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New Ways To Get Rich

It's called show business—emphasis on business—for a reason. But these days, TV's traditional financing models seem to be failing. Paying $2 million an episode for a drama that won't last a season is suicidal. And digital video recorders (DVRs) mean commercials may soon be history. The challenge for TV producers is to find maverick ways to fund their programs—and profit by them.

DVRs might send the networks into panic mode, but Ben Silverman, founder of Reveille and executive producer of USA's Nashville Star, NBC's The Restaurant,
and Bravo's Blow Out, sees "tremendous opportunity" in the digital revolution.

"It's like the TV gold rush. With consolidation, there are these enormous companies. It's like they are driving wagons up the side of the mountain and filling them with gold," he says.
"Little guys like me can run behind and pick up the nuggets that fall off."

James Yaffe, managing director of Endeavor Marketing Solutions, says the strategy is the same: "Whatever media channel you choose to use, you have to create a broad awareness."
And visibility is all. The new TV entrepreneurs, such as American Idol's Simon Fuller, Survivor's Mark Burnett, and Silverman, are practical, focused, and brand-savvy.

Here is their five-step blueprint for success:

1. Bait Your Hook

The genius of American Idol
is that it's a TV show where the talent is homegrown and cheap. Record producers Simon Fuller and Simon Cowell conceived of Pop Idol
in the U.K. as a way to develop musical talent. And it's a chart-buster. U.K. pop idol Will Young has just released his second album, and it's a bigger success than the first.

No surprise, then, that American Idol
(performance show on Tuesday nights) is No. 1 in viewers, with 26.5 million, and No. 1 in adults 18-49. "The genius and brilliance of the whole thing was to get people to watch, to get them to invest in the process," says Tom Ennis, vice president of Fuller's 19 Entertainment. "That's why [Fuller and Cowell] came up with the voting thing. They knew that, after people spent months of their time watching these kids, they would become so involved in the process, they'd follow their careers after the show ended. They'd go see their concerts and buy their albums." (First Idol
Kelly Clarkson's album sold 2.3 million copies; her 30-city concert tour sold an average 14,000 tickets per show. Ruben Studdard's album sold just under 2 million, while Clay Aiken's sold just under 3 million.)

Although American Idol
has developed legitimate stars in Clarkson, Aiken, and Studdard, its success is tricky to duplicate. Yet USA's Nashville Star, produced by Reveille, pulled it off with contest winner Buddy Jewell. After nabbing a contract with Sony Music Nashville on the show in 2003, Jewell went on to sell more country albums than any artist that year, debuting at No. 1 on the country charts.

Now Mark Burnett, the genre's most successful innovator, is aping the talent-search elimination model with The Contender. He hopes to find a top-tier fighter who will command millions per fight. With boxing nearly dead in the U.S., Burnett and his partners, DreamWorks' Jeffrey Katzenberg and movie star Sylvester Stallone, have a shot at reinvigorating the sport, while reserving a piece of any future action for themselves.

"What Mark Burnett wisely saw was how to create a new backend model for these shows," says one studio executive. "They looked at American Idol
and said, 'If we get this show right and we are as successful as Survivor
and Idol
and The Apprentice, we will create the next Muhammad Ali.'"

2. Repeat Performances

A long shelf life is key. That means dating reality shows, such as The Bachelor
and Joe Millionaire, are out, while closed-ended ones, such as Fear Factor, are in. Shows like Survivor
and The Apprentice
are question marks, even though Burnett is sure there is syndication value in these top-rated titles. (The Apprentice
is No. 7 overall with 19.6 million viewers. Survivor
is No. 4 with 22.4 million viewers.)

Fear Factor, even though it is a reality show and a really gross one at that, was designed for syndication from the get-go. Each episode's storyline wraps by the end, allowing it to air repeats. Most reality shows play once—and are never seen again.

That distinction has made all the difference in Fear Factor's value. Repeatability earned NBC and producer Endemol some $250,000 per episode from cable channel FX. The show also was sold on an all-barter basis to broadcast stations. No cash changed hands, but NBC kept seven minutes of advertising in each episode. Local stations retained the other seven minutes, a sales model that can be almost as profitable as cash.

While most in the industry think Survivor
and The Apprentice
can't be syndicated, Bunim-Murray's The Real World
and Road Rules
have found homes in off-network cable.

