By Joe Flint
When television executives unveiled their fall schedules to
advertisers earlier this month, they used words such as "noisy" (as
in very buzzy) and "passionate" to describe why they chose their
new shows.
One word they didn't use was "ownership," although that appears
to have been just as important in the decision process.
Walt Disney Co.'s ABC will own or have a stake in almost 70% of
its coming schedule, compared with 59% now and 48% in 2010. And
it's a similar story at Fox, where 68% of the network's 2015-2016
lineup is produced or co-produced by sister companies at its
parent, 21st Century Fox, up from 52% the previous year.
CBS Corp. and Comcast Corp.'s NBC also try to own as much of
their schedule as possible. CBS has ownership interests in 68% of
its 2015-16 lineup, while NBC has 52%.
Owning shows is a priority because hits can generate revenue
long after they have gone off the air by making money off reruns in
the U.S. and internationally. Earlier this year, Hulu paid about
$700,000 per episode for reruns of "Seinfeld." CBS Chief Executive
Leslie Moonves has often bragged that the company still makes
millions annually from "I Love Lucy, " which went off the air more
than five decades ago.
With ownership also comes the ability to decide how a show will
be exploited on other platforms such as video-on-demand and
streaming services, all of which are increasingly important in
capturing viewers and revenue.
The networks' push to own more shows is bad news for independent
producers including Time Warner Inc.'s Warner Bros. and Sony
Corp.'s Sony Pictures Television. Warner Bros. did land two of the
most highly anticipated new shows for next season--"Supergirl" for
CBS and "Blindspot" for NBC--but less than half of the studio's 13
pilots were ordered for the coming season.
When a network doesn't own a show, its only revenue comes from
commercials, and much of that cash typically ends up going toward
the show's license fee.
"You can't just rely on one revenue stream," said Dana Walden,
co-chairman of the Fox Television Group.
To boost the number of Fox-made shows on its network, 21st
Century Fox Inc. last summer combined the network with its
Twentieth Century Fox Television production unit after years of
operating as separate entities. (The Wall Street Journal and 21st
Century Fox were part of the same company until mid-2013.)
"Having the companies aligned and under the same management
allow us to have greater communication," said Ms. Walden.
Disney Chairman and CEO Robert Iger told analysts last year that
it is paramount that ABC "own a substantial amount" of its
prime-time programming.
"The long game is the studio," said Paul Lee, president of ABC
Entertainment Group. "We at the Walt Disney Co. own and make the
most extraordinary storytelling and we have to make it a
priority."
Veteran television executive Jordan Levin added, "It's harder to
justify the network business without having a greater degree of
program ownership." The run on a network is more about building
awareness for shows, which are increasingly making money from
reruns, he said.
Studios attached to networks still produce shows for rival
broadcasters. Disney has co-productions on Fox and CBS, for
instance, while Twentieth Century Fox has a show on CBS. But such
arrangements aren't as frequent as they once were.
There is growing concern among much of the creative community
that the networks are letting finances and not quality be the
deciding factor when choosing shows.
"The more you buy from yourself, the more you limit the
potential of buying the best shows," said BTIG analyst Rich
Greenfield.
ABC's Mr. Lee acknowledged that in case of a tie, the network
will go with its own show. Still, he doesn't see a day where ABC is
nothing but Disney-made shows. "I don't envision a world where that
happens."
Ms. Walden played down the idea that Fox favored its own shows.
"We took pitches from every studio. ...The best writers for us were
mostly writers in overall deals at our studio."
The desire for ownership sometimes takes a back seat if a
network's bigger priority is strengthening its schedule. NBC,
coming off a year with no new hits, was more willing to do more
business with outside suppliers. And CBS, eager to snare shows it
hopes will lure younger viewers, doesn't have a stake in either
Warner Bros.' "Supergirl" or "Life in Pieces," a family comedy from
Twentieth Century Fox Television.
Gavin Polone, a veteran independent producer ("Gilmore Girls,"
"Curb Your Enthusiasm") and former agent, said the consequence of
networks owning the bulk of their content is that independent
production companies as well as the audience "are often forsaken in
favor of deals that are beneficial to the media monoliths."
Warner Bros., which spends heavily on top producers such as
Chuck Lorre ("The Big Bang Theory") and J.J. Abrams ("Person of
Interest"), is reluctant to part with any ownership in return for a
slot on a network. It is a strategy that has mostly paid off as the
studio still has the most programs on broadcast TV with 29 heading
into next season. This pilot season though, ABC passed on three
Warner Bros. shows in favor of shows in which it had ownership.
Sony has shown a greater willingness to share ownership of its
shows. This pilot season, it partnered with NBC on the drama "Game
of Silence" and ABC Studios on the comedy "Dr. Ken." Sony Pictures
Television and Warner Bros. declined to comment.
BTIG's Mr. Greenfield said the just-concluded pilot season
should serve as a wake-up call to independent production companies.
"The question these companies should be asking is why they aren't
developing a direct-to-consumer business model," he said.
Write to Joe Flint at joe.flint@wsj.com
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