Warner Bros. TV Hits New Media Hurdles

Jul 24, 2006  •  Post A Comment

Warner Bros. Television, the biggest supplier of broadcast TV series, is learning firsthand how the Internet, cellphones and iPods are complicating relationships between studios and networks.

Until now, networks have controlled the distribution of the shows they purchase for broadcast. Warner Bros. has been working to forge agreements with ABC, CBS, Fox, NBC and The CW that would let it offer debuting shows such as “Studio 60 on the Sunset Strip” through its own digital outlets.

So far, at least four of the networks have resisted Warner Bros.’ proposals, sources familiar with the negotiations said. If the two sides don’t hammer out an agreement, the studio’s new shows may not be available for sale on the Web. Disagreements over those revenue-generating pursuits probably won’t affect the use of the Internet and mobile devices for show promotions, sources said.

Rebuffs from the studios create obstacles for Bruce Rosenblum, president of Warner Bros. Television Group, who last month said his company was aiming to strike deals with the networks by the end of summer.

Warner Bros.’ talks with the networks will help establish a new template for studio-network relationships in a world where shows pop up on the living room set, the Web and mobile devices. They may also signal how revenue from those new distribution channels will be split.

The broadcasters have a big stake in establishing their networks and Web sites as the exclusive place to see the shows they buy from Warner Bros. and other studios. The networks build their brands around the shows and they don’t want viewers to be able to see the series on studio Web sites, at least at the beginning of the programs’ TV runs.

“NBC wants ‘Studio 60’ on digital platforms to be NBC-branded because viewers think of ‘Studio 60’ as an NBC show and will look for it on an NBC-branded platform, not a Warner Bros. platform,” said Mark Graboff, NBC Universal Television’s West Coast president.

A Warner Bros. spokesman declined to comment.

When ABC in October struck its landmark deal to make hit shows such as “Lost” available on Apple Computer’s iTunes Internet store, it forced television executives to figure out how they would use the Web and mobile devices to distribute and promote their shows, and who might profit from digital distribution.

Networks point to the existing syndication model as a guide to how shows might be distributed via the Web or mobile devices. Currently, original series are branded with the network running them. As the shows age, cable networks or local stations that run them in syndication can use the programs in their branding.

One consequence of making shows available on the Web or mobile devices is that the value of the programs in syndication may decline because audiences have already had their fill.

Studios such as Warner Bros.-which doesn’t have a wholly owned broadcast network-would like to benefit more from the digital incarnations of the programs they create. For the 2006-07 season, Warner Bros. has 26 shows on broadcast television.

Warner has been open to offering networks exclusive rights initially to distribute new shows through all media, a source familiar with the negotiations said. Another issue, how studios and networks split revenue from sales on iTunes or other digital services, may create additional conflicts.

Most other studios, particularly those owned by media companies that own sister networks, took a 50/50 split with the networks, sources said.

One network executive said Warner Bros.’ proposal for getting its debuting shows on platforms such as iTunes was so one-sided they couldn’t even enter into conversations.

Warner Bros. suggested it should receive 100 percent of that revenue, an executive at another network said.

If studios and networks fail to agree on how new shows are distributed digitally, both sides face potentially unpleasant circumstances. Studios such as Warner Bros. won’t have any of their new network product up on digital platforms, which means less revenue and fewer promotional opportunities. And networks may not be able to offer viewers increased access to Warner Bros. shows that could be important parts of their new fall schedules.