Producers caught between regs, studios

Another year has gone by, and the future of independent television producers remains in a great state of flux, hinging largely on government regulation of the networks and the vertically integrated power of the major studios.

The big event for independents, of course, was the major relaxation and perhaps eventual elimination of the financial interest and syndication rules, in essence freeing the networks to produce and share in revenues from all of their primetime programming, limited only by how much they care to gamble on the risky world of network production.

The studios are betting the webs will put quite a lot into that gambit, and have increasingly turned their attention toward the creation of ad-hoc networks for first-run syndication, though that hasn’t prevented their continued domination, along with the networks, of the primetime landscape.

Where independents fit into this scenario remains anybody’s guess. Since networks can own more shows, they have the option of taking an interest in independently produced programs; however, that also provides indies with an opportunity to have the network function as their bank and help offset the costs of production — albeit in exchange for a back-end share of those programs.

Several producers believe that network support will make it possible for them to compete in the series arena, after a period in which deficits associated with production have forced such mid-sized companies as Orion, MGM and (briefly) New World out of the primetime game.

Others, however, maintain that turning over rights to a network is no different than dealing through the major studios, and that ultimately the true independent — a company that produces and controls its own programs — is, with the exception of a few small niche players, an endangered species.

A number of independent producers note that there will still be a demand for their services as producers but question whether they will be free to pursue the entrepreneurial goals of owning the shows they make. As the always-quotable Leonard Hill colorfully put it recently, the issue represents the fundamental difference between “the unique pride of authorship when somebody is at risk in production” and those who welcome “the Soviet security of salary.”

Some believe indies can survive but must approach the business differently than they did in the past. “Independents have to think more strategically,” said entertainment attorney Ernie Del, who helped structure the novel Wind Dancer Production Group arrangement with ABC and Disney, making the network thecompany’s bank (in exchange for a piece of the series) and the studio its distributor.

Companies have to realize that the industry is contracting, Del notes, “but having said that, you have to remember that there’s a need for creative talent. (Independents) have got to be smart and not just think in the old ways.”

In terms of prime time series on the three networks and Fox Broadcasting Co., 17 different independents are involved in producing 23 of 91 regular series scheduled excluding movie slots, or just under one quarter of primetime shows on the three networks and Fox Broadcasting Co. Those shows total 18 hours of primetime, a little over a sixth of that provided by the four services.

That’s down from 28 series that totaled 20 1/2 hours last fall, a 20% decline in the number of series in which independents play a part, although the figures are fairly close to independent production levels during 1991-92, when Fox programmed fewer hours.

Still, the story doesn’t end there. Of those 23 shows that list an independent company as the supplier, at least six are connected to a network, accounting for another 4 1/2 hours of the total. Two more, shows from Shukovsky English Entertainment and Mozark Prods., are fueled in part by multiple-series deals with CBS.

Series business

The networks point out, rightly, that they can keep a number of independents in the series business. By helping finance programs — particularly costly action-oriented hours like “Walker, Texas Ranger” or “The Commish”– the webs help defray costs that have sunk more than a few indies, and nearly one studio, MGM TV.

A classic example of the dynamics that have plagued independents surfaced last spring, in fact, when CBS came to the rescue of “Walker” after Cannon Pictures ran out of money in the midst of production.

Ultimately, Columbia Pictures TV joined the party as well in exchange for providing the show-running services of Frank Lupo, whittling Cannon’s participation down to a share of the project, but without the upfront deficits that nearly sank the show.

Although there’s a future in owning and distributing shows, networks note that with the failure rate of primetime series there is an upward limit to how much of their schedules they would be willing to produce.

Network-friendly indies also note that if a network is somehow prone to play favorites with their series (either in the form of scheduling or simply being more patient when it comes to cancelation), than a network alliance gives them a leg up vis-a-vis other primetime fare.

On the flip side, studio officials and some independent producers point out that by allying themselves with networks those independents yield a degree of both creative and financial control over their properties — particularly with the power webs hold over the exhibition of programs.

They also site increased activity by the network news divisions that have diminished the opportunities for all suppliers of entertainment programs in primetime, with 10 total hours currently scheduled by the three webs and Fox. Coupledwith movie slots and “Monday Night Football,” those entries account for 24 hours, or more than 30% of primetime on the four services.

“I don’t think it’s in anyone’s interest for the networks to keep replacing (dramatic fare) with those (news) shows,” says Larry Sanitsky, a partner in the independent Konigsberg/Sanitsky Co., which is producing the new CBS soap “Angel Falls.”

That show was one of the encouraging signs for indies out of this year’s development process, along with another CBS hour from a TV movie producer who hadn’t previously done a primetime series — the Kushner-Locke Co.’s modern western “Harts of the West”– on its fall schedule.

