TelevisionWeek’s Syndication Roundtable

Dec 3, 2006  •  Post A Comment

TelevisionWeek: My name is Melissa Grego, I’m the managing editor of TelevisionWeek and I just wanted to thank and welcome all of our panelists here who are joining us in this year’s TelevisionWeek Syndication Roundtable. As we’ve done in recent years, we’ve taken the opportunity this year to invite leaders from various aspects of the syndication business to discuss the state and the future, and I’d like to just one at a time introduce each of you. We have Mitch Burg joining us, president of [the Syndicated Network Television Association]; Deb McDermott, president of Young Broadcasting; Ken Werner, president of Warner Bros. Domestic Television Distribution; Carla Pennington, executive producer of “Dr. Phil”; and John Nogawski, president of CBS Television Distribution Group. Correct?
Carla Pennington: I’m the only non-president.
TVWeek: Presidents and an executive producer. Well, today being the last day of the November sweep, I’d like to take the opportunity to start to talk a little about November sweeps. Carla, “Dr. Phil” hit recently an 18-month high, I believe, in the first week of the sweep. I’m wondering if you can tell us a little bit about what you might attribute that to and whether you stunt on “Dr. Phil” for sweeps.
Ms. Pennington: We do plan for sweeps and we’re very happy with the success. … We planned way back before the season began what we were going to do this year. You know, you go into your fifth season and the biggest job is to maintain the success and momentum you already have going. So we came up with the idea of the Dr. Phil House this season, which has given us a totally different look and feel for the show.
TVWeek: Well, tell us about the Dr. Phil House; what exactly is that?
Ms. Pennington: It’s sort of a reality show within a show because we move our guests in for a period of time, and I’ve always said when we’re doing the show and we’re capturing real moments onstage, you hear sometimes about things that happen before the show taped, and I thought wouldn’t it be great if Dr. Phil was available to walk in during, you know, a moment of stress with the couple or whatever and deal with it firsthand, immediately. And so he’s able to walk in, in the middle of the action, and that’s what we’re able to capture. By having these people there he was able to watch them from his car, from his computer at home, we had producers there around the clock, so we were able to capture reality as it happened. He was able to deal with the problems as they happened and not something that happened … months ago.
TVWeek: In a lot of ways that’s sort of re-envisioning the concept of that show, which is so much hindsight-related, right? Because usually he’s there talking to people after the fact about the relationships.
Ms. Pennington: Right. I mean, they’re dealing with current problems. It was a great tool for him, sort of a microcosm. You know, like putting people under a microscope and really studying their behavior. That’s what he does for a living. He’s a human behavior specialist. So it was perfect for us, but we planned that early, early on.
But really, with the success of the November book, [what] I would attribute it to is the stories. It’s all about the storytelling. From when I was at “Entertainment Tonight,” it’s all about how you tell a story. And we’ve had some very interesting cases and problems and stories that unfolded before our eyes on the stage as well. And one of them was a three-part story line that ended up-started out, excuse me-as one show and as we were taping it, it turned into three. That happens a lot because the drama, as I said, unfolds on the stage and it’s exciting. So we just try to find stories that resonate with the viewers, whether it’s a problem that everyone can relate to or whether it’s something that’s somewhat voyeuristic in watching some of these problems unfold. But we really did have some great content. All about the content.
TVWeek: You said going into the fifth season, there’s a lot of, perhaps, pressure, or you really want to maintain, you want to continue to grow, is there much pressure when it comes to the November sweep in particular? There’s been a lot of talk in recent years about the sweeps and are they still relevant?
Ms. Pennington: That’s true, you don’t want to get that call from Roger King, you know, the numbers are down. You want to maintain the success that you have and not take it for granted. There’s a lot of imitators that come along with the show, but I like that, so bring it on. Because it makes my staff’s creative juices flow. So again, it really is about maintaining the success, trying to keep in touch with what the viewers want.
TVWeek: But the sweep is still as important as ever to you?
Ms. Pennington: Oh, it is of course. It is important.
TVWeek: How about you Deb, as far as the sweep?
Deb McDermott: The sweep is totally important, except in San Francisco. We have people meters and we have, you know, every sweep is important. But the November sweep still-the buyers are still looking at that, at the major sweeps, and it is very important. And I agree with [Ms. Pennington], it’s all about the content. If you don’t have [good content], you can always hype and you can always say there’s going to be something in the show, but if it doesn’t deliver, then you’ve got a problem.
