TMZ's $55 Million Brand:Moving Far BeyondThe 30-Mile Zone | @PaigeA

When TMZ executive producer Harvey Levin and his team heard that Mel Gibson had been arrested in the wee hours of July 28, 2006, hey did what all newshounds do: They started working the phones.

“The police told us that the arrest was without incident, but we started getting tips and making calls,” says Levin. “We were told that he went on an anti- Semitic rant, but the police said that was ‘absolutely untrue. You will destroy the operation if you put that up on your website, because it’s false.’ We knew we needed to get the goods.”

At that point, many reporters would believe the police and stop pushing. But Levin, a news veteran with a legal background who had covered Los Angeles for outlets such as KNBC and KCBS since 1978, sensed there was more. And TMZ wasn’t limited to the smaller scope of sources tapped by traditional outlets. In TMZ Land, a valet and a CEO are equal, with both capable of generating clickable news. In the case of Gibson, the goods didn’t come from a disaffected waiter leaking embarrassing dish about a low-tipping star. It came from the same source others had not listened quite so closely to.

“I made a phone call to one of the police officers who had arrested Mel, and I told this person what I knew,” says Levin. “There was just enough of a pause and a tiny nervous laugh. I listened to that, and it was very subtle, but I heard it: This person is not telling me the truth. It was that moment that made me think, ‘I’m getting stonewalled on this story.’

“When you ask questions, the answer you get and the way you get the answer matters. We pushed and pushed and pushed. Obviously we had good sources, but finally we got the report. The police department was crazed trying to figure out who gave it to me. I learned later that they actually seized my telephone records.”

The mega-scoop did more than send the career of an A-list star into a tailspin. It cemented TMZ’s reputation for combining sheer hustle with digital expediency, sharp elbows, tough skin and mordant wit.

Let Your Contents Be Your Guide

In the years since, TMZ, which opened shop on the Web in late 2005, has grown into a content brand without direct peer—loathed and imitated in equal measure, destabilizing traditional businesses and celebrating its own disruptive DNA at every step. Once a feisty little URL, it is now a $55 million force that includes the core website, a syndicated TV show, live tours and ruthlessly cost-effective extensions in various stages (including, God help us all, a musical).

TMZ routinely breaks major entertainment stories, but it is deliberately not chasing Peabodys or Pulitzers. The majority of its content is celebrity silliness, with “celebrity” often applied only in the loosest of ways. Chronic, public stumbles by the likes of Lindsay Lohan, Amanda Bynes and Britney Spears provide constant fodder for the site and the TV show, and lately so have Simon Cowell’s baby mama drama and Justin Bieber’s alleged penchant for spitting on fans.

That the mainstream media doesn’t fully trust TMZ was proven when no one picked up TMZ’s huge scoop that Michael Jackson had died in 2009 until more traditional organizations such as CNN and The Los Angeles Times confirmed it, and found, per usual, that TMZ was on the money.

Levin & Co. long ago stopped caring what traditional media dislikes about TMZ—and in fact, riding that line between high and low, and getting tips from a wide array of parties is what drives its profits.

In total, TMZ’s revenue is north of $55 million annually, according to sources. The TV show, which is the profit center, and its websites cost relatively little to produce.

That’s why there’s soon going to be a lot more TMZ. By the end of this year, two new sites—TMZ Sports and a revamped MomLogic— will join TMZ’s other Web spinoffs, which focuses on red-carpets, fashion and awards shows; and, an opinionated blog on all things celeb. Levin plans to quickly expand TMZ Sports to other platforms.

A reality show, Famous in 12, coproduced by Renegade 83, will premiere on The CW next March. TMZ and Renegade have found a family who will participate in a 12-week experiment to see if they can become famous, using all the tricks of the Hollywood PR trade, including frequent appearances on TMZ.

“There was no one better to go to with this than Harvey,” says Jay Renfroe, executive producer at Renegade 83, “He immediately got what we were doing and ran with it.”