Both companies are, at this point, producing the projects independently without studio or network backing. In fact, “Angel Falls” becomes the first primetime series distributed by ACI, a consortium of indie producers formed in 1987 that includes Avnet-Kerner, Robert Greenwald, Hill-Fields Entertainment, Konigsberg/Sanitsky, Michael Jaffe Films, Steve Tisch, Steve White and von Zerneck-Sertner Films.

According to Sanitsky, it’s no coincidence that a fair percentage of the new dramatic series are from independents: major studios have shied away somewhat from that business, just as they did with the TV movie form several years ago, because the economics of one-hour television are no longer very good.

“You can’t carry all that studio overhead against something that has such a limited return,” Sanitsky notes, with the exception of the action-adventure syndicated fare, which have become a big business for studios due to their popularity overseas.

Smaller margins

As for a primetime soap like “Angel Falls,” Sanitsky says leaner companies like his own can get by on smaller margins and, in the process, keep production and jobs alive locally. “It’s in all of our interests to find a way to keep this programming on and try to keep it here in Los Angeles,” he says.

Unlike the studios, the failure of such an effort can devastate an independent, and Sanitsky said the major challenge is to keep costs down. The company’s approach includes having creator-exec producer Joyce Eliason script the first six episodes of “Falls,” forestalling the need to hire a writing staff.

“Those old one-hour shows from the studios that carry a $ 1 million to $ 1.5 million (per-episode cost) are like dinosaurs in this business,” Sanitsky maintains.

“Frankly, I think there’s a lot riding on ‘Angel Falls.’ I sort of see us at the forefront of something”– indies getting more involved in the one-hour business – depending on “whether we can make the economics work ourselves.”

Producer Leonard Hill, a partner in Hill-Fields Entertainment and longtime student of and combatant in the fin-syn war, also believes that independents are at “a very critical crossroads” in terms of their future within the industry — based on whether regulation will promote diversity or allow the industry to slide “down the path of mindless vertical integration.”

While the future in the series area remains a mixed bag, signs on the movie front are more ominous. ABC, CBS and NBC have all become more active in that area, and outlets like Fox, TNT and the USA network (jointly owned by Paramount and Universal) either take at least a partial production role in all the movies they air or produce the lion’s share of their own product.

In addition, while the payoffs aren’t as great as on series the risk associated with movie production isn’t as high either, and networks can rely on movies and miniseries — which travel better overseas than sitcoms and ensemble dramas — for both foreign distribution and their longterm libraries.

Some independents continue tothrive, such as RHI Entertainment, which, relying heavily on overseas partners, is supplying CBS such high-profile fare as the miniseries “Return to Lonesome Dove” and “Scarlett,” the eight-hour sequel to “Gone With the Wind.”

One alternative is for independents to capitalize on overseas sources of financing and other revenue streams, such as homevideo, to turn the U.S. into a secondary market and diminish the importance of a network sale. That’s the approach New World Entertainment has used on series like “Zorro” (on The Family Channel) and “Paradise Beach” (in syndication), as well as Saban Entertainment on projects like “Floating Outfit,” a four-hour miniseries starring Martin Sheen and Corbin Bernsen that will lens in South Africa.

Saban is fully funding the $ 6 million project through a deal with the South African Broadcasting Co., which provided facilities in exchange for territorial rights, and Vidmark Entertainment, which will distribute the production domestically in homevideo. Saban intends to produce 10 movies during the next year using such a formula.

Lance Robbins, senior VP of movies and miniseries at Saban, said the company feels its unwise to “rely on the networks as the basis for our live-action production” and doesn’t want to give away overseas rights and work for a producer’s fee.

Instead, by seeking out partners and creative financing strategies — like selling theatrical and video rights in advance of a network sale — Saban views the U.S. as its after-market. Because of those ancillary sales, Saban can also cut the network license fee (traditionally about $ 2.7 million per movie) in half on certain projects.

“The networks are looking for creative ways to save money as well,” Robbins says, adding that such a system also provides greater creative control by taking the U.S. buyer out of the production loop. “You have to remain flexible and creative in your selling … and keep open to other ways to generate revenue.”

Who is the bank?

Essentially, if indies are to continue to live up to their name, the question is who will function as the bank to support independent production. “Where are the equity investors?” notes attorney Del, citing overseas companies like Italy’s Silvio Berlusconi Communications and France’s Canal-Plus that have helped finance a number of independent programs (the latter has a deal with Papazian-Hirsch Entertainment).

Hollywood certainly hasn’t thrown in the towel in the fin-syn war, still waging the fight in Washington, and signals from the networks remain mixed — with some cause for optimism that the webs will support independent production as well as real fears, spurred by last season’s development and scheduling period, about the encroachment of in-house production.

Many producers also remain wary of the networks engaging in practices that prompted the fin-syn regs in the first place — namely, extracting rights in exchange for scheduling shows and conditioning access to primetime.

“We have at the very crux of all these arguments one single term: diversity,” Hill says, seemingly speaking for many when he adds, looking to the future, “The jury is still out.”

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