TVWeek: You have to back it up.
Ms. McDermott: Viewers have so many choices out there that the show is successful when it delivers content that viewers want, and that’s really important. And they’ve done a great job this book.
TVWeek: San Francisco is a good point. You’ve had a number of changes this season in San Francisco, right, on KRON?
Ms. McDermott: Right.
TVWeek: You were able to keep “Dr. Phil” on prime time, right?
Ms. McDermott: Yeah, “Dr. Phil’s” in prime time and we have MyNetwork that flows out of “Dr. Phil,” and “Dr. Phil’s” a great, you know, a good lead-in for them.
TVWeek: Now has “Dr. Phil”-are the numbers up in San Francisco for you as well?
Ms. McDermott: Yes, they are.
TVWeek: OK, so it’s across the board. Do you see going forward, as there are more and more people meters, the sweep continuing to be as important as it is?
Ms. McDermott: I think it’s getting more and more challenging as we have more people meters and more hits, because the buyers really are working at the most recent book in the computer and it’s harder to look just at the sweeps. But it’s going to take a while for them to roll out people meters across the country. It is very expensive and we prefer not to have them in lots of our markets because it’s just so pricey. It’s very expensive and it’s a huge adjustment for the market when the people meter goes in, in just what the numbers are.
TVWeek: John, what about you? This is a different November for you. You’ve recently gone through one of the most anticipated and biggest mergers. … the largest international distributor of television now with 70,000 hours or something like that in your library. It’s a lot to keep track of.
John Nogawski: Things have changed. We were always large. From a library standpoint it was more about the first-run shows that really were the big increase for us, you know, from the rest of the library [that] already existed.
TVWeek: And you already worked together pretty closely.
Mr. Nogawski: Well, we’ve been part of the same company really for six years already, so … even though there was a rivalry, there was some sort of a communication going on as well. I think actually it’s made it much more efficient where we would have woke up in the morning and Roger [King] and I would be figuring out our strategy, and we’re going to, you know, independently [try] to maximize what our business plan was. Now we actually can effectively work together. … We have one mission, which is to take our top-rated television shows, thanks to people like Carla Pennington, where really it all started. If you think of “Dr. Phil” as really the first of that merger, even though before we were together we walked out of a room where we had a meeting in New York and we got the production rights to do the television show and Oprah [Winfrey] had already chosen Roger to distribute it, and that marriage has worked real well. And now it’s so much easier. It’s really a more efficient way to operate our business.
TVWeek: When you were at The WB, the sweep was also important. You live and die, I’m sure, by those numbers day to day. … How’s it been for you this Nov. 1, Ken, as head of Warner syndication?
Ken Werner: Well, I think there is a change that is going on. … What you’re seeing with the rolling out of the people meters is essentially a bifurcation of the marketplace because in the top 10 markets now they are getting their information in terms of their demos right away, and because the marketplace in many ways is defined by clearances in your top 10 markets, if you’re sitting out there and for two or three months New York, Chicago and L.A. are not delivering the kinds of numbers that you’re looking for, you know, by the time you get to Nov. 1 you’ve already got yourself a trend there that causes concerns.
And obviously your clients in those particular markets, from the moment you go on, day one, they’re looking at the demos and by week five they’ve got themselves a trend. And they’re on the phone if the show hasn’t taken off, if you will, and they’re looking at it. Now I think it probably helps, and Carla can speak to this, in terms of giving producers feedback instead of waiting for the November book, especially when you open a show, you can see how it opens and then you can see day to day how it’s beginning to trend.
And when you have national numbers, which we all had at the NTI with people meters for many, many years, you can follow certain trends, but it was a national number so … it wasn’t helping you diagnostically. But now with you having 10 markets and depending on where your clearances are, you know we’re not all blessed to have the best clearances on every television station for every show. So you can then begin to see where is the show working, why is it working, are certain promotional techniques working in one market and not another, and adjust far more quickly.
