Sony sours on TV biz

U.S. topper halts network prod'n, citing spiraling costs

Until network TV radically changes the way it does business, Sony Corp. and chairman-CEO Howard Stringer want no part of it.

In his first interview since Sony began taking steps to downsize Columbia TriStar Television, Stringer confirmed Thursday that changes at the division would take place almost immediately.

While Sony will continue to produce and distribute programming for cable and syndication through its Columbia TriStar TV Distribution arm, development and dealmaking on the network side have halted.

“It doesn’t make any sense anymore,” Stringer told Daily Variety. “I don’t want to be part of a system that doesn’t bring returns on Sony’s investment.”

In this vertically integrated, multichannel world, producing for primetime TV is an inherently bad business, Stringer said. And although Columbia TriStar TV is in no worse shape than it has been in recent years, Stringer is putting his actions where his mouth is and getting out — now.

Execs who are most involved with network development will probably be the first to depart the company once a plan is put in place, although Stringer stressed that no jobs have been cut and no final decisions have been made.

The long-term fate of TV toppers Mel Harris, Len Grossi and Tom Mazza is far from clear.

It’s also uncertain how deep the Sony cuts will reach.

Still, “we’re looking to get started,” Stringer said.

Entertaining results

Although Sony’s stock value has dramatically stumbled (due to the electronics business), Sony Pictures Entertainment’s performance has held steady. According to Stringer, the film division is having a good year, while Sony Home Entertainment and Digital Entertainment have also seen growth.

Over at Columbia TriStar TV, the division recently brought in a new management team and bolstered its roster of production deals. In addition, Columbia TriStar TV Distribution’s cable production business is growing; many of those projects were initially developed on the network side.

And the studio’s primetime performance this fall is no worse than anyone else’s — harboring a mix of hits (“The Guardian,” “King of Queens”) and misses (“What About Joan,” “Pasadena”).

But that track record doesn’t equal a profitable division, Stringer said. Without any light at the end of the tunnel, Stringer said Sony opted to pull the plug now rather than be party to a slow, painful death.

Stringer blames an industry that has refused to change despite warnings over the past few years that the traditional production model doesn’t work. That includes pricey talent deals, most of which result in unprofitable product — if anything at all. Industry players like the development process and pilot season only because that’s what they’re used to, he said.

Lack of logic

“If business had been rational, there would still be room for everybody,” Stringer said. “But every time we reached a point of rationality, another company came along to bid up prices.”

Most recently, Michael Ovitz’s startup production boutique Artists Television Group landed a number of high-profile writers and stars in part by raising the pricetag ante. ATG collapsed under the weight of those deals, but the residual effects are still in play at just about every production company.

“It’s the genius of making us pay more and more, which then forces us out,” he said.

A few hits might still cover the cost of those deals — but vertical integration has made it tougher for everyone to turn a profit, even with a hit show.

Studios such as Columbia TriStar that are nonaligned with a broadcaster must in most cases give up at least half of their backend if they hope to land a primetime slot.

The fact that Sony’s cable business has grown by utilizing network division development only proves that the primetime door is no longer open to everyone, Stringer said.

“We’ve not made significant profits on the network TV side for a long time,” Stringer said.

Hard reality

He also noted that most of TV’s recent megahits (“Survivor,” “Millionaire”) have not come from the traditional world of network drama and comedy series but rather from local or foreign reality TV producers.

If Sony were to re-enter the network business, it would have to be through very different means, such as nonscripted series. Stringer calls it “guerilla theater.”

“We’re not walking away from primetime,” Stringer said. “If network TV gets together and figures out how we can do something together, I’m back in it.”

Industry execs, meanwhile, fear the inevitable ripple effect should Sony completely exit the primetime business.

“This is going to exacerbate the already daunting reality of the TV business,” one rival studio topper said. “The old financial model just doesn’t work.”

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