As Seagram CEO Edgar Bronfman prepares to shell out billions to Matsushita for a majority stake in MCA, much of Hollywood is naturally pondering the impact of the sale on the studio’s film operation.
But Bronfman may want to take a good hard look at the studio’s TV division, which has seen its luster and revenue diminish after years as the biggest entertainment revenue supplier for the company.
In 1989, the last year MCA was a stand-alone company, TV revenues were $605 million, the single biggest contributor to the studio’s filmed entertainment division, which collected $1.7 billon in revenues.
Matsushita does not break out MCA’s numbers, but according to sources at the studio, the TV division is now losing substantial amounts of money.
“MCA has definitely lost a lot of its market share and margins as well,” says Merrill Lynch analyst Jessica Reif of the company’s TV operations. “They used to be a dominant force and now it seems like they’re not active.”
Universal TV has been a prolific supplier of network programming, thanks largely to the success of producer Dick Wolf (“Law & Order,” “New York Undercover” and now “The Wright Verdicts”) in the hour-long drama business, and the Barry Kemp sitcom “Coach.”
The division’s long-running franchises include “Murder, She Wrote,” already renewed for a 12th season, and “Northern Exposure,” in danger of cancellation after being moved out of CBS’ Monday lineup.
The current season has been less than hospitable to most of U TV’s new product, including Kemp’s “Blue Skies” and “A Whole New Ballgame,” which were each paired with “Coach” on Monday night. Both were cancelled within three months.
Similarly, the division’s two Amblin TV series, “seaQuest DSV” and newcomer “Earth 2,” have faded after a promising start, with only “seaQuest” given a chance of returning next season. Another new hour, the Fox Broadcasting superhero series “MANTIS,” is on the bubble; ABC’s midseasoner “Extreme” is struggling; and the new John Landis sci-fi hour “Sliders” has gradually declined after promising premiere numbers.
Universal has a relatively modest development slate for next season – in part, executives have said, because they’ve been willing to walk away from deals that don’t make sense financially.
But syndication is the engine that drives any TV operation’s profits, and the MCA syndie unit is bound to come in for some scrutiny by the new owners. Amid the turmoil accompanying the sale, studio execs are remaining mum about the TV division. MCA Inc. exec VP and TV group chairman Tom Wertheimer, MCA TV syndication president Shelly Schwab and several other MCA TV execs declined comment for this story. Station operators, studio insiders, industry execs and rep firms advising stations on programming decisions are wondering whether the entrenched TV regime will survive the second sale of the studio in the past five years.
Most agree that MCA has done a relatively good job of selling shows. That would explain how MCA managed to get six series on the air this past season, three of which sprung from its $100 million investment in the so-called Universal Action Pack. One of those shows, “Hercules: The Legendary Journeys,” became a surprise hit last January.
The Pack, which is estimated to have lost $30 million its first year, consisted of six series from big-name producers on the Universal lot. Together they produced a total of 24 two-hour action movies that aired in syndication from January 1994 to January ’95.
MCA was also able to launch a daytime talkshow with Suzanne Somers and the latenight strip “Last Call” from Brandon Tartikoff, overcoming the animosity of station execs burned a few years ago by an aborted talkshow with author Kitty Kelly.
Both of the strips ultimately failed, like most other new firstrun syndie shows this season.
The syndie unit has also enjoyed strong sales to cable of the studio’s library product, which hasn’t garnered much attention but nonetheless contributed heavily toward the bottom line.
But several broadcasters and reps criticized MCA’s off-network launch of the ABC series “Coach,” calling it an example of the company’s lack of commitment after a deal is done.
The show sold in syndication for, at most, $1 million per episode, not bad considering that MCA – which is devoid of a hit five-day-a-week strip – does not have as much leverage as other studios in negotiating deals.
“When they have product to sell they are awfully good,” says Jack Fentress, vice president and programming director, Petry Television. “They rarely have the leverage that other companies with multiple products have, and they get the job done.”
Some stations, however, express disappointment with the lack of promotional effort MCA put into “Coach.” All syndicators help stations promote their shows, usually spending millions of dollars for an off-network launch.
But two station reps, a broadcaster and a competing syndicator say MCA chose to do very little promotion, forcing stations to produce their own spots for the show. To make matters worse, “Coach” has turned into a major ratings disappointment.
“MCA dropped ‘Coach’ in the water to see if it could swim and it sank like a stone,” says one group owner who bought the series.
MCA defenders say there was a major marketing plan put in place for “Coach” that was at least equal to those for other sitcoms. It included flying station execs to L.A. to structure a marketing campaign, a well-attended and well-received workshop at the Promax promotion convention and a co-op advertising program in which the syndicator matched station promo spending dollar for dollar.
Broadcasters were also mystified by MCA’s decision to launch the quirky “Northern Exposure” in off-network syndication instead of going to a cable network. Lifetime wanted the show and was willing to pay six figures per episode in a complex deal that would also have involved barter ad time.