So that’s in terms of the larger markets. It changes, obviously, in the case of Young, for instance. Although KRON’s obviously a very important market, the rest of the country is sitting there and, if they’re metered but they don’t have demos, they’re getting some sense, but everybody is buying off of demos. So you’re not quite sure how it converts. Like we have a show, “Tyra Banks,” which you know on a household basis does OK but in the demos delivers terrifically, and people are buying it for the demos. So when you look at the major markets and you see that it’s delivering a nice demo number in the major markets, you can sort of pass that along to the metered markets who don’t have people meters, and to the diary markets. But I think it’s becoming-it is-a very important element in syndication. And from a network point of view, networks are always run based on their NTI.
TVWeek: Right.
Mr. Werner: I don’t think they care about their affiliates quite as much as they should.
TVWeek: Mitch, your organization does a lot of interesting number crunching and sort of telling the story of the benefits of syndication, and I know one of the things that you tell people is about the live viewing of syndicated television. Wondering if you can talk a little bit about that and what you do with those numbers.
Mitch Burg: One of the things that comes up in all of the conferences is what is the impact [of digital video recorders] going to be within the arts. … So we said, you know, there has to be a better way of measuring this. So we went to TiVo, which had a panel of 3,000 respondents, and we were able to go in and see how people were [using DVRs].
Across the board, what we found was that syndication retained 80 percent of its audience across all strip programs. … We could all speculate or hypothesize why that is, [but] they are a part of people’s lives and then as a result of that they tune in and if they don’t see it today, they’ll see it tomorrow because they are watching us on average about twice a week.
Advertisers … want programming that creates loyalty, and they frankly want positions that they can own over time. What happened was this: People were looking at having this whole discussion of DVRs, which really [was] a lot of speculation or survival posturing, but nobody was bringing numbers to the marketplace. And so what we were able to do was go to clients and their agencies and say here’s what the numbers are, and we created a monthly track. And the interesting thing, we’re talking about November sweeps just a couple of seconds ago, one of the things that we say to our clients is that we deliver consistently across the year.
The stunting on a national basis really doesn’t matter because we’re delivering our average rating plus or minus 10 percent across the year. Why is that important? Because now November sweeps will be over [by] December. What is December? December is the biggest retail period of the year. Far away I think about 25 percent of all the sales … comes from the month of December. Our friends in other media potentially now turn off the spigot, and then we’ll do more weekly programs. … What happens in December is our ratings actually slightly go up, and so what’s more relevant than somebody who wants to sell something at Christmas by syndication?
TVWeek: Have you weighed in on the commercial ratings debate?
Mr. Burg: Yes. Some people are looking at second-by-second data as we go through. The advantage that we found actually goes down to formatting. Because syndication is embarked in the cash order business, what happens is we have very short commercial breaks. On average, our average commercial break is … only two minutes and 11 seconds long.
TVWeek: And how does that compare with prime-time broadcasting?
Mr. Burg: You can watch prime-time programming, you know, that they’re going into a national with a local break, you have enough time to go take a shower. … (laughter).
So what happens by doing this minute-by-minute rating, what we would show is we’re holding 96 to 97 percent of our audience during a commercial break. That’s even better because they’re exclusive national breaks … … The biggest issue in all of advertising wasn’t DVRs, it was clutter. And we provide the only environment that’s so short that people actually have the benefits of running their commercial and having people recall it. When people run in the commercial pod that’s only 90 seconds in length versus a traditional pod which were all four to six commercials long, there’s a 30 percent advantage in commercial recall. And that’s what really people are talking about. That’s the ultimate engagement tool.
TVWeek: In the last year since Disney and Apple made their iPod deal, I’ve heard just so much teeth-gnashing over new media and the scariness of it all. It sounds to me like you, Mitch, see great advantages in the new media, the new technologies that are out there.
Mr. Burg: They’re there … you know, the reality is we’re working in an environment where you can’t fight change. We’re looking to see what happens; you can’t sit there and say, gee, I wish the world stood still. Maybe it would be better from a business perspective that it would, but all successful people embrace change. And I think that’s an opportunity for the syndicators, because what will happen as a result of this … We’re in the content business. And so, you know, John and I will have discussions about what does that mean. It means taking your content and potentially putting it into new platforms or adapting it to certain ways. I think that creates the excitement of what we’re going to achieve next.
TVWeek: That’s interesting, because last year when I sat with a group of folks and talked about this, we talked about a potential broadband window for syndication. The discussion was like, probably no. And then “Two and a Half Men,” which Warner Brothers distributes, actually does have a broadband window.
