Cable networks paying less for licenses

New York is under siege this week by armies of network hucksters pitching their fall schedules to skeptical media buyers.

High on the upfront programming agenda, as always, are fresh batches of primetime hourlong dramas seeking to gain a foothold with viewers. But network pickups are a mixed blessing these days for the studios because, for the most part, hour dramas have stopped fetching big bucks in the rerun marketplace.

Crime dramas, especially, have gone cold, and it remains to be seen if some of the recent lighter hourlong successes, including this season’s “Chuck” and “Pushing Daisies,” will work off-net.

Earlier this month, CBS TV Distribution had to cobble together three networks — Sci Fi Channel, WE and ION (formerly Pax) — to come up with a license fee in the $400,000 range for reruns of CBS psychic hit “Ghost Whisperer.”

And reruns of grisly crime drama “Criminal Minds,” also from CBS TV, which would’ve certainly harvested more than $1 million an episode from one cable network a few years ago, ended up with a payday of below $800,000 from a combination of A&E and ION when the parties concluded the deal two weeks ago.

And in January, Twentieth TV managed to extract only about $450,000 an episode from TNT for the forensic procedural “Bones.”

Bill Carroll, VP of programming for rep firm Katz TV calls these subpar license fees a marketplace correction, brought on by the fact that “there are just too many hourlong shows, especially police procedurals, playing all over the cable dial.”

For example, on any given weeknight at 7, A&E runs “CSI: Miami,” Spike schedules the original “CSI,” TNT has “Law & Order” and USA weighs in with “Law & Order: Criminal Intent.”

The shows end up cannibalizing one another, and scratching out Nielsen ratings that are disappointing when measured against the big bucks shelled out by the networks. Not only are the overall ratings less than stellar, but too many viewers are age 50 or older, which Madison Avenue tends to shy away from. The 50-plus audience for USA’s “NCIS” reruns this season is 60%, and three TNT shows — “Law & Order,” “Without a Trace” and “Cold Case” — derive more than half their aud from viewers 50 and over.

But cable networks run the episodes too frequently, say the distributors of these reruns. So naturally the ratings suffer when a show’s episodes turn up two or three times a day, five days a week. And, for most of these shows, local TV stations in markets throughout the country play two more episodes on the weekend as part of a simultaneous syndication deal that supplements the cable contract.

Cable has a counter-argument. “We wouldn’t have to run the episodes so many times if the supplier didn’t demand such big license fees,” says one cable network exec, adding that he’d prefer not to have to squeeze a show for so many runs, particularly when the episodes are also turning up regularly these days on DVD, on websites, on video iPods and even on cell phones.

Another factor in cable TV’s retreat from off-network hours, says Deana Myers, cable analyst for SNL Kagan, is the swing toward original scripted one-hour dramas by USA, TNT, FX, Lifetime, A&E and Spike, among others.

USA has at least three solid scripted hits — “Monk,” “Psych” and “Burn Notice” — and many more pilots for new shows are in development.

Warner Bros. produces “The Closer,” cable TV’s biggest current scripted hit, for TNT, which also has another scripted original “Saving Grace,” from Fox TV Studios. Building on “Closer” and “Grace,” TNT has drawn up a blueprint for the most ambitious slate of original cable dramas ever attempted, planning to schedule three fresh shows each night in primetime on Monday, Tuesday and Wednesday, by 2010.

Steve Koonin, president of the Turner Entertainment Networks, led by TNT, makes no bones about his ambition. “Everybody in the industry realizes the broadcast business has been on a steep decline for years — this year in particular,” Koonin said in a statement. “For advertisers, our networks provide an alternative that is getting better and better.”

“TNT wants to be distinctive,” Carroll says. “And the best way to get there is through original programs,” not repeats of shows that played on broadcast TV.

Another aggressive cable network, FX, has pushed the boundaries of what’s acceptable on ad-supported cable since March 2002, when it scheduled “The Shield.” Current FX shows that generate you-won’t-see-that-on-broadcast buzz include “Rescue Me,” “Nip/Tuck” and “Damages.”

Last summer, Lifetime collected the best original-series ratings in its 24-year history with “Army Wives,” which is back for its second season this summer.

But as more networks pour money into original series, the law of averages is bound to take over and the failure rate will pile up, Myers says.

More expensive flops will only add to the burden. Cable networks are under a handicap, in that writer-producers with track records of past hits are reluctant to accept commissions from cable; unlike broadcast-network reruns, there’s rarely a big payday on the backend, even for a successful series.

The exceptions are HBO, which grossed hundreds of millions by selling reruns of “The Sopranos” to A&E and “Sex & the City” to a combination of TBS and broadcast rerun syndication, and Debmar-Mercury, which pocketed revenues north of $100 million by selling reruns of Comedy Central’s “South Park” in TV syndication.

But all three shows had to be censored to make them acceptable for ad-supported broadcast and cable TV.

The scissoring proved to be a turnoff for people who’d enjoyed the shows in their original form. None of the three scored big numbers in their second life as reruns.

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