Syndication: How to Make it on a 1.0

Sep 16, 2007  •  Post A Comment

The unveiling of the latest batch of first-run syndicated television series this year did little to buck the downward ratings trends the industry has struggled against over the past decade.
This has left syndicated TV executives to confront a thorny question: How do you make money on a 1.0 rating?
Last season, when six first-run strips hit the airwaves, the lowest-rated of those to be renewed pulled a 1.0 season average national rating. That wouldn’t have been good enough two years ago, when a 1.4 rated talk show, “Jane Pauley,” failed to get renewed. In 2002, a 1.9 wasn’t good enough for stations to stick with “Pyramid.”
As the benchmark for success within syndication continues its slide — from a 4.0 rating to a 2.0, and now a 1.0 — only two series to debut last week were able to break the 1.0 barrier. Rising production costs, diminishing license fees and the migration of viewers to cable and the Web have syndicated TV executives tightening their belts to salvage profit margins.
“It’s tougher to make money in the syndication market these days,” said Chuck Larsen, president of TV consulting firm October Moon Television. “The syndication marketplace has certainly changed, and it’s much more difficult to gather an audience in this 500-channel universe. But for successful shows there is still significant money to be made. That’s why you are seeing fewer shows out there every year — that’s part of the fallout.”
Industry sources estimate production can cost a mere $250,000 a week for a two- to three-month span in which an entire season could be completed. This is one reason why inexpensive court and game shows continue to fill up development dockets.
A survey of startup costs for court shows, for example, indicates a series can be made for as low as $6.5 million to $9 million. Research and development could run around $1 million, with the marketing budget running between $1.5 million and $4 million. Since an entire season of the show can be taped in as little as two months and few judges demand the salaries of a talk show host (which can start at $8 million), production costs remain low compared to the other categories.
The Numbers
Most of the syndicators that brought out new shows last week tapped the court and game genres, or tried to build on the success of established brands with offshoots.
NBC Universal’s new talk show “Steve Wilkos,” a spinoff of the studio’s long-running “The Jerry Springer Show,” staked its claim as the only new strip to beat its lead-in performance, one of the key measures of success for a syndicated show. It posted a four-day average of a 1.1 rating and a 4 share in metered markets. That rating is 10 percent higher than its lead-in.
“Wilkos” ran even with the average ratings for the time period a year ago. The series also showed growth among adults 18-34 with a 0.8 rating and a 6 share. That rating was up 60 percent from its lead-in, and it gained viewers among women 18-34, who doubled their audience count.
“Obviously it’s very early on, but we are very encouraged with the ratings, as well as the feedback we are receiving from viewers, our local stations and advertising partners,” said Barry Wallach, president of NBC Universal Domestic Television Distribution.
The only other series to break the 1.0 barrier was Warner Bros. Domestic Television Distribution’s “TMZ,” which averaged a 1.7 rating/4 share in better time periods to take the No. 1 rating among the rookies. That score was down 18 percent from its lead-in and off 19 percent from year-ago ratings for the time slot. The series has shown time-slot growth in the younger age groups, with its 0.8 rating/5 share average, a 14 percent jump in audience size.
Sony Pictures Television’s “Judge David Young” finished the week as a consistent performer, holding even with both its lead-in and versus September 2006 with a 0.8/3, down 11 percent from its lead-in and 20 percent from a year ago. Sony declined to comment.
Game shows took up the bottom two slots on the list of new shows this week, with Program Partners’ “Merv Griffin’s Crosswords” scoring a 0.8 rating/2 share, a rating that was down 27 percent from its lead-in and off 38 percent from time-slot ratings last year. Twentieth Television’s “Temptation” earned a 0.5 rating/2 share. That rating was down 17 percent from its lead-in and off 50 percent from ratings a year ago.
A show’s rating refers to the percentage of U.S. homes with TV that watched the show, while the share reflects the percentage of homes with TVs turned on that tuned in. Nationally, each rating point in overnight metered markets represents about 761,564 U.S. households.
Seeking a Hit
With the threshold of viability for a syndicated first-run show getting lower, distributors are left with two choices: Deficit finance and hope for an outright hit, or find a way to make a buck from a 1.0 rating.