The chat show TMZ Live, which has been incubated on the Web for three years and tested on select Fox stations, premieres on Fox- owned stations in September and should be cleared on TV stations across the country next fall. Radio versions of TMZ air on Sirius XM Satellite Radio and one-minute vignettes are syndicated on the Premiere Radio Network. The staff also is currently creating TMZ UK, which will air across the pond and be tailored to a British audience.

There’s more—both Los Angeles and New York host a TMZ Tour, in which a TMZ-branded tour bus and a TMZ host take tourists around the city, showing them celebrity places of interest. Levin even plans to launch a TMZ musical, aiming for Book of Mormon territory.

Ultimately, Levin would like TMZ to operate like a studio, creating, developing and selling its branded products across entertainment platforms. In April, the whole outfit moved from 8000 Sunset Blvd. in West Hollywood to a new production facility on West Jefferson Avenue in Los Angeles’ Playa Vista (the vast marshlands where Howard Hughes once housed his huge prototype “Spruce Goose” aircraft). There, Levin says TMZ will have the space it needs to grow and deploy the technology it needs to get there.

The Scoop on Those Scoops

All of this action springs from a daily pitch meeting—featuring plenty of jokes sprinkled between pitches—that starts around 6:45 a.m. and wraps before 9 a.m. Levin hangs over a cubicle wall in TMZ’s new red-andblack- accented facility, with a high-tech glass whiteboard behind him. Occasionally, he writes on it in neon pen, but he spends most of the two hours bantering with his young jeans-and-baseball-cap-clad staff.

“I believe that the newsgathering and the website is the gasoline that drives this car,” says Mike Walters, TMZ news director and coexecutive producer of TMZ Live. “It starts with a seed in the newsroom, and parts of it end up being items we use on all of the different outlets.”

That TMZ breaks so many of the biggest entertainment stories, such as Gibson in 2006, Heath Ledger’s death in 2008, Michael Jackson’s passing in 2009 and many more, has many reporters scratching their heads. How do they do it? What’s the magic? Do they pay for stories?

According to team TMZ, the formula for that magic—as with Levin pouncing on that Malibu cop’s nervous laugh about Gibson—is simply hard work.

“When everyone else stops at making 10 phone calls, we make 100,” says executive producer Evan Rosenblum. “We just keep digging and digging.”

As for the common accusation that TMZ pays for tips, “I have no problem paying for tips,” shrugs Levin, “but we hardly do it at all. If someone calls and says, ‘I have gone through court files in a certain city and there’s a big lawsuit in which you’d be interested,’ I don’t mind paying them for their work. But we have to verify every story that we do.

“We absolutely will not pay for interviews, however,” he continues. “When you pay for an interview, you are telling someone to goose it, to say something salacious, even if what they are saying is not true. A lot of traditional network news operations will pay someone $100,000 for things like a picture or a photo album, but what they are really paying for is an interview. When you do that, how do you know what’s coming out of their mouth is true?”

Taking TMZ to TV

By 2006, it was clear that the time had come to take TMZ to the next level.

Late in the year, Hilary Estey McLoughlin, president of Telepictures, called Levin and said, “‘Good news! Fox just bought the TV show.’”

“And I said, ‘Oh great,’” recalls Levin. “Hilary was offended and said, ‘I thought you might be a little more excited,’ but I couldn’t even fake it. All I was thinking was, ‘How are we going to do a show? What the hell is the show going to be?’”

Levin continues, “We decided to do a funny take on Hollywood that would complement the website. Let’s blow up the paradigm and just create something completely new, a new voice, a new attitude, a new point of view. Suddenly it became interesting.”

With that concept at its core, TMZ on TV went live on Sept. 10, 2007. TMZ has crafted a partnership with the Fox-owned stations, which bought the show in cash plus barter deals. Stations keep 5½ minutes of advertising inventory in each episode, while Warner Bros. keeps 1½ minutes.

TMZ, recognizable to fans of the website but somewhat looser and goofier, immediately claimed a top ranking among syndicated shows, especially in the younger demos. In the November 2007 sweeps, it averaged a 1.9 household rating, which is about what it averages today. For the week ended July 21, it was up 6% year-to-year, the only entertainment magazine to gain that week. It’s also the third-ranked magazine in households, behind CBS Television Distribution’s Entertainment Tonight and Inside Edition.

