Nets move to ensure bottom lines add up

At a recent session with reporters, ABC TV Network Group president Robert Iger said the major TV networks “can’t save their way into profitability” but rather “have to program their way” into it.

That doesn’t mean the networks have given up on saving, as evidenced by ABC’s recent buyout offer to non-union workers to reduce staff, resulting in an eventual reduction of roughly 500 positions.

All three networks also continue to talk tough about greater austerity in regard to new contracts with the National Football League and Major League Baseball, though the deals owners are making with ballplayers indicate they believe the networks’ bark is louder than their bite.

Faced with declining prime time shares and seeking to defray the costs of their news divisions, the three networks have increasingly turned to news magazines and reality fare to fill up their 22 hours of prime time each week, since both forms are significantly less expensive to produce than one-hour dramas.

Still, as producer Fred Silverman noted at a recent industry forum, dramas are not only frequently the “signature shows” of a network, but also represent the sort of quality programming that can’t be easily duplicated in other venues, whereas independents and cable networks can just as easily serve up talking heads and news as the webs. ABC Entertainment exec VP of prime time Stu Bloomberg concurred, citing the need for schedule balance to avoid becoming the “all-comedy, all-reality” network.

The question of supporting one-hour dramas, then, cuts to the core of how the networks will survive financially in the ’90s if they truly intend to program their way into profitability by maintaining prime time viewing levels. With a declining market for shows in off-network syndication and increased competition from ad hoc networks assembled by the major studios, the networks face a real challenge to prevent further diminution of their market power.

One obvious approach, according to Columbia Pictures TV president Scott Siegler, is to produce shows for “as close to the license fee as possible,” making a profit if possible in firstrun on overseas sales.

After that, studios have to explore a variety of new creative partnerships, from ancillary sales to concurrent exhibition deals on cable. Columbia, for example, spent $ 6 million on its two-hour movie/backdoor NBC pilot “Journey to the Center of the Earth,” though much of the cost is expected to be defrayed via a theatrical release overseas.

NBC is taking one step in regard to perpetuating hours with “Great Escapes,” a series of prime time serials shepherded by exec VP of prime time programs Perry Simon and produced by the network’s in-house unit in association with such outfits as The Cramer Co., Kushner-Locke Co. and Papazian-Hirsch Entertainment. The goal is to order one of the half-dozen shows in the works and give it as much as a 40-episode commitment–backed by the network and overseas money–nearly doubling the average episode total on one-hour series.

Siegler, whose studio produces the NBC daytime series “Days of Our Lives,” noted that a certain level of production is accepted in daytime shows and that there may be ways to shoot prime time shows for closer to daytime cost levels without chasing off viewers. “It’s a valid question,” he said. “I think that’s an area we should all be looking at.”

The need to increase the number of episodes also reflects how alternative channels have diminished the appetite for reruns. In their latter years shows like “Dallas” and “Knots Landing,” while still successful in their first airings , performed so poorly a second time around that eventually they couldn’t be repeated–meaning the networks had to go with original summer fare and not asecond prime time run, where the networks usually make their money off a program.

After experimenting with original summer programming all three networks have now made that a regular staple of their prime time mix, trying to offer at least some fresh programs throughout the 52-week calendar year–a hedge against cable and other competition that have dropped network shares to record lows in the summer time.

In addition to ordering more series toward the year-round goal, the networks have also increased orders for on-going shows–not a problem with reality fare or news, which has a lower per-episode cost than comedies or drama, but a major obstacle with other series.

Fox now routinely orders 40 or more episodes of “Cops” and “America’s Most Wanted,” as well as 30 of its variety series “In Living Color.” In addition, the weblet has expanded orders on conventional formats, like the Spelling TV dramas “Beverly Hills, 90210” and “Melrose Place,” to 30 episodes, beyond the industry norm of 22.

Those inflated orders are good news to distributors: They get shows up to the bulk needed for syndication faster, meaning a show like “90210” will have over 100 episodes (considered the magic number for that market) within four years instead of the usual five, providing a quicker turnaround in syndication and overseas.

Similarly, multiyear renewals provide suppliers more lattitude negotiating with talent and can potentially forestall the characteristic hold-up that takes place once a series reaches its option year and is free to court offers elsewhere.

ABC sought to prevent such problems earlier this year with its unprecedented three-year renewal of the hit sitcom “Home Improvement”–carrying the show through its fifth season, as well as agreeing to terms on a possible sixth year. CBS and Fox have also made two-year deals on “Northern Exposure” and “90210,” respectively.

The wild card in the entire network financial equation remains the impact of possible changes in the financial interest and syndication rules, as well as the response of the major studios, who have taken steps to ensure they have programming outlets beyond relying on the Big Three networks and Fox as gate-keepers of prime time.

Paramount and Warner Bros. have been most aggressive in that regard with shows like “Star Trek: Deep Space Nine” and “Kung Fu: The Legend Continues,” but Sony Pictures Entertainment and MCA will also enter the fray as well. Even smaller syndicators, like All American TV, have been able to tap that market, keeping “Baywatch” on the air by slashing production costs, focusing on overseas sales and keeping the show alive in first-run.

Gary Nardino, currently producing the first-run Warner Bros. Prime Time Entertainment Network series “Time Trax” under his deal with Lorimar–and before that the head of Orion TV Entertainment, which was ultimately forced to bail out of the TV business–said that the math simply doesn’t work out anymore on “ensemble dramas of high intent,” like Orion’s “Equal Justice,” that don’t travel as well overseas as action fare.

In addition, by operating in syndication companies like Warner Bros. and Paramount can enjoy certain economies of scale with hours that normally don’t apply when dealing with the networks by committing upfront to 22 or 26 episodes of a certain series. By contrast, the webs generally order 13 episodes and, fearing failure, frequently push for four- or six-episode initial orders on new hours.

“The cost difference (of a 22-episode order to start) is enormous,” Nardino says. “You don’t shut down and have the costof shutting down and starting up again, and everything you have to buy can be amortized over the course of the year.”

“Time Trax,” for example, is lensing in Australia and costs less than $ 750, 000 an hour to produce, versus a projected $ 1.2-to-$ 1.3 million price tag if the show was produced in the United States.

NBC did provide a full-season, 22-episode commitment to a new series from Steven Spielberg’s Amblin Entertainment and Universal, “Sea Quest,” at a reported license fee of $ 1-million per episode. Although that’s on the high end for a new series, the order will allow Universal to line up overseas buyers and amortize the cost of the project over more episodes.

Some producers have publicly called on the networks to extend full-season pickups to dramas at the start of the year, though Nardino doesn’t see that happening except in rare instances, such as a supplier with the superstar pedigree of Spielberg on “Sea Quest.”

Still, the networks clearly have to be more responsive to competing original prime time fare in syndication, as well as to the new streams of programming that makes available overseas, where the networks are currently less constrained in terms of their ability to share in profits from a series.

CBS, for example, can cash in on the in-house production “Dr. Quinn, Medicine Woman,” and observers expect the networks to more vigorously pursue their own production and ownership, especially if the fin-syn rules are eliminated or further relaxed. “They (the networks) are not going to step back,” Nardino says.

Columbia produces one of the few regular network action series, CBS’ “Raven,” and Siegler believes the webs will respond to the first-run crush and potential foreign sales with more shows on that order. “You look at what ‘Hunter’ does in syndication, and the appetite in first-run and international for action shows, and it’s clear the networks have forsaken that audience.”

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