And syndicators are wrestling with some of the same challenges that have prime-time broadcasters and cable networks struggling to boost profit.
For syndication companies, those industrywide problems are compounded by a lack of good time slots into which to sell new programming.
“The challenge now is that there are weak lineups you inherit whenever you launch a show,” said Hilary Estey McLoughlin, president of Telepictures Productions. “That’s what we’re up against when we launch a new series, however, that also provides a low benchmark for success. We were able to get stations excited about ‘TMZ’ and got some terrific time periods.”
The syndication landscape is unlikely to change dramatically this decade. Consolidation means there are fewer station groups to sell.
With prime time periods locked up in many major markets as far out as 2012 by successful series ranging from “Wheel of Fortune” to “The People’s Court,” syndicators are left to fight for the few remaining open holes on station schedules. Those vacancies usually are created when low audience counts force a cancellation.
Knowing that any new series probably will pull in close to a 1.0 rating has left syndicators with three options: Trim production budgets; find pre-branded concepts with built in audiences; or find new revenue streams.
The Pipeline
These limitations have dried up the development pipeline at many studios, where the volume of series being developed declined to six last season, down from 12 in 2001. Studios including CBS and Disney-ABC sat out the 2007 first-run development season. Representatives of CBS and Disney declined to comment.
“In recent years, many daytime series have had to face the challenge of having either no license fees from stations, accepting instead a pure barter split, or a de facto license fee that is purely minimal,” said Bill Carroll, VP and director of programming for Katz Media. “This has forced syndicators to find new cost-efficient ways of producing product that is either not overly expensive, which is why we are seeing as many court shows as we have, or taking existing resources and extending a brand that already exists.”
That’s evidenced by last week’s debuts. Court show “Judge David Young,” game shows “Merv Griffin’s Crosswords” and “Temptation” and NBC Universal’s spinoff “Steve Wilkos” all fall into categories that can be produced on a stingy budget.
“Part of the reason we continue to be in the court business as well as explore the game show genre is that there is a reduced cost of production and marketing expense in those type of programs and you can make a profit,” said Bob Cook, president-chief operating officer of Twentieth Television. The company distributes court show strips “Divorce Court,” “Judge Alex” and “Cristina’s Court,” with “Divorce Court” and “Judge Alex” breaking a 2.0 rating.
Several shows debuting this fall also benefit from the use of prebranding, among them spinoff “Wilkos”; Warner Bros.’ “TMZ,” based on the popular entertainment gossip Web site TMZ.com; and “The Morning Show With Mike and Juliet,” which taps the talents of popular Fox News hosts and began a slow rollout earlier this year.
Beyond keeping costs low and tapping known brands, syndicators are finding new ways to wrest revenue from traditional show concepts through new business models.
Mr. Cook said Twentieth is developing alternate streams of income for “Temptation” to help offset the costs of production. “In addition to the license fee we get from stations and the barter, we added a home-shopping element so viewers can purchase prizes from the show at a nice discount, as well as [creating] a perfect product integration opportunity for advertisers, who love interactivity,” Mr. Cook said. “Temptation” is based on FremantleMedia’s classic game show “Sale of the Century.”
Mr. Cook also stressed the growing importance of Internet revenue opportunities to the new series being developed under the Twentieth banner.
Syndicators, along with broadcast and cable executives, also are turning to the Web to test a show’s viability before they invest money in production.
Ms. Estey McLoughlin noted Telepictures is using the Web to incubate series and build a brand for a potential program.
“If your brand is already well known, you can get a station group excited about something and either find yourself in a bidding war or be placed on a lineup that can help your show succeed,” said Ms. Estey McLoughlin.
If that strategy doesn’t work, syndicators are left with two options this season, she said.
“Either do a show that’s cost-efficient and/or figure out a way to have deep pockets and be in the game for the long run and hope that it strikes gold and causes a bidding war.”


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