are Going to Prison,” also will stay intact.

The change to Carsey-Werner’s business model does not mean independent-minded producers can no longer successfully launch shows, Mr. Werner said.

“The environment is certainly daunting, but somebody is going to come up with another way of developing a hit,” he said.

As recently as last year the company considered putting itself on the block. Carsey-Werner hired UBS Investment Bank to determine whether it was viable for an outright sale or in a position to create a joint venture with a rival studio (TelevisionWeek, May 3, 2004). But the company remained independent, and in August former partner Caryn Mandabach left to put out her own TV production shingle.

The decision to hold onto the Carsey-Werner library while changing other divisions of the business makes sense, said Bill Carroll, VP and director of programming for Katz Television Group, if independence from a larger media company was Mr. Werner and Ms. Carsey’s goal.

“For them, this maintains the equity they have built up in their company while allowing Tom to go off and do other things,” Mr. Carroll said.

Much has changed in the television business since 1981, when Mr. Werner and Ms. Carsey left ABC as programming executives to start up their own production company. For one thing, the end of the financial interest and network syndication rules, or “fin-syn,” in 1993 allowed the networks to buy studios and removed requirements for buying out-of-house programming. That spelled the end for many production companies as they found themselves absorbed by larger entities or effectively put out of business. Carsey-Werner, which maintained a steady stream of comedy hits despite regulatory changes, bucked the trend for more than a decade, even with networks enforcing perpetual license fees, which lock studios into set rates per episode for the life of the show, regardless of rising costs.

But with parallel consolidation on the station group side, the financial rewards reaped from syndication shrank. That made it harder for smaller companies to recoup their investment, compensate for failed series and cover administrative overhead, said Chris Silbermann, a partner in the Broder-Webb-Silbermann-Chervin Agency.

“Not only are you getting squeezed at the front end, there’s no pot of gold at the back end,” Mr. Silbermann said.

Successful producers such as Ms. Carsey and Mr. Werner are still getting rich under the current system, but their ability to support the costs of a production company without major conglomerate backing is diminishing, said Lanny Novak, the head of scripted television packaging for the William Morris Agency.

“The financial rewards aren’t quite what they had been before,” Mr. Novak said. “You can still do extremely well, but you you’re not going to hit that home run that is going to set up a company in independent means.”

The most common model for successful TV producers is a deal with a large network-owned studio, which covers the producer’s development costs but also cuts out a significant piece of any financial back end.

The shift at Carsey-Werner leaves few, if any, independent production companies focused on making scripted prime-time product for the networks. While Sony Pictures Television continues to exist without a network corporate cousin, it is backed up by the huge financial resources of its parent company.

That means smaller companies have to have an immediate success, with a viable revenue stream, to stay in business.

“If you don’t hit it out of the park, you’re basically working for fees, and you can’t support the [production] infrastructure,” Mr. Silbermann said.

But naysayers are nothing new in Hollywood, Mr. Werner said. Just like today, at the time Carsey-Werner started out the success of an independent production company was hardly guaranteed, he said.

“When we went into business together, they thought we were crazy too,” he said of industry executives in 1981. “If an independent wanted to come along and wanted to do it, it’s still possible.”