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Table Scraps

Inside a dark screening room in Philadelphia, Banyan execs consider The Dress, starring upscale wedding designers Michelle and Henry Roth. A key ritual of marriage, fraught with excitement and frustration, seems a perfect pitch for a new reality show.

"It's The Osbournes
meets American Chopper
for young women," says Ben Ringe, Banyan Productions' director of development.

But can Banyan's three partners—Ray Murray, Susan Cohen-Dickler and her husband, Jan Dickler—sell it?

Even though the team produced the TLC mega-hit Trading Spaces, the bulk of lucrative revenues went to the network. Independents get table scraps.

Why? Because they don't own
the shows they produce. Instead, feisty indies rely on basic survival skills. They play all the angles—from creative flexibility to finding new markets to distribute product. Sometimes, it just comes down to churning out volume. These strategies can compensate for the slim profit margins they're thrown.

Consider Banyan's experience with Trading Spaces. Industry execs estimate it costs around $150,000 to produce; Banyan probably takes home 10%, or $15,000 per episode. TLC, by contrast, has grown its ad revenue, propelled by the show's success. In 2000, the year TS
debuted, TLC took in $345 million. For 2003, industry estimates peg revenues at close to $480 million.

And Banyan's experience is typical. Indeed, indies complain that it's virtually impossible to make much money off a $200,000-per-episode show, a usual charge for a cable series.

Producers say those in the traditional TV business would be appalled at how small their profit margins are. Which explains why they keep producing shows.

Plus, a network or third party—not the TV creatives who work outside the big studios—often controls format rights and the library. Producers may be shut out of the backend deal for global and home video, too.

There are rare exceptions.

American Idol's producer, 19 Group, owns the show and reaps huge rewards. But, for an unscripted cable show with a $200,000-per-episode budget, the production company might take home just 8% or 10%.

For the average producer, a hit could merit a $20,000 bonus, not a windfall. If producers are lucky, the networks pay a small reuse fee for repeats, around $20,000. Otherwise, they can watch as their shows rerun on cable—and network coffers grow—for years.

Networks want shows faster and on lower budgets. If one production company can't oblige, a dozen more will. Some of the biggest shops—LMNO Productions, Termite Art—are among a cluster of independents in Studio City, Calif., on the street dubbed "reality row." All seek new ways to cut deals and grow business.

The reason is simple: Buyers have leverage—and networks double as creative-control freaks.

"It is insanely difficult," says Dave Noll, head of City Lights Television and a former VH1 exec. Currently, City Lights is working on, among other shows, One Shot, a reality series for Discovery Kids, airing in 2005 on NBC. "You have to be so much better than everyone else," he says.

It also helps to have a hit. Banyan Productions has an edge, in part because it produces TLC's Trading Spaces.

The home-improvement show may be slipping in the ratings, but TLC ordered a fifth season. And the network's parent has demanded spinoffs Trading Spaces: Family
and, for Discovery Kids, Trading Spaces: Boys vs. Girls. As long as Trading Spaces
stays afloat, so does Banyan.

But no company can afford to be a one-hit wonder. Banyan prides itself on the ability to produce anything—a strip show, a weekly series, a special—for cable, syndication, on-demand or any new technology.

Eclecticism is critical. The Philadelphia-based indie has dozens of series ideas in development and five DVD projects in pre-production.

The company's founding partners, refugees from Philly's KYW, started out in 1992 in the Dicklers' basement. Their first project was a live pregame show for the Miss America Pageant. The special aired on 195 stations, and Banyan lost $44,000 on it. For a few years, it scraped by making infomercials. (In 1995, Banyan was nominated for "Infomercial of the Year" for the E-Force exercise-machine ad.)

Business perked up when Discovery Channel wanted a furniture–fix-up show, and Banyan crafted a series called Home Matters.
Throughout the '90s, Discovery Networks execs commissioned other small shows. That's how Trading Spaces
arrived. Initially, TLC tapped Knoxville-based Ross Productions to create the show. (The network had bought the U.S. rights to the BBC's Changing Rooms
format from Endemol.) But after season one, the network turned to Banyan.

"Trading Spaces
helped unleash a lot of Banyan's original ideas," says Dickler.

It also underscores the indies' plight: A production company has to be flexible if it is to prosper. Indies that are making it utilize a five-point plan to survive in a tough business climate.

The first
strategy is securing ownership and financing.

If you control the idea, you have bargaining power. Finance some of the production, and you have more. Banyan, which also opened a small Los Angeles office, relies on
fresh concepts from the company's young, aggressive producers. Similarly, at City Lights, Noll likes to have 90 ideas working at once. His team studies broadcast and cable networks' demos and current shows, then picks key projects to pitch. He keeps the ideas tacked up on a board under each network's name. Noll takes six ideas into a pitch meeting.

A second way to grow business is to produce volume.

Los Angeles-based Pie Town Productions, which produces for HGTV, Food Network and Lifetime, is currently juggling 14 shows. "Volume is the only way we can afford to do these shows and offer year-round employment for our staff," says Tara Sandler, who runs Pie Town with partner Jennifer Davidson. Her company will kick out more than 300 episodes this year.

Banyan, too, relies on the more-is-more approach. The company has 12 series in production. Last year, it produced 593 episodes; this year, it has created 616.

And thanks to a deal with Twentieth Television, Banyan's first syndicated show, Ambush Makeover, debuts nationally this fall. A second show, Design Invasion,
will be tested in Fox O&O markets starting Sept. 13.

A third option for producers wanting control: buying blocks of TV time to run your show.

Former Bunim Murray producer Rick de Oliveira is crafting a show for Spike TV called On the Road, a music-industry reality contest. Spike isn't footing the bill or paying a license fee. Instead, de Oliveira, who owns it, is working with Alliance, a unit of Grey Global advertising, and carmaker Kia to fund it. But if the network isn't paying, it may be less invested in its future. Observes one skeptical producer, "It is a good economic model but a bad emotional model."

Other producers are pursuing a
new frontier: the DVD business.

For example, Banyan has ratcheted up development, including hiring Vice President Eric Ritter, formerly executive managing editor at Inside Edition, to head its home-video division, Banyan Entertainment, which will roll out 10 titles each year. "Moving into other marketplaces is more important than the issue of format ownership," says Dickler.

"You can have a marginal hit and make your deficit back with DVD sales," adds World of Wonder's Randy Barbato, who produces for Bravo, Trio and HBO. Maybe, but it's a gamble. Chappelle's Show
and The Simple Life
enjoy strong DVD sales, but the model is largely untested.

A few select production companies espouse a
route: They specialize in particular genres.

Some independents are masters of Lifetime's "women-in-peril" movies. Others craft cooking shows. The networks respond to expertise. If Oxygen needs an original movie or home-improvement show, entertainment chief Debby Beece can tap experience. "This is how they make their living," she says. Indeed, Oxygen's new redecorating reality show Nice Package
is a Banyan production (and an in-house idea).

Broadcast networks get shows from big names, such as Survivor
creator Mark Burnett and The Bachelor
creator Mike Fleiss. When new cable networks demand original programming, their budgets are lean. Some cable shows go for $40,000 a half-hour; a more expensive show has a $250,000 budget. That pales in comparison with broadcast, networks where anything under $1 million per episode seems like a bargain.

Operating in this environment is difficult. Measuring success is simple. Says Banyan's Murray, "The more eyeballs you have, the better you are doing."