Warner Deals Share Revenue

Sep 18, 2006  •  Post A Comment

In a first for a major studio and networks not aligned under the same media conglomerate, Warner Bros. Television Group last week unveiled two test revenue-sharing deals for showing selected Warner Bros. series on digital platforms such as the Internet, iPods and cellphones.

The deals involve new Warner Bros.-produced dramas that will air on ABC and NBC this season.

While ABC has been able to raise digital revenues on shows that its corporate parent, The Walt Disney Co., owns outright through its studio, Touchstone Television, the network had not made agreements for shows it didn’t own prior to this deal.

Because digital downloading is so new, networks and studios are not sure exactly what kinds of revenues can be generated for a new show, and in turn how to split them equitably. Warner Bros., one of the top outside suppliers to the Big 4 networks, has been trying to secure a deal that would offer a split on digital platform revenues with its network partners.

“This is an experiment,” said Bruce Rosenblum, president of Warner Bros. Television Group, who brokered the deals along with one of his top lieutenants, Executive VP Craig Hunegs. “The evolution of these businesses really will not look the same two, three, four, five years from now.”

The deal with NBC “split revenue streams kind of along the revenues a network would typically get and a studio would typically get, and expanded it to the digital world,” said Marc Graboff, NBC Universal TV’s West Coast president, noting that ad revenues have traditionally been part of the network model while studios retain the cash raised from models such as syndication and DVD sales.

NBC gets the rights from streaming the Warner Bros. drama “Studio 60 on the Sunset Strip” on NBC-branded sites, NBC affiliate sites or third party-branded sites, as well as video-on-demand, subscription VOD and wireless platforms. A similar deal gives roughly the same rights to ABC for Warner Bros.’ “The Nine.”

In both cases, Warner Bros. has the rights to permanent downloads of episodes on electronic retail platforms (such as iTunes, Amazon and AOL) after initial broadcast on the network. Rights are assured through the 2006-07 season. Both the NBC and ABC agreements involve only a single new Warner Bros. show on each broadcaster.

“We talked about initially a global deal, and then as we all learned about the complexities of what was going on, we all came to the conclusion simple is better,” said Mark Pedowitz, president of Touchstone Television, who brokered the deal for ABC.

Warner Bros. expects to make similar deals with the other broadcasters and major cable networks, Mr. Rosenblum said.