Pact may be just the first between studio and nets

Warner Bros. Television Group and ABC have struck a deal that will likely be the first in a series between the studio and all the broadcasters rearranging the traditional rights in syndication and digital distribution windows.

The pact primarily regards providing viewers access to episodes of scripted primetime programming 24 hours after their airdate on network-branded websites and apps, aggregators like Hulu and cable VOD.

But in a reflection of how profoundly the TV landscape has shifted in recent months, the new deal also extends expanded rights for WBTV to take a show into off-network syndication a year earlier than the customary four-year mark and sell highly serialized ABC series to subscription VOD services like Netflix after the completion of each season.

In return, ABC was able to fold into the deal what had been a separate ongoing negotiation with WBTV, awarding the network the right to include the studio’s scripted series in a simulcast of the linear feed to any media.

While that may seem like a technicality in a cross-platform age, the right to simulcast effectively brings ABC much closer to offering itself up not just free over the air but as part of a authenticated viewing experience across a range of devices beyond the living room.

These conditions mark the most significant departures in a series of annual deals between ABC and WBTV that have deviated little since 2006, when they first began imposing guidelines on the then-nascent business of distributing series on digital platforms.

If the new deal proves as precedent-setting across the TV industry as its forebears, it could foretell a compression of the windows that time the passage of episodes from primetime all the way to second runs on cable and local stations.

“Typically, because we’re the largest independent studio, we’re the ones to break new ground with networks,” said Craig Hunegs, executive VP of WBTV, who has led negotiations for the studio opposite Jana Winograde, executive VP of business affairs and administration at ABC, since the original 2006 deal.

But two of the governing principles that have long anchored these deals will remain. The network retains all revenues derived from the ad-supported streaming windows while the studio keeps dollars yielded from electronic-sell-through platforms like iTunes that allow consumers to own rather than rent episodes, as well as DVD sales.

Secondly, no more than five of the most recently aired episodes of a series can be posted on digital platforms for a 30-day stretch at any given time.

The deal is expected to serve as a template for similar deals with Fox, CBS and NBC. One of those deals is near completion while the others aren’t as far along, according to sources; WBTV declined comment on the status of those talks.

The absence of this deal until its completion last Friday explained why the WBTV-produced comedy “Suburgatory” was nowhere to be found on ABC.com, Hulu or VOD for the first five weeks of the season, robbing viewers of additional opportunities to get acquainted with the new series early in its run.

NBC and CBS still have similar gaps in VOD lineups on digital platforms, with WBTV-produced series “Harry’s Law” absent from the Peacock, and both “The Mentalist” and “Mike & Molly”off the Eye network. New deals will likely restore that programming.

Episodes of another WBTV-produced comedy for ABC, “The Middle,” were also due to be removed online if the studio failed to reach a new agreement with the broadcaster. The deal also covers a third series that has yet to air on the network, rookie sitcom “Work It.”

Now WBTV can sell any one of these shows into syndication earlier than the typical four-year exclusivity window broadcasters insisted on for currently running shows. That need dovetailed with off-network buyers’ preference to have a library of a minimum of 88 episodes, or four seasons of 22 episodes apiece, before stripping episodes.

But WBTV negotiated for an accelerated syndication window because that’s what its clientele wanted, according to Hunegs. “What we’re hearing consistently from cable networks and television stations is they want our programming earlier,” he said.

There have been some examples in the past of syndication sales made prior to the four-year mark, but they typically have to be individually negotiated.

That WBTV also sought to secure the most immediate access it could get to the SVOD window epitomized by Netflix is reflective of how lucrative these deals have become to content companies. The studio’s recent joint output deal with CBS Corp. granting out-of-season rights to Netflix for programming from the CW was estimated to be worth $1 billion.

SVOD sales may only get richer in the coming years as Netflix rivals like Amazon and Hulu Plus are expected to bid more competitively. SVOD is also important because the series that perform best there are the kind of highly serialized programs that aren’t valued as highly in syndication, which isn’t as conducive to the kind of binge-viewing patterns that Netflix invites.

While the multiplicity of windows where the same programming is available might seem to carry the potential for the cannibalization of viewing opportunities, the conventional wisdom has evolved to the notion that the more windows in action, the more chances the viewer has to get hooked on a show.

TV Everywhere is yet another window that has become of increasing importance to programmers. That’s likely a reflection of the newfound flow of retransmission consent dollars from MSOs to broadcasters who are now under pressure to provide more value to the multichannel environment.

Once ABC has secured simulcast rights for all its programming, parent company Walt Disney Co. can complete negotiations with MSOs to offer the ABC broadcast feed to password-wielding subscribers much as they began doing earlier this year with ESPN via the ESPNWatch app launched in April.

“It’s an important piece of the full puzzle, which is our ability to deliver all of our series to our viewers where they want, when they want it,” said ABC’s Winograde.

Simulcast right also allows ABC to make good on a long-speculated move that would have the network follow Fox into an arrangement with MSOs that gives only their subscribers next-day access to programming on VOD, whether on the network’s own website or Hulu.com.

As part of the deal ABC has also won limited SVOD rights as well. Revenues from any SVOD retailer in which parent company Disney has partial or whole ownership–namely, Hulu Plus–stay with Disney, which just happens to have a stake in Hulu along with News Corp. and NBCUniversal.

Hulu also played a role in the reason “Suburgatory” was dropped from digital platforms. The online TV hub reversed its policy on a condition it had agreed to in previous years whereby distribution of WBTV series were limited to ABC.com and Hulu and not allowed to Hulu’s many sub-distributors, which include Yahoo, AOL and MSN.

While Hulu agreed to honor that arrangement for continuing series like “Middle,” it signaled the opposite for new programming like “Suburgatory,” which prompted Warner Bros. to pull the series.

All told, the changes to a deal that hasn’t changed much over the last five years. There has been some alteration; in the second year, 2007, the studio actually got a small cut of VOD revenues online. All ad-supported dollars reverted to the network in subsequent deals.

Even once WBTV completes the latest round of deals, broadcast VOD will still feel a bit scattershot. For instance, while most series episodes on Fox are available either the day after air for subscribers of select multichannel services like Dish Network or eight days later for non-subs, Universal Televison-produced drama “House” still maintains its eight-day delay in its TV Everywhere environment while Dick Clark Prods.-produced unscripted series “So You Think You Can Dance” maintains a four-day delay. “American Idol” and “The X Factor” isn’t available at all, though rights holders typically allow entire seasons of unscripted program
ming online because there’s such little backend value. Other series that have no online access is ABC’s “America’s Funniest Home Videos” and CBS’ “Rules of Engagement,” which Sony Pictures Television is currently hoping to find a home in syndication.

Sources suggest the real reason there hasn’t been more of a standardized approach to programming the on-demand sphere is that even after five years of incremental audience growth to viewing full episodes online and VOD, it’s still just a fraction of the audience that tunes into primetime. Networks would just as soon prefer viewers do their catch-up viewing via DVRs, where at least advertisers are rewarded for C3 viewing, or the first three days of playback. Measurement of VOD watching has barely begun to be tracked by Nielsen.

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