NBC is taking strong measures to make sure it never faces another painful “ER”-type series renewal.
The network has sent out the word that it will only develop series with studios willing to grant the network partial ownership in new shows or perpetual license fee deals that extend for the life of a series, according to several studio chiefs.
What that means is that studios that agree to NBC’s requests will no longer have the power to renegotiate license fees after four years while threatening to take a hit series elsewhere.
Warner Bros. TV did just that earlier this year, when it forced NBC to pay $13 million per episode in order to keep “ER” next season, an unprecedented price that wiped out much of the profit NBC accrued on the show over the past four years.
While standard network license fees last four years, ABC began demanding five-year license fees on new series last season. NBC is now proposing license fees with built-in increases set before a series even gets on the air, and with no opportunity to renew or renegotiate. The initial license fees will be higher than the standard deals.
“This is a clear warning shot across the bow,” said one studio chief unhappy with NBC’s proposal. “Our ability to reap full benefits in success are limited.”
Several studio sources said NBC execs are saying they will commit no money toward developing a new series unless the studio gives in to the demands.
NBC and studios execs declined to comment on the record. But an NBC source said the network is not issuing any ultimatum, and there are no hard and fast rules. NBC is unlikely, for instance, to make such demands of producers with hit shows.
“If you’re Angell, Casey or Lee, it’s different than if you’re Joe Schmo,” an NBC source said, referring to “Frasier” exec-producer creators Peter Angell, Peter Casey and David Lee.
Even if NBC’s request is simply a starting point for negotiations, many studio executives are grumbling, and some are even implying that they will quit doing business with NBC before caving in to such requests.
“They will not be the first stop for some people,” said one studio honcho. “Premiere show runners may feel it’s too difficult to make a deal there.”
One NBC exec implied that studios can actually benefit from the plan, because NBC will help deficit finance shows it co-produces, but studio execs balk at that notion.
“It poses all kinds of problems,” said one studio chief. “If we’re paying a writer $9 million, for us to give up half ownership, they should have to pay half the costs on that deal.”
NBC also contends that at least it is being honest about its needs upfront, instead of squeezing the studios in May, when the networks exercise the power to decide which shows will get on the air.
This past May, both CBS, with “King of Queens,” and NBC, with “Newsradio,” demanded ownership or profit participation in those shows in exchange for putting them on the fall schedule. ABC went a step further. Even after getting studios to agree to five-year license-fee terms, ABC at the 11th hour demanded that the pre-negotiated license fees be lowered in exchange for pickup.
While studio execs are not happy with the new rules, they understand why NBC would want to protect itself from another “ER” bloodbath.
“What happened with ‘ER’ did not benefit anybody in the business,” one studio source said. “It put money in Warner Bros.’ pocket, but it made it harder to do business, and it has ramifications on future Warner Bros. shows.”
The most likely result of NBC’s plan is that studios paired with networks will more often work exclusively inhouse, and independent studios will find it harder to make huge profits in success. But networks like NBC are more concerned about containing programming costs, which have skyrocketed out of control and severely dented network profits.
“We are trying to assure our future,” the NBC source said.