Another option, though a less profitable one, is to release the shows on DVD. Bunim-Murray released The Simple Life, starring Paris Hilton and Nicole Richie as little rich girls stranded in Hickville, on DVD soon after its run ended on Fox. With Survivor
and The Apprentice
loaded with familiar characters, psychodrama, and back-stabbing, DVD might be the next logical step. Those who missed "You're fired!" the first time around may want to revisit the humiliation.

3. Get Your Money Up Front

"Everyone else is running around creating ideas for advertisers and hoping networks and audiences will like it," says Silverman. Most, he says, are on the wrong track. Silverman, along with Burnett and ad agency Magna Global, clicked with The Restaurant. Magna brought in American Express, Coors, and Mitsubishi as show sponsors and secured ad time for all three. NBC bought the show last summer for all-barter, letting Silverman, Burnett, and Magna sell half the ad time. The show's second season of six episodes launches April 19, and, this time around, NBC paid a license fee. "In the second cycle, NBC gets more control," Silverman says, "but I'd rather have the ad time."

Silverman is replaying this model with Bravo's Blow Out, in which stylist Jonathan Antin launches a high-end beauty salon in Beverly Hills. It, too, is pairing with Magna Global, and American Express, Revlon, and Lens Crafters will sponsor the show.

The formula is tried and true. American Idol
and Survivor
found success with brand-integration three and four years ago, respectively. Coke, Ford, and AT&T are the high-visibility sponsors of Idol, while Survivor
counts Tylenol, Home Depot, and Procter & Gamble. "We don't look at shows purely as television programs. We look at the shows as brands," says Cecile Frot-Coutaz, chief operating officer of FremantleMedia North America, producer of American Idol. "We aren't interested in doing one-off specials on the great and the weird."

4. Think Global

Most scripted fare no longer sells well abroad, but unscripted fare is a different story. Ennis estimates that licensing American Idol
to 34 countries is the most profitable area of 19 Entertainment's business—even though 19 also manages the career of every Idol
star in every country—and takes a piece of each one's record and ticket sales.

Reveille is currently in negotiations in 19 countries for the format of one of its new shows, 30 Days, in which a person lives in a different social environment for a month.

Conversely, some of the most successful shows in the U.S. are the result of imported formats: Michael Davies brought Who Wants To Be a Millionaire
from the U.K.; CBS's Big Brother
and Survivor
came from Scandinavia. "We try to figure out what the brand attributes are of a particular program," says Frot-Coutaz, "and how we can exploit that all over the world."

5. Market a Package

Once you develop a brand, sell select merchandise around it. That means selling a Queer Eye for the Straight Guy
coffee-table book full of style dos and don'ts and a branded soundtrack but avoiding Queer Eye
hair products and spice racks. "We want to be editors, not manufacturers," says Endeavor's Yaffe, who worked with Queer Eye's producers on marketing and merchandising. "The minute we ruin the show, that ruins our opportunity. We have to deliver the attributes of the show."

The show is also prudent about product placement, although Queer Eye
is rife with opportunities. "If you knew that Ralph Lauren was paying Carson Kressley to recommend his products, then you wouldn't trust Carson," says Yaffe. "So areas that don't touch the straight guy are open territory. Any area that touches the straight guy is sacrosanct. We need the Fab Five to be able to pick products they really like and use. That keeps it pure and doesn't contaminate the entertainment."

On a bigger scale, Silverman says he'd love to open a Rocco's chain, using The Restaurant
as a promotional base, or Jonathan's Salons, based on Blow Out. He doesn't have the rights, but he does have the vision. "The idea is, you use TV to highlight a business," he says. "Even Donald Trump. He's clearly using TV to promote his casinos and his properties. It's flagrant."

That doesn't bother Silverman. To him, TV is paradise found, "the world's greatest vehicle for getting people to do stuff."

Contributing editor Paige Albiniak has been covering the business of television for nearly 25 years. She is a longtime contributor to Next TV, Broadcasting + Cable and Multichannel News. She concurrently serves as editorial director for entertainment marketing association Promax. She has written for such publications as TVNewsCheck, The New York Post, Variety, CBS Watch and more. Albiniak was B+C’s Los Angeles bureau chief from September 2002 to 2004, and an associate editor covering Congress and lobbying for the magazine in Washington, D.C., from January 1997-September 2002.