More importantly, TMZ is the top-rated show among men and women in the 18- 34, 18-49 and 25-54 demographics, except among women 18-49, where it comes in second to ET, and women 25-54, where it ties for second with Inside Edition behind ET.

TMZ only averages 2.77 million total viewers, compared to ET’s 5.13 million and Inside Edition’s 4.2 million, but almost all of TMZ’s viewers are young.

“For the right station, TMZ makes a lot of sense. They are very good at both making themselves available within the newscasts of stations as well as being available on the websites of those stations and driving traffic to station websites,” says Bill Carroll, VP, programming, Katz Television Group. “If you are a traditional news station, you probably aren’t going to be the TMZ station. But if you are aiming at a younger audience, you probably are going to be a TMZ station, and happy about it.”

“We were always interested in the show,” says Jack Abernethy, CEO of Fox Television Stations. “We knew Harvey knew television, and it was the kind of thing we needed. It was intentionally structured to work for a Fox station— it was young and hip-looking.”

Abernethy is so impressed by TMZ that one of his TV stations, WWOR New York, is emulating its style with Chasing New Jersey, a local newscast.

TMZ is incredibly efficient,” says Abernethy. “We are trying to steal pieces of this model. If you look at TMZ, you see how many people are actually researching stories, covering stories, touching stories—it’s virtually everybody. The more people you have covering stories and bringing stuff in, the better product you are going to have.”

Incubating TMZ Live

That’s also why Fox jumped on TMZ Live, another project that originated on the Web. Launched in 2010, TMZ Live features Levin and one of his executive producers, usually Charles Latibeaudiere, leading a conversation covering the celebrity news of the day. TMZ Live also jumps off of the morning meeting, but gets more in-depth about how the news is being reported.

“People come to our website by the millions for our exclusive content. But any time you can take people behind the curtain a little bit, things get more interesting,” says Latibeaudiere. “We’re never going to reveal a source or reveal things that will give other outlets a road map to our stories. But people love feeling like they are in our newsroom with us.

“We know that everything we put on the website or TV show is not going to be welcomed, that people may not be thrilled with it,” he continues. “What we are doing is giving you a full range of entertainment here. You can agree or disagree, and we’d love for you to tell us why.”

Fox initially tested TMZ Live on KTTV Los Angeles, expanded it to KSAZ Phoenix and then five other markets: Boston, Chicago, Dallas, Detroit and Minneapolis. This fall, TMZ Live will air on all 18 Fox-owned stations, as well as a few non-Fox-owned stations, all of which are paying cash for the show and keeping all 15 minutes of advertising inventory in each hour. By next fall, it is expected that the show will be cleared across the country.

Whether TMZ Sports and MomLogic will take the same TV trajectory as, TMZ on TV and now TMZ Live remains to be seen. Levin’s increasingly convinced that TV’s no longer the only right route, but the notion that both spin-off brands will find their ways to multiple platforms is a safe bet.

“I don’t think TV is always the most lucrative platform,” says Levin. “TV and the Internet are fusing—we call it ‘Intervision’ here. There’s a mosaic of things that are more lucrative than any one thing that you can do. Sometimes TV makes imminent sense, and sometimes other things make more sense. We have a combination of all of that going right now.”

Whatever the new frontiers end up bringing for TMZ, it aims to keep people on their toes. The fact that the mere mention of its name brings a strong reaction is a key revenue driver.

“After a couple of years of doing the TV show, we were doing some market research,” Latibeaudiere recalls. “We did a test with some people and they watched our show as well as Entertainment Tonight, Access Hollywood and shows like that. We asked, ‘How do you feel about TMZ? About the website and the TV show?’ And it was interesting that the resulting graph showed that people either loved TMZ or hated it, but they felt strongly either way. For other brands, the curve was flat. We never want to be flat.”

Paige Albiniak

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.