Mr. Werner: Well, no … what we did was in connection with the sale of “Two and a Half Men,” the television station was allowed, if they wished, the right to screen episodes that were put on their air. So it’s really a partnership between the television station and the distributor.
Because at least as far as we’re concerned in my area, we’re dedicated to the health of television stations. You know, there are an enormous number of changes going on. I look at it like, you know, on Broadcast Island everything sort of seems OK, you know, there are waves out there and so on and so forth, but if you look underneath Broadcast Island, there’s like, you know, volcanoes and there’s all sorts of disruptions. But it’s still looking OK.
Television stations have great reach, great frequency, great margins. They have great ubiquity in their communities and what we’re trying to do is to partner with them to deliver them great content and great marketing. Because we think it takes at least four or five years; the world will flatten when digital comes along.
There are already a hundred choices in the average television household and so it’s going to become much more about marketing and content and much less about the initial first move or distribution advantage that historically broadcasters have enjoyed.
So what we’re trying to do, at least at Warner Bros., is partner up with stations to help them maintain their vitality, and the way they’ll maintain their vitality is by having unique programming and using their reach and frequency and partnering with us in terms of marketing to reach out to those consumers and let them know that there is something special and different about their television stations. And I think then no matter what interface comes along, people like comfort; they have these relationships with their television stations that have been around for, you know, 50, 60 years. They’re not going to quickly change.
Television stations, you know, it’s still an excellent business. The challenge I think broadcasters have had is articulating a vision to the financial markets, because they’re all publicly traded, as to how they’ll survive. And I think a lot of that’s partnering with people who can provide them with great programming and content.
TVWeek: Deb, what’s your take on it?
Ms. McDermott: I think there’s a huge opportunity for what you’re talking about with the broadcasters and the sydicators. … What a lot of people don’t realize is that the broadcasters’ Web sites and their local markets are the highest frequency, I mean, have the highest number of hits and they’re at a huge advantage. So partnering with them and putting content on there that viewers are going to go to because viewers are coming to our sites for weather and for news [makes sense]. And they see that they can go and grab something about “Dr. Phil” and what’s going on with “Dr. Phil” or something that’s going on with any show that’s out there that’s syndicated. … that’s on “Entertainment Tonight.”
Anyway, there’s such an advantage there, and the partnership that ABC has done with the affiliates has been a very strong partnership. … There’s just there is so much that we can do together in that area. We also have digital channels; we have extra channels. There are opportunities down the road for more programming, there’s opportunities for more partnerships. … There’s going to be a lot more opportunities coming forward, and we just need to really look at those, think creatively, and it’s all about the viewer. I mean, we have creative content that the viewer wants to see and give it to them in a platform where we can get their attention. …The advantage of the local stations is we can do that. We have that ability to do that in our markets.
TVWeek: Can you sell and do you sell your ad time in packages with what’s on your Web site versus what’s on the air?
Ms. McDermott: We do it all different ways. Sometimes we package it with on-air, but sometimes we just sell the Web site. In this ABC example we’re selling a sponsorship that is all on the Web site, and we’re selling it and it can be in an interactive commercial which is very attractive to advertisers. It’s a very exciting world and the biggest excitement about it all is the quality of the video. No longer are the viewers going to be satisfied with video that isn’t crisp and clean on their Web sites.
TVWeek: How lucrative is all of that at this point, and do you see it growing in the next year? Because this is really pretty new, right?
Ms. McDermott: Revenue on the Web site is the fastest-growing revenue category for every television station and television company and probably for most people out there. We’ve gone through a huge learning curve of trying to figure out how to sell it and what the value is. And really getting the advertisers to say, ‘Oh yeah, that’s what I want to do.’ …
There’s a lot of opportunities to market their product and we’re working through all that, and I would say that, you know, it’s huge growth, I mean it’s 100, 200, 300 percent every year. You’re going to see some major growth because the numbers haven’t been that big and we see companies that are making major improvements in what they’re bidding just for the Web advertising without spot included.
Mr. Nogawski: You know, I think you really have to look at it as evolutionary as opposed to revolutionary because although it was ABC who made the first move, but when you look around at what people are doing and nobody thinks they’ve, you know, figured it out, I think everybody, whether it’s CBS or … everybody’s out there trying different experiments with different platforms to really try and discern what the customer is interested in, and you’re beginning to see as people test this that consumers are looking at the computer and broadband in a different way than they look at television.
