Already a Bloomberg.com user?
Sign in with the same account.
Walt Disney Co/The
Nielsen Holdings NV
In the world of television, getting canceled doesn’t mean what it used to. The four major U.S. networks have unveiled 31 shows for the 2012-2013 season that begins this fall. Not all will survive. Among the most recent casualties: In mid-May, the short-lived CBS (CBS) medical drama A Gifted Man got the ax after failing to win viewers. Others such as ABC’s Desperate Housewives made a graceful exit following an eight-season run.
Then there’s the case of Pan Am. The 1960s-retro airline drama that aired on Walt Disney’s (DIS) ABC last fall may yet fly again, thanks to the growing demand from new outlets for original programming. Sony Pictures Television (SNE), the producer, has held talks with pay-TV and streaming services to keep the series going with new episodes, say two people with knowledge of the matter who aren’t authorized to speak on the record.
Subscription services such as Netflix (NFLX) and DirecTV (DTV), which compile vast databases on viewing habits, offer shows a chance for a second life. Investing in new episodes of a defunct network series can make financial sense with the right budget and a dedicated, if small, fan base. “Digital can provide a way to recycle shows that have been canceled, because there’s a lot more pressure on those platforms to go toward original content,” says analyst Tony Wible of brokerage Janney Montgomery Scott.
When Netflix ordered a new season of Arrested Development in November, it knew how popular past seasons of the show were with its 26 million subscribers. Despite accolades from critics, News Corp.’s (NWSA) Fox pulled the plug on the sitcom in 2006 after three seasons. “One of the reasons we were so excited about coming to Netflix is that’s where our fans are,” said Mitch Hurwitz, the show’s creator, at a broadcasters’ convention last month. To hold down costs, Netflix ordered 10 new episodes of the show, whereas Fox aired 22 in its first season.
Netflix is also talking with CBS about resurrecting the drama Jericho, which went off the air in 2008, according to two people with knowledge of the discussions. The network is “always willing to talk with Netflix if they’re interested in one of our shows,” says Kelly Kahl, CBS’s chief scheduler. Netflix declined to comment.
DirecTV, the satellite-TV service, has extended the life of Damages, a legal drama starring Glenn Close that originally aired on News Corp.’s FX, by scheduling the program commercial-free on its Audience Network. It’s ordered a total of 20 new episodes, which will begin airing in July. DirecTV also resurrected the football drama Friday Night Lights, running it for three seasons after it was canceled by Comcast’s (CMCSA) NBC. The network later rebroadcast the DirecTV episodes.
Both shows had received critical acclaim, making them attractive, says Derek Chang, DirecTV’s executive vice president of content strategy and development. DirecTV saved money by sharing costs with producers and distributors. “If a show has an excellent cast and writing, it can be a good fit,” Chang says. DirecTV has no plans to pick up any of this year’s canceled shows.
A potential buyer such as Hulu offers studios another incentive to keep their series alive. While Netflix and DirecTV run programs commercial-free, shows offered by Hulu are ad-supported. Industrywide, ad revenue for online video is up 22 percent, to $2.3 billion, this year in the U.S., according to a recent report from Pivotal Research Group. Meredith Kendall, a spokeswoman for Hulu, declined to comment.
Executives at Apple (AAPL), Google (GOOG), and Yahoo! (YHOO) also may be studying reanimating old series as more advertising dollars move toward streaming video, Wible says. Most network programs come with budgets that make it difficult to be profitable without ad support: Ten hour-long episodes can cost about $30 million. In 2009, Google’s YouTube ran all five episodes of The Beautiful Life, which moved to the online service after just two episodes aired on the CW Network. YouTube, Apple, and Yahoo declined to comment.
These companies may have a harder time gauging potential audiences for a series discarded by a network: “The problem, if you’re a Google or a Yahoo, is you don’t have Netflix’s rich data to know the true interest of a show,” says Wible. “Nielsen (NLSN) only gives you a snapshot. You’d need another data point that proves the show is going to pay for itself.”
The bottom line: Netflix and DirecTV are buying canceled TV shows with built-in audiences. Google’s YouTube, Apple, and Yahoo may follow suit.