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The Emmy goes…nowhere

After HBO suddenly appeared last week on the doorstep of the Academy of Television Arts & Sciences with a $50 million, five-year offer to carry the Primetime Emmy Awards, the four major broadcast networks were forced to ante up higher license fees.

It all ended peacefully. By the end of the week, Emmys' fate had been sealed for the next eight years. The show will continue its "wheel" format, giving ABC, CBS, Fox and NBC each a turn once every four years. The network that carries the Emmys will pay ATAS a $5.5 million annual license fee for the first four years of the contract, with that increasing to $7.5 million annually for the next four.

For months, ATAS has been trying to get a higher license fee out of the networks, arguing that the show brings a hefty margin that makes it worth far more than the networks were paying.

In fact, ATAS Chairman Bryce Zabel ran his election campaign last year on the notion that he could get the networks to pay a higher license fee. But, when the negotiating window opened this fall, the networks budged only a little, offering to raise the license fee to $3.3 million annually from $3 million.

It wasn't until HBO stepped in with a much bigger offer that the networks realized they really were in danger of losing the show to cable. In the end, the deal worked out well for the Academy, although things could have backfired for Zabel had the show gone to HBO and the broadcast networks refused to support it.

Although the networks pay high fees for exclusive rights to other awards show—CBS pays $25 million annually for five-year exclusive rights to the Grammys, and ABC has a seven-year $350 million contract for the Oscars—the fierce rivalries between the broadcast networks makes that sort of deal impossible for the Emmys. When networks have tried to air the show on an exclusive basis, as Fox did in 1987 and ABC did in the early 1990s, the other networks balked and counterprogrammed heavily against the show, bringing down its ratings.

With the current rotating deal, the other networks back off their programming on Emmy night and send their top talent to the awards show. And, because it airs in September, the show provides a prime showcase for the new fall programming of whichever network airs the show.

In recent years, the Emmys have taken in anywhere from $15 million to $30 million in revenue, depending on the advertising market and other factors. With production costs of $5 million to $6 million and another $1 million to $2 million in marketing costs, Academy executives felt that the profit potential made it obvious that license fees for the show should go up.

When the networks learned that HBO was planning to pony up $10 million a year for the show, they reacted strongly, with CBS in particular threatening to boycott the show. In the end, it was CBS President and CEO Leslie Moonves who led the networks' negotiations before ATAS's board of governors.

"Les came in an made a very articulate and impassioned presentation on why the Emmys should remain on broadcast television as it has for the last 50-plus years," says Dick Askin, president and CEO of Tribune Entertainment and vice chairman of the association's executive committee.

Besides granting ATAS higher license fees, the networks also ceded more creative control to the Academy, allowing it more input, Askin said.