I mean, what “Dr. Phil” does is tell a story. And it’s a television experience, and that’s a very different experience … When people turn the computer on they tend to look for very short bits; it’s very text-driven, it’s a different kind of experience. Many people are connected to work, so I don’t know that they’re allowed necessarily to sit there for hours, and so as we all spend time and money and energy looking at how they interact with that media and how that either complements or competes with television, we get a much better idea about how to deal with it.
Because I have heard, for instance, broadcasters thought that, you know, just having news on would be a compelling thing. But it turns out that that made that too narrow, because there’s not that much local news, if you will. Maybe they need entertainment; maybe they need to come to distributors such as … I mean, we are in the business of creating many types of entertainment and of different lengths, and that’s one of the skills we bring, and so it may be that you need to create something that’s a little bit different.
TVWeek: What kind of conversation are you having?
Mr. Nogawski: What’s coming out of all this is just how ideal all these platforms are really for the syndication business, because this is what we do: We carve out a place to exist.
That’s kind of how syndication originated itself. What network wasn’t providing, we provided the fill for that, and no pun intended. And as a result of that, you know, we’ve actually carved out really an incredible business. We took from what was network television that just sat, you know, in a vault and was useless until, you know, a young guy called Desi Arnaz Junior or Desi Arnaz came along and said, couldn’t we rerun these things? And, you know, it created a syndication business.
Filling the holes with first-run television created another business, and then getting to the point where it was day-and-date created, another business. And now look at all these burgeoning areas, whether it’s going through Apple or going on a Web site from a local television station or doing something through Verizon, it really is the syndication model. It’s carving out something where we will provide a service and provide certain programming to fill those areas, whether or not it’s full length.
I don’t necessarily think that that’s the easy solution. The low-hanging fruit is just to take our existing content, throw it on there and say, OK, well, let’s just repurpose it in another way. I think what we need to be charged with as television producers is what is it that they want? How can we produce it? Kind of like what we did in the syndication forum originally, then make different kind of content for that in particular user, for example in the wireless world. We took “Entertainment Tonight” and we made “ET to Go.”
We learned a lot; it was a quick learning process because also you’re dealing with a very small screen and we quickly learned you can’t shoot it the same way that you would normally shoot the television show. It needs much more close-up, it’s much more bits of information, they aren’t going to be patient enough to sit there and watch an entire episode. They want what they want when they want it in a very short stint. Producing for wireless was one thing. Producing for the Web is another…
TVWeek: You produced “Dr. Phil” for wireless? Do you do anything-not yet.
Ms. Pennington: No. Our Web site is very successful in the number of hits that we get, but the streaming video we do is limited. We give people extra content, what they didn’t see on the show. What we created this year is something called “Dr. Phil Uncensored,” where they can log on and see what Phil thought about the guests or thought about the production of the show, so you feel like you’re getting a little inside information. But also, just from a producer’s standpoint, the new media … I think it’s a great way to build more awareness for the show. If you look at what CBS is doing with YouTube, where you can log on and get the best 30 seconds of “Letterman” the night before, it just builds more awareness, and we’ve started using it for “Dr. Phil” as well. We’ll give them some content that we think, you know, the younger, hipper YouTube kind of viewer would want and get more eyeballs on “Phil.”
TVWeek: We’re tracking how all of your companies develop and who’s got a new job and who is responsible for what. It seems that most of these big companies have divisions dedicated specifically to exploiting the company’s property digitally and distributing it that way. We’re also seeing some smaller companies that might be experts in digital distribution, and I’m wondering how it fits into the grand scheme of your huge responsibility for all of this content., Particularly Ken and John, how do you interface with those divisions of your company.
Mr. Werner: Well, you know, we’re studios that create content and market content. That’s what we come from. Our expertise is to create things that people are interested in and market them.
I happen to work for a division that distributes it to television stations, but as an enterprise, in order to be vital, and in order to maintain the economics and make it a good business, you need to be able to understand and appreciate the different venues that have come along.
If you look at it historically, when pay television came along, when cable came along, when independent television stations came along … remember, there was a day when you couldn’t release a network show into syndication until it went off the network. And you know, it turns out that putting a program on in strip in access actually increases the network’s view.
