While barter is still champ, cash may become syndication’s comeback kid.
That’s what some syndicators and stations are predicting as the economy picks up and cash assumes a more prominent place in stations’ buying strategies.
A swing back toward more cash would make life less complicated for syndicators, who have had to become increasingly creative to meet their bottom lines during times when stations haven’t had the ability to pay higher cash license fees.
And if the economy does start booming, stations will want to substitute cash payments for barter, because the advertising time will be much more valuable to them.
While there are some signs that things are improving, the industry consensus is that a pendulum swing from barter to more cash won’t happen immediately.
Advertising is showing some improvement. “There’s been a sense of a pickup for some months in the economy, which is only now beginning to translate into increased advertising activity,” says Tim Duncan, exec director of the Advertiser Syndicated Television Assn. (ASTA).
“We’re seeing the first quarter look a little more encouraging,” adds Gary Montanus, senior VP of marketing at Worldvision, a sentiment shared by syndicators and stations polled last week.
Summing up, Genesis Entertainment president Wayne Lepoff says, “Psychologically, I think people feel a little more confident (heading) to this year’s NATPE.”
However, Jim Curtin, VP of program services at TV rep firm HRP, says the growth might be slower than some expect. An economic recovery “would have a positive impact on stations and, a year or two down the line, mean a better marketplace for syndication in terms of finance.”
Buena Vista Television president Bob Jacquemin believes stations are becoming healthier and the industry is in the initial stage of a transition to higher cash-license fees. But stations have not yet “been willing to pay us enough to reduce the barter content” in the company’s series.
Ad improvement not enough
Duncan cautions that an improvement in the advertising market alone “may not be sufficient for stations to feel flush with cash. They’ve got to get the excess debt off their balance sheets.”
While the cash/barter equations may indeed shift in the future, virtually all cash shows these days have barter elements in them and the feeling persists that barter is here to stay.
Rick Feldman, VP/station manager for KCOP Los Angeles, calls barter “a fact of life,” saying “I don’t see a big enough turnaround over the short haul to make any kind of major impact in the use of barter.”
Rich Goldfarb, senior VP, Turner Broadcasting Sales, maintains that barter will always be the main ingredient in expensive, slick action hours geared for prime time as it is in the new hours “Star Trek: Deep Space Nine” and “The Untouchables” from Paramount and “Time Trax” and “Kung Fu: The Legend Continues” from Warners.
And when there’s tremendous demand for hot off-net sitcoms, syndicators will also be able to demand a mix of cash and barter.
But, in general, “I think the industry has greatly injured itself by allowing the proliferation of barter,” says Michael Alexander, president, general manager , WWOR-TV New York. “I hope stations around the country will wake up and reverse the trend.”
Buy back offer
Spurred by the need for inventory for make-goods to advertisers because of what Jacquemin termed “Nielsen underdelivery” of kids’ ratings, Buena Vista Television recently offered to buy back a 30-second spot in each of its “Disney Afternoon” shows.
“It came back a resounding no,” with a ratio of almost 10-1 against,” says Jacquemin. But despite the “Do Not Pass Go” sign on the plan, it was “clearly a reflection that the station community was getting healthier and demand for their local inventory was significantly higher than we thought to be the case. That can only reflect positively on the direction of the business.”
Jacquemin adds that there may be a way to address the problem of barter inventory that might be felt in the future should cash make its comeback. In the case of the company’s 1995 off-network entries “Blossom” and “Dinosaurs,” the executive says that if demand increases, the company might work arrangements with its licensees whereby it could collectively buy back that inventory. The amount of inventory would be determined in January or February of that year based on increased demand.
“If in fact an arrangment could be made where they made us whole,” Jacquemin says, “I have no problem with selling a certain percentage of the time back to the local stations who can make more money because of differences between local spot rates and national rates.
“Somebody is going to break the ice,” Jacquemin predicts.
Mike Shaw, senior VP of advertising sales at Buena Vista Television, says that while syndicators’ barter load could lessen by ’94 or ’95, the barter component is not as important as the combined price received for the show. “It’s the total dollars that are important, not the mix,” he notes.
Or as ASTA’s Duncan puts it: “Cash and barter are just two sides of the same coin and that coin is called the price of the show.”