SAN FRANCISCO — News Corp. president and chief operating officer Peter Chernin sounded the alarm Friday over the rising costs of the TV business that have brought the networks to “the edge of economic turmoil.”
“It’s not yet time for a eulogy,” he told station execs at the spring affiliates meeting in San Francisco. “But I strongly believe it’s time for a real wake-up call.”
Chernin blamed agents and lawyers for “invading” the TV business after cleaning up with feature films. He complained that hit shows are being renegotiated earlier and at higher fees, slamming network profits.
Fox’s Sunday hit “X-Files,” for instance, was just renegotiated and will cost Fox $15 million more each year, he said. (Of course, that’s a 20th show, so much of the money stays with the company.) But ABC, he contends, lost close to $20 million on the midseason Arsenio Hall flop.
Sports rights are also “spiraling to new heights,” and network development costs — more than $50 million at Fox this year — “are spinning out of control,” he said. Chernin also blasted the latest Hollywood development trend: demanding episode production commitments before a series pilot is even shot.
Networks held hostage
“Networks are being held hostage now for series commitments,” he said. “It’s kind of like buying a house before seeing the neighborhood or the floor plan.”
Fox’s decision to develop much of its network programming inhouse at 20th Century Fox is a “defensive move” to avoid having hit shows pulled off the schedule by suppliers, Chernin contends.
Chernin’s remarks were, perhaps, a not-so-subtle way of encouraging affils to help the network more through increased promotion and by picking up some of the costs of extending rights to the NFL and other programming. The timing, however, was rather ironic, given News Corp.’s agreement to spend more than $1 billion to purchase Intl. Family Entertainment days earlier.
Chernin said owning IFE and multiple distribution platforms is necessary in order to justify and spread out the increased programming costs. Affiliates, however, see IFE’s The Family Channel as new competition for viewers and potentially an eventual threat to their program exclusivity (see related story).
News Corp. co-chief operating officer Chase Carey dodged the bullet on the testy issue of program exclusivity, saying Fox has no current plans to make its programs available through any other distribution platform than its affiliates. Carey also threw Fox affils a bone by unveiling a new one-year test of a “seamless,” commercial-free transition from the end of network primetime programming at 10 p.m. into local news. To compensate for the lost spots, Fox will elongate two 30-second local commercial breaks within the 9 p.m. to 10 p.m. hour.
Carey said there would be no strings attached, but he did come down hard on affils that haven’t yet started airing local news. “There are simply no excuses anymore to be newsless,” he said.
Fox is offering its affiliates ready-made news packages to help lower the cost of starting up newscasts. However, the network hinted that it may soon ask affiliates to share in the costs of gathering the Newsedge feed it now sends to affiliates for free.
Fox Entertainment Group president Peter Roth presented the new fall lineup to affils, and he announced two new executive producers on “Millennium,” former “X-Files” writers Glen Morgan and Jim Wong.