So it’s important to understand and gain an appreciation for what is going on in these new areas. From my perspective, Warner Bros. having that kind of a division-understanding what that business is in a really tactile way so that we can figure out how best to exploit things and how best to slice the pie-is a great advantage because if we didn’t do that, then we would be really at the mercy of outside forces. Because as Mitch said, the world is changing. We need to embrace change. We’re not going to be able to stop it, so we might as well be able to take advantage of it.
TVWeek: So do you work in concert with people who are deemed the people in charge on a day-to-day basis?
Mr. Werner: Not on a day-to-day basis, but the way we’re organized, we all report in to the same structure and we try and run our businesses and also adapt to changes in the business environment. What do you think, John?
Mr. Nogawski: We have a very distinct area that works in that space. And they certainly are experts in that space, and their job is almost to be an aggregator from all the different areas inside the company, so they have a different expertise than we have.
We certainly produce, and there are things that they may use in some of their deals. And then there are other deals that are just much more like a syndication model … I don’t see them being involved in, say, doing a deal with Deb through her stations and her Web sites. That would remain more in our domain.
TVWeek: And that’s your relationship again.
Mr. Nogawski: There’ll be other deals that just make more sense, that are kind of like one-offs from a television show. If we were to take the “Dr. Phil” moments, let’s say, and be cutting deals with Yahoo, for instance. If there was a deal-it’s not even in the working stage-but in other words, that being an example, that probably would be more inclined to be put through us. Whereas if it was a giant Google deal that is going to take the 70,000 hours of television that we have and work out some kind of buying it or streaming it, or some sort of market advertising-supported model or something like that, that would probably be done through that separate division.
So there’s a degree of where we’re finding it’s more appropriate for us to work a deal than it is for them to work on it. So there’s a marriage there.
TVWeek: Well, with all this talk about slicing and dicing things differently, I would love to hear how each of you determines or defines or measures success for a show. Over the years I’ve been told it’s a combination of the time period-how it performs in a time period against direct competition-along with comparison to lead-in a year ago, and that generally a 2 national household rating is pretty much what you need to have the combination of demos in there. Does that still hold true, Mitch?
Mr. Burg: I think what happens is that everybody’s looking at ratings and performance lead-in, lead-out, things of that nature. But as advertisers are looking for deeper relationship with programs, those are kind of the old metrics. Yes, it’s nice that we have real ratings and it’s nice that we have this daily presence and people stay through the program. But underlying that is kind of emotional connections that people have toward programs, and this is probably the next area that people will start to move toward. At NATPE we’re hoping to share some new research that we’re doing which will deal with people’s emotions and attitudes towards individual television hosts and show how that connection is strongest in syndication.
TVWeek: Deb, is that something that you would take into account in making a decision about whether to renew something or move its time period?
Ms. McDermott: The more research information we have, the better and the easier it is to make those decisions about what you’re doing, and the more important that information becomes. We do psychographic information on our shows on the income levels, the family sizes, the age groups, do they like to buy high-end cars?
There’s a whole lot of information that we try to garner. … It’s usually playing in or out of news. … But what kind of audiences are going to be brought into the next show? If that show only takes care of itself, we’re not necessarily interested in it; it’s going to be fruitful for that time period, but it’s not going to help the next program.
And that’s really important to us-how does it flow into the next program? So the more information we have the better. In the local markets we really like to have 2’s in the demos. I know that the numbers, as you go into larger markets, it gets a little bit smaller. But we’re kind of stuck in daytime with 1’s and a 1 is a 1 is a 1.If that show can break to a 2 in a demo, it’s doing well and we’re very excited about it.
TVWeek: How about you, Ken?
Mr. Werner: I think the marketplace, the television stations, determine what’s successful or not. … It’s the nature of syndication that everybody has different needs. So you’re putting your program into different environments and then you’re aggregating it and so the question is, given the number of television stations that have it, do they find it to be worthwhile in terms of delivering advertising dollars? And that’s the metric you look at. So it depends on what your array of stations are and whether they feel that it’s worthwhile for all of them to continue to contribute to it or not. …
You’re either losing money or you’re making money, and how much money are you making? And those are the types of things that we look at. How are viewers responding to it? Do we believe in it? Does it need more time? Is the show growing? Is it declining, is it flat?
