THE ART OF THE TV DEAL
In the old days, when regulations barred the networks from owning the programs they aired, buying TV shows from the studios was pretty straightforward. The only issue was cash, cash, and more cash. Then, the financial-interest-and-syndication (''fin-syn'') rules were repealed in 1995, thus allowing networks to own all or part of the programs they air and allowing studios to own TV networks.
Those changes have made the relationship between the networks and studios much more complicated--and contentious. That's because networks want to produce more of their own shows, and studios want to guarantee distribution for their shows by buying or founding their own networks. And they're stepping on each others' toes in the process.
Before, networks stood on the sidelines as studios reaped hundreds of millions of dollars selling reruns of shows they produced into what is called the syndication market. Even though Seinfeld is closely associated with NBC, for example, it is owned by several entities, including Jerry Seinfeld and units of Time Warner and Sony. Since NBC doesn't own equity in the show, it will never collect any of the rich syndication profits.
So the networks are pushing to own more of the shows they air. After all, they figure, it's the airing and promoting of these shows for years that creates a property than can eventually be syndicated. Meanwhile, the studios, increasingly nervous that the networks will elbow them aside, are getting tougher, looking for leverage and creating their own networks. Hence, Paramount Pictures started UPN, Time Warner launched WB, Walt Disney bought Capital Cities/ABC, and Twentieth Century Fox turned Fox Broadcasting into a full-fledged network. ''People are playing with a different set of rules than before,'' says former NBC network chief Brandon Tartikoff.
STALKING OUT. Indeed, the players are all tussling for position. A few months ago, DreamWorks SKG came up with an idea for a sitcom, Nearly Yours, that it presented to NBC. The network offered up former Cheers director James Burrows, who is under contract to it, to direct Nearly Yours. In return, the network wanted an equity stake in the show. Irate at being requested to hand over a piece of the show, DreamWorks walked away, taking with it two other shows that it had deals to make for top-ranked NBC. (The companies are still negotiating.)
Of course, standoffs of that sort are risky. The broadcast networks can't produce all their own programming, and their interests really lie more in having the best lineup possible, no matter who produces or owns the show. And studios still want the best launching pads for their shows--in anticipation of syndication riches. That's why Warner Brothers makes Friends for NBC instead of its own WB network.
Even so, a network may not be able to resist placing an iffy show it owns on its prime-time schedule. NBC has made a 22-episode commitment to a show that it owns starring Tony Danza, who hasn't had a hit since Who's the Boss? ended, back in 1992. The new show will be broadcast at 8 p.m. on Wednesday, traditionally NBC's weakest night, despite test screenings that advertisers generally agreed were dreadful. NBC says it is reworking the show.
CRAZY QUILT. The new crazy-quilt relationships already have some people heading for corporate divorce court. Since 1989, Walt Disney Co. has had a contract with Home Improvement producer Wind Dancer Productions. But when Disney bought ABC last year, Wind Dancer claimed in a lawsuit that the giant studio made ''an inside deal with ABC'' to renew the show for less than it was worth.
Neither side is willing to comment on the case. But star Tim Allen, who is well aware that the sitcom is the only hit ABC has left, recently took advantage of the new anything-goes marketplace. He negotiated a $25 million payday to continue with the show. As part of that deal, Disney offered a three-movie contract with its film studio.
Of course, NBC, like CBS, doesn't have a movie studio and can't offer such a deal to its stars. But even in the new, rough-and-tumble climate, NBC was still able to come up with an attractive carrot to keep Frasier star Kelsey Grammer happy. In a deal to renew the show for three years, NBC agreed to broadcast Fired Up, a sitcom produced by Grammer's production company, and for part of the last season gave it the coveted slot just after Seinfeld. Grammer may well consider himself lucky to have pulled off such a deal. Next time, NBC might want to own a piece of the show as well.
By Ronald Grover in Los Angeles
Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.