With daytime ratings drifting downward, syndicators large and small are redefining the way they do business. No one syndicator is approaching the economics in the same way, but like practiced lottery players, they're all hoping for the next Oprah Winfrey Show, Dr. Phil, Wheel of Fortune or Jeopardy!, any show that will throw off $100 million-plus annually. Cultivating those hits, of course, will be the legacy of the late Roger King, whose King World distributed them all.
Pulling off that kind of success is like finding a diamond in a bag of crushed ice. Today, almost all healthy time periods are filled by proven programs cleared on stations for years to come. When desirable time periods do open up, there's a quick feeding frenzy before they are locked up again. Syndicators looking for new ways to play the game face some daunting obstacles.
Even CBS' powerful Oprah Winfrey Show has seen its ratings erode. In 2003, Oprah averaged a 6.6 live-plus-same-day national household rating, according to Nielsen Media Research. This year, the show is averaging a 5.8, a 14% drop after peaking in 2004 at a 7.7. (The loss of actual viewers would be less than those percentages, because Nielsen recalculates the value of a ratings point every year.)
The story is much the same for the rest of syndication—with the notable exception of CBS' Judge Judy. Looking at the top shows in several genres, CBS' Entertainment Tonight has decreased from a 5.6 in 2003 to a 4.8 Nielsen five years later, a 14% drop. In that same time frame, CBS' Wheel of Fortune has fallen from an 8.9 to a 7.5, a 13% decline. And CBS' Everybody Loves Raymond, like all veteran sitcoms, has plunged, losing almost 40% of its ratings.
Syndicators' dilemma is this: Ratings are drifting downward and plum time periods are rare, but shows still cost the same or more to produce. How do they make money in an environment that works against them?
Each syndicator is approaching the problem in a different way, whether by keeping production and marketing costs down, incubating shows within other shows or online to build their brands prior to launch, or taking on financial and marketing partners to help spread the risk.
It's rare for any syndicator to take more than one bet per season, compared to big studios bringing out two or three shows in the past.
The annual gathering of the National Association of Television Program Executives used to be a giant bazaar of TV shows from which stations could pick and choose. Now it's mostly a gathering place for meeting and greeting; many shows have been sold long before the confab and there's far less merchandise to peruse.
Syndicators cancelled shows that averaged a 3.0 in households; today, that's a huge hit. Warner Bros.' Ellen DeGeneres and CBS' Rachael Ray both are considered successes; both average a 2.1 in households.
Producers and distributors have to work much harder for their money. When nearly half of all syndication revenue is driven by advertising barter sales, they can't afford to produce shows that cost more than the advertising they bring in. Instead of syndicators spending less to produce shows, they are often spending more.
It does mean they have to place their bets carefully, giving brands time to incubate, watching production dollars and taking as little risk as possible.
“That's the name of the game,” says Bob Cook, president and chief operating officer of Twentieth Television. “Everybody is trying to stay ahead of that curve. You want to be more efficient with production, but if you keep the quality on the screen and stay ahead of the ratings, then you are playing the game well.”
HOW A TV SHOW IS BORN
Creating a success starts long before a show ever gets on the air, with syndicators looking toward established brands to save themselves valuable promotional dollars. Dr. Keith Ablow was a best-selling author before he got his talk show in 2006. But compared to Dr. Phil McGraw, who was a regular on Oprah Winfrey's show before getting his own successful program, Ablow was a relative no-name. His show failed.
That's one of several reasons why distributing Trivial Pursuit: America Plays—a TV show based on the board game that's present in almost every American household—was so attractive to independent syndicator Debmar-Mercury.
“The mandate for all first-run on a go-forward basis is to look for talent or ideas that are established brands,” says Cook. “You have to make sure that they have a marketing extension built in to the brand.”
“We have a name-brand national marketing partner behind us in Hasbro,” says Mort Marcus, co-president of Debmar-Mercury, which got off to a great start with the successful off-net sale of Comedy Central's South Park in 2004. “I think we have drunk the Kool-Aid a little bit because we are so confident it will be successful due to the show's title and financial backing.”
Debmar's deal has another built-in advantage. Hasbro will cover national marketing costs for the show. That cuts Debmar's risk in half. Debmar also secured exclusive international rights to distribute Trivial Pursuit; this will boost overall revenues even if domestic ratings are mediocre.