You have to look at all of those things. Because you’re always risking, generally the people in the distribution business, up until now, were usually at risk when they put a television show up. So when you’re deficit financing, you want to believe in the project and you want your clients to believe in the project.
TVWeek: John, would you agree?
Mr. Nogawski: We’ve got two levels right now. We’ve got a real high-class problem. We have nine of the top 10 television shows on the air right now, so in a way we’re spoiled. On the other side we have, what is it that is the next thing we’re going to do? And it’s all about “show me the money.” It’s really what it comes down to.
We’re in a very difficult business because all these great shows have populated the most lucrative time periods. And what we’re left with is the time periods that mean less to the television station, that they’re willing to pay us less for, yet we don’t want to put a television show on the air that we’re not proud of that does cost money to produce. And so it’s become more difficult for us as a production entity to find that next niche, yet know you’re going to go into a time period that probably is not one that the stations are as much willing to pay for. So what you’re really trying to find is that great talent or that great concept that you hopefully can produce efficiently but still put a quality piece of merchandise on for the stations that can hopefully grow and not just be an ROS spot. …
Because of patience level, because of the people meters, because of a lack of time periods, it’s become more and more difficult. So now we have to even look beyond it; that’s why I’m so excited about the new platforms-maybe those are going to help keep us or allow us to keep these shows on the air longer. You know, maybe we can make a little bit of money by putting it on Deb’s Web site. Maybe we can make a little bit of money by … running it simultaneously on cable. Maybe we can do an integrated marketing opportunity where there’s some sort of sponsorship involved inside the television show. These are all the things we’ve got to start doing, otherwise there’s no sense in us producing any more new television.
TVWeek: It does make me wonder, is there room? I have a hard time imagining a new show showing up on the air getting sold that isn’t either spun off of an existing hit or incubated. Do you think we could see another “Judge Judy”?
Ms. McDermott: I think it’s challenging right now because a lot of us have contracts for time periods that go on a number of years, and they don’t all end at the same time. We really need to be developing a show. … But new development, we’ve seen less and less of that. I mean, last year was a pretty slim year for development.
Mr. Werner: We need to be able at Warner Bros., because we’re not aligned with anyone, to create as many different types of programs that we think will pop. … You never know where success is going to come from, and to the extent that you are very, very focused in terms of where you’re looking, I think that limits your abilities.
We know that success is more challenging than failure and failure is much more probable. But we think for television stations, they need this first-run programming. They need to be distinctive and they need really to encourage people such as ourselves in terms of the deal-making and the type of money they’re willing to put down and the promotion, so that we’ll look at it and say, look, you know, we’re willing to take two or three shows and we’re willing to put them on the air and we’re willing to do long-term arrangements, but you need to also be willing to promote them and to have that same level of commitment and to underwrite their financing because, you know, you never can buy failure cheaply enough.
If you just start putting on shows that you don’t believe in or that are not being produced at the level that audiences expect, then it’s just going to sit there and you have a hundred competitors. … And when you have that reach and frequency and you have that ability to reach out today to audiences, I think it’s vital for television stations to take advantage of those opportunities and to encourage distributors to produce top-quality programming and to market them. So when we talk about partnership, that’s what we’re talking about.
But we’re also very robust in terms of trying to look at, you know, you have traditional affiliates, you’ve got Fox affiliates, you’ve got CW affiliates, you’ve got independent stations, you’ve got MyNetwork-there’s lots of opportunities out there, and as Deb said, they’ve also got digital channels. And given the way residuals work, digital channels are going to need original content because the residuals on off-net are very high. So there’s a huge opportunity out there, but it’s really about today taking advantage of the opportunity that broadcasters have-that strategic advantage-and taking advantage of it before it really becomes flat.
TVWeek: You mentioned not being aligned with a station or group, and traditionally that’s been perceived as a challenge for your company; you have to do things a little bit differently. Do you still see that as the case?
Mr. Werner: I think that what we’ve seen as a result of vertical integration is a shrinking of the marketplace, because it appears that, generally speaking, if you’re vertically integrated-with some exceptions, such as King World, which was a merger if you will-you’re producing for your owned-and-operated [stations]. And that’s a strategy.
Warner Bros. has always had a strategy of being very robust-we’ve been very, very successful at producing programming that people are interested in. … They look at what we’re offering and they look at what’s developed internally, and we like to think that generally speaking the product will win out. … As I said, you can’t buy failure cheaply enough. So it’s a double-down. If you go with a program that’s produced internally, which you don’t think is as good as the other one and it doesn’t succeed, you’ve lost money at your television stations and you’ve lost money at your distribution company.
