NBC has struck an agreement in principle with Paramount Network Television to renew the hit sitcom “Frasier” for three more years. The deal, struck Wednesday night, could be announced as early as today.
As NBC continues to haggle with the cast of “Seinfeld” for one more year, the renewal of “Frasier” comes as good news. However, keeping the show wasn’t cheap. According to industry sources, NBC has agreed to pay Paramount a lump sum of roughly $50 million to reduce the studio’s deficit on the show as well as substantially increase the license fee to more than $2 million per episode.
If the $50 million deficit-reduction payment is factored in, the new license fee would amount to better than $3 million per episode.
The license fee for “Frasier,” which premiered in the fall of 1993, had not been renegotiated since the show’s launch and was still less than $1 million per episode, sources said.
The three-year deal means NBC will have the show through the 1999-2000 season. NBC and Paramount declined to comment for this story.
There had been speculation that if NBC couldn’t come to terms with Paramount, the studio would shop the show elsewhere. ABC was said to have been interested in talking to Paramount about acquiring the hit.
However, although the Peacock web’s exclusive negotiating window with Paramount expired earlier this week, industry observers did not think the show actually would jump networks. These windows often expire without a deal being struck, but that does not always mean the studios start shopping shows elsewhere.
A bumpy ride
For starters, NBC has solid ties to Paramount, which also produced “Cheers,” the long-running hit that spun off “Frasier.” On top of that, NBC has been very tolerant of the personal problems of “Frasier” star Kelsey Grammer, which have included brushes with the law, substance abuse, car accidents and this season a rehab stay that delayed production on the show.
Also, NBC awarded Paramount’s midseason comedy “Fired Up” with the plum spot behind “Seinfeld” on Thursday nights and also has deals with the studio for a new comedy starring MTV’s Jenny McCarthy and a new comedy with Al Franken.
Nonetheless, NBC also is getting a reputation for playing hardball when it comes to negotiations. Peacock execs have made it clear they don’t like the idea of being held hostage by producers, and being the No. 1 network gives them the power to twist arms when it comes to doing deals.
“They tried to lowball Paramount,” said one rival webhead, who contended that the network’s tactics with the studio were arrogant.
Apparently, the fear that the NBC Tuesday night success might actually jump was enough to get NBC to close on a deal fast. ABC execs, sources said, were ready to meet with Paramount and talk deal. This season, “Frasier” is averaging a 12.1/18 in the 9 p.m. Tuesday slot.
Some network execs feared that if “Frasier” had left NBC, it would have been a bad move not only for NBC but the industry as well. “There has to be a modicum of loyalty,” one webhead said.
A tidy profit
Clearly NBC, which makes more than $300,000 for each 30-second commercial spot on “Frasier,” had a good deal on the show. Even with the costly renewal, NBC will still likely be earning more than $1 million per episode after it pays Paramount.
Still, the high cost of this show, along with the anticipated $4 million to $5 million per episode it will cost NBC to keep “Seinfeld” on for one more year and ABC’s upcoming court battle over the renewal of “Home Improvement,” has many industry execs shaking their heads.
“We are all bracing ourselves,” one webhead said. “At some point you stop making money.” Not only are the costs of failure getting out of control, the exec continued, “The cost of success is out of control.”
Next week, hearings start in the suit “Home Improvement” producer Wind Dancer Television filed against Walt Disney, which distributes the show. Seeing as how ABC was offering $3 million per episode, and that show gets better ratings than “Frasier,” Wind Dancer execs likely are smiling about the Paramount deal.