Launching a show fronted by a well-known host or based on a popular established brand is ever more important as the number of cable networks expands and as Internet content sites proliferate. In the multi-channel universe, it's also harder to promote a new program with traditional on-air spots, because fewer and fewer viewers will ever see the pitch.
“TV stations used to reach such a huge part of the city, but now they have a harder time doing that,” says Marcus, who says the $200 million in revenue generated by first-run sitcom Tyler Perry's House of Payne in syndication is due to how well-known Perry already was with his large and fervent fan base. “With someone like Tyler Perry, you have a chance to get sampled. If you are doing something no one has heard of, it makes it much harder for people to promote it.”
Building a brand from scratch is expensive, but possible. Warner Bros. built TMZ, its highly trafficked Website, into a TV show in just one year.
“One thing we are definitely doing is trying to incubate formats, taking bigger, broader ideas like TMZ and then migrating them back to television,” says Hilary Estey McLoughlin, president of Telepictures Productions, who hopes to duplicate the success of TMZ with the studio's recently launched Web portal, MomLogic.com.
TMZ was “a built-in brand that already had a following and recognition factor when we launched the TV show,” she says. It's a well-oiled machine out of the box because we already had a staff and an infrastructure set up.”
Warner Bros., one of only two remaining studios that don't have a station group to feed, needs to build brands online. But other syndicators are building brands off their existing successes before spinning them off on their own.
CBS Television Distribution has had plenty of success with this strategy, launching Dr. Phil and Rachael Ray off The Oprah Winfrey Show, The Insider off Entertainment Tonight and coming soon, The Doctors out of Dr. Phil.
“For me, the formula always has been to respond to the audience, watch how they're reacting, watch their level of interest and engage them over time,” says Terry Wood, president of creative affairs and development for CBS Television Distribution. “There are two places where people are talking directly to us—online and through the ratings. Those are both great day-in-and-day-out laboratories.”
One reason at least one new court show seemingly launches every year is because the format is among the most efficient to produce. Justice is also swift: Court shows are often taped outside Los Angeles, shooting several episodes per day of taping, so that an entire season can be put in the can within just a couple of months. And many syndicated shows—not just court programs—are giving stations fewer and fewer original episodes. But with fragmentation the rule of the day, shows can repeat more frequently without viewers noticing.
And, while on-air promotion is important, some syndicators have realized that providing stations with spots with specific time and date information or multiple 30-, 15- and 10-second spots might not be necessary.
“We've found that court show audiences, for example, watch because they like the judge, so they just need to be reminded that the show is on. This way, we've cut down dramatically on the number of promotional spots we've had to produce,” says Cook.
Syndicators also have the same goal as everybody else on TV: Trying to make money on shows on-air, online and at-home.
“One of the factors that come into play is not just what time period will work and whether people will watch it, but how can you support that on multiple platforms financially and promotionally,” says Josh Raphaelson, co-principal of Program Partners. The upstart company has launched various multiplatform extensions for its game show Crosswords, including online, at-home and console versions of the game.
Game shows, in general, lend themselves easily to multiplatform extensions, making them popular offerings both in primetime and daytime. Even veteran shows are hoping to keep themselves fresh and attractive by giving fans new ways to play. CBS' Jeopardy! this year launched a simple online version of the game, and the show's executive producer, Harry Friedman, says he's working on creating a mobile version with which viewers can play along with the TV show.
RIGHT TIME, RIGHT STATION
Syndicators also have learned well the lesson that Roger King taught them 25 years ago: Getting a show on the right station in the right time period makes all the difference.
A first-run show, says Ritch Colbert, co-principal at Program Partners, “is always driven by identifying a need in the marketplace.”
“We only take out stuff that we absolutely think stations will want and will work,” says Marcus, who's selling stations a late-night talk show starring Tom Green off the Internet, in addition to Trivial Pursuit. “Our effort and focus is on finding out what the holes are and then filling that need.”
The only syndicator that's still developing $25 million talk shows is Warner Bros. In the early days of consolidation, that was considered a disadvantage, but today the studio has learned that works in its favor.
“One of the benefits of vertical integration is to deploy assets strategically to maximize profitability and reduce risk,” says Ken Werner, president of Warner Bros. Domestic Television Distribution. He's quick to point out the downside: Stations could end up absorbing the cost of failed shows.
Still, no matter how they go about doing it, syndicators are still seeking the big hit. “Can a syndicated show still throw off $100 million a year?” asks Marcus. “Absolutely. That's why we get out of bed every day.”
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