Instead, MCA went for broke, figuring the series would have more upside potential in broadcast syndication. It offered the show to stations on an all-barter basis under a firm two-year deal.
Although the show is struggling, stations in 94% of the U.S. are committed to carry it for another year.
Meanwhile, MCA sold “Law & Order” to the Arts & Entertainment Channel for $175,000 per episode. The show has prospered there and even helped boost NBC’s network run.
Some contend that MCA hurt shareholders when it chose to sell “Major Dad” to MCA’s half-owned USA Network for $575,000 per episode. Paramount, the co-owner of USA, wrote off $18 million on “Major Dad” and one of its own shows, “Wings.” The sitcom had been a moderate success during its network run, but stations weren’t willing to pony up huge sums of the show.
Insiders say there is friction between Schwab and Universal TV exec VP Ned Nalle, who was given responsibility over firstrun programming in September 1992. Others downplay those rumors.
Either way, the sales force is known to have nixed a number of projects that Nalle has brought to them, and some old-guard execs under Schwab have been relegated to relatively minor roles. And some say there is confusion over the reporting structure.
Still, Nalle and Schwab have enjoyed some success this season with “Hercules,” which debuted in January and quickly became the third-rated firstrun action hour behind “Star Trek: Deep Space Nine” and “Baywatch.”
“Vanishing Son,” which was also introduced as a weekly in January, has attained the No. 5 slot alongside the veteran series “Renegade” – though its future is less certain from an economic standpoint.
Beyond the two syndie series, William Shatner’s “TekWar” series – estimated to cost at least $1 million per episode – went to the USA Network, where its ratings have been solid.
In the five-day-a-week arena, MCA is believed to have lost $8 million-$10 million on “Somers” and possibly as much as $10 million on “Last Call,” which was produced on a day-and-date basis and had huge overhead.
Tartikoff, who produced the series via MCA before entering into his deal as New World Entertainment chairman, and the syndicator intend to shop the series to cable.
“They’re having success with the weekly shows,” says Katz’s Carroll, “but ultimately the strip is where synidcators are judged and where their presence is needed.” “Hercules” is the studio’s first success in that arena since “Charles in Charge,” a network show that was revived for firstrun syndication in 1987 and enjoyed a three-year run. Reruns of the network and firstrun episodes went on to fetch $600,000-per-episode in the back end.
MCA’s problems in firstrun go back almost a decade. Prom 1986 to 1993, most syndicators were battling to launch lucrative strip shows for the access hour before primetime or talkshows for the afternoon.
MCA took a different tack. To balance the huge number of one-hour hits spit out by the studio’s network division, including “Murder, She Wrote” and “Magnum, P.I.,” Schwab decided to jump into the firstrun sitcom business. The syndicator was hoping it could generate more hits to follow “Charles,” which provided a windfall in license fees when MCA accumulated enough episodes to strip it five days a week.
But MCA’s decision to shun expensive firstrun access strips in favor of cheaply produced weekly sitcoms, particularly those from Arthur L. Annecharico’s Arthur Co. didn’t work.
The relationship with the low-cost producer resulted in such disappointments as the weekly firstrun sitcoms “What a Dummy,” “The Munsters Today,” “Adam-12” and “The New Dragnet.”
Other failed efforts include “Harry and the Hendersons,” the short-lived firstrun “Hollywood Premiere Network,” a two-night-a-week venture from the MCA TV Entertainment wing in the 1990-91 season with Chris-Craft TV. It resulted in “She-Wolf of London,” “Shades of L.A.” and “They Come from Outer Space.” The series were so bad that MCA and Chris-Craft quickly pulled the plug on the entire project to save face.
Stations who took the shows criticized the studio’s lack of commitment to them after the ink on the sales contract dried.
While MCA president Sid Sheinberg is willing to bash Matsushita’s management of the company, he won’t talk about what role he or the owners have played in the TV division over the last several years.
“Part of MCA’s problem is that the market changed and they did not,” says Bill Carroll, vice president and director of programming, Katz Television.
While no one can fault MCA for trying a different path, station operators say MCA has long been reluctant to support its product.
For example, MCA angered stations a few years ago when it decided to pull the widely cleared Kelly talkshow from the market only months before it was scheduled to premiere. The syndicator apparently believed the deficits would be too high on the strip, but stations were left with huge holes in their schedules and little time to fill them.
Most recently, MCA turned heads with its decision to cancel the low-rated Somers program. When a syndicator axes a show, it usually tries to get another program out quickly to hold onto the time period. Not so for MCA, which has decided to wait until next year to introduce its new projects, including “Rant and Rave” with radio shrink Dr. Laura Schlesinger, “He Says, She Says” (hosted by two Los Angeles TV personalities) and a latenight strip in development from cutting-edge producer Stephen Chao.
MCA noted the other series were not ready to go on the air.
Brian Lowry contributed to this report.