So we think there’s a great future; Warner Bros. has been very successful producing for all the networks. … They produce for everyone. Because they have great creators, and we think that’s the same thing in syndication. We’ll be partnering with stations because we’ll produce great programming and we’ll help them market it.
TVWeek: Last year at NATPE, of course, most of us-probably not you, Ken-were surprised to hear that UPN and The WB would be merged into The CW, and there was a lot of immediate speculation about the impact that would have on the syndication market. There was a lot of talk about potential for resurgence of original weekly hours and all kinds of things. But many of the stations ended up picking up MyNetwork Television, including KRON in San Francisco. I’d love to hear all of your reaction …
Mr. Werner: The post-mortem?
TVWeek: Yeah, the post-mortem (laughter). Has it panned out the way you thought?
Mr. Nogawski: I think originally we would have been excited for there just to be The CW. At least looking back now, almost a year ago, when the announcement came out, as we watched Warner Bros.’ network and UPN merge, that was exciting from the network level because we said, OK, well, now we have an opportunity to take the best of the best and then create a few things and really now have an emerging network.
TVWeek: And of course your company was half-owner, right?
Mr. Nogawski: The other half. And the reason we liked that was because it took one more network out of play, which would create, you know, we thought, a better environment. And from a syndication standpoint we thought, OK, it’s also an exciting opportunity because it would open up a whole realm of stations to go put programming on and we certainly, between all of us, have plenty of it to put there.
The choice of putting MyNetwork together took away that opportunity from the syndication business. And it’ll bear out whether that’s going to be a successful entity or not a successful entity. I mean, it’s not for us to judge it here when we’re a few months into its beginning, but it didn’t bear out as a great syndication opportunity, unfortunately for us.
As far as for looking forward on that, where will it end up, I think we’ll find out here in the next year. I think as far as the different kind of programming, though, that might end up in some of that environment, it still may end up being produced in different ways. Whether they’ll stick with their philosophy right now, who knows? We’re not part of their management team. Deb maybe knows more about where they’re headed than any of us; she at least is an affiliate.
TVWeek: What was your reaction when you heard about The CW, Deb, and if you can, tell us why you chose to affiliate with MyNetwork.
Ms. McDermott: Well, we were totally independent before. We just saw MyNetwork as an opportunity for us to have prime-time programming that-you know, we owned “Sex and the City,” and “Sex and the City” has a life cycle that would be rotating off, and we’re constantly looking for new product. We felt like maybe this was an opportunity … where the source of our programming was going to be coming from [prime time] and felt it would be a strong option. The CW and The WB merger really didn’t impact us because we didn’t have either one of those.
TVWeek: Are you happy so far with how MyNetwork has worked out for you?
Ms. McDermott: MyNetwork has performed very strongly in San Francisco. It’s either the top-performing affiliate in the country for MyNetwork or in the top three, and it rotates between New York and, I believe, Miami.
TVWeek: Mitch, do you see the possibility for another big merger or big deal like this that can rock the world? Is there room in the market to see that happen again?
Mr. Burg: Every time you think it will happen, something new will happen. You know, part of the whole excitement at NATPE last year when this announcement came down was not only the opportunity for syndication in terms of clearing programming, which certainly would have been significant, but also the displaced viewers that happened. …
The younger-skewing viewers were actually at play, and I think that benefited syndication because when we’re running the same programming genres on a show like “Friends,” for example, we’re delivering better 18 to 34 than anybody else. So did that money flow in to us? I think to some degree that happened. …
We’ve looked at a research piece just today that said of the top five sitcoms that are on television, national television, three of them are in syndication. So that created dollars for us. The other part of it also was the ethnic skew that UPN had, and certainly we have programs that help reach that target as well. So indirectly there was a benefit to syndication as a result of the combination … and then the dollars looking for the best place. Interestingly, our sitcoms alone reach … almost 80 percent of the 18- to 34-year-olds in the country in one week. That’s higher than any of the broadcast networks and twice that of MTV.
TVWeek: Thank you once again, all of you, for coming and sharing your insight this morning. Good luck to you on all of these challenges in the coming year.


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