The View From Madison Avenue
Just one year ago, it was as if syndication were a wallflower at the broadcast networks' glamorous upfront ball. That's why SNTA is giving its own dance.
It seems like a good time to throw a party.
Even though not many syndicated first-run shows crack a 2 rating, syndication took in about $2.5 billion last year, 13% more than the year before. This year looks to be a good one, too, though it's early for predictions because the syndie upfront usually takes its cues from broadcast.
Some buyers worry that there are no strong off-net shows entering syndication. With the proliferation of reality programming, they wonder where those shows will come from (reality doesn't repeat very well).
The market's strength in 2003 may be less than it seems. "In '02, syndication performance was abysmal, so that level of increase [in 2003] is a bit of an anomaly," notes Bob Flood, executive vice president and director of electronic media at New York-based media agency Optimedia International.
Terri McKinzie, assistant media director of Chicago-based Starcom USA, concurs. Last year, syndication was up because the "network marketplace at the beginning of the year was just so tight that people didn't have the option to place dollars in network and therefore had to go to alternative media." Starcom places in excess of $200 million worth of advertising time in syndication per year for such clients as Kellogg's, Sara Lee, Nintendo, Discover Card, the U.S. Army, Best Buy, Hallmark, and Miller Beer.
John Muszynski, Starcom's executive vice president and chief broadcast investment officer, sees another factor: Many syndicators virtually sold out their entire upfront inventory rather than hold some back. That sell-out level may have caused an inflation of the full-year revenue estimates, particularly if syndicators sold inventory that, in the subsequent tight scatter market, they weren't able to deliver.
Not surprisingly, syndicators themselves disagree with those buyer arguments, with more than one pointing out that, whenever their programs didn't deliver, buyers didn't pay. Syndicators also point to Dr. Phil,
a breakout hit in a so-called bad year, as well as to the substantial ratings performances of off-net sitcoms.
The traditional rule is that, if the broadcast networks have a good upfront, syndication will also benefit as ad money chases both reach and network-level ratings for the top-tier off-network shows.
On that basis, "it's too early to tell if syndication will have a good year," says Optimedia's Flood.
Political advertising, he predicts, will boost ad demand in the third quarter and the beginning of the fourth. For the 2004-'05 season's quarters, though, the signs—such as level of housing starts and measures of consumer confidence—remain "mixed." And factors from the election to the economy, war and terrorism will have an impact on the media landscape.
"Last year's price is a concern," says Ray Warren, managing director, OMD USA. "There's a definite feeling in our shop that [last year] syndication was not priced appropriately.
"In some ways," he adds, "the syndication guys were probably pushing harder" last year than broadcast-network or cable sellers. Cable, with its proliferating ad-supported networks and growing inventory, was "more realistic" in its pricing.
But some syndication buy-side supporters argue with their wallets and hearts. Says Andy Donchin, senior vice president, director of national broadcast, Carat, "I happen to be a fan of syndication. If you steward it and police it and stay on top of it, it's a great vehicle, a great option for us to spend our television money,"
But this year, some issues will impact buyers' view of syndication. As the upfront season gets under way, there's a dearth of new top-tier off-network scripted fare, particularly sitcoms, in the syndication pipeline.
The biggest new off-net sitcoms coming into the market include Yes, Dear and Malcolm in the Middle. Despite their undeniable marquee value, there's a sense in the buyers' community that the wait for the next Seinfeld
or Friends will continue.
Among first-run programs, the brightest stars—Oprah, Wheel, Jeopardy
—have been at the top of the ratings for years. And the top-rated off-net shows were network debutantes years and years ago. Seinfeld and Friends premiered on NBC 14 and 10 years ago, respectively; Everybody Loves Raymond, on CBS in 1996.
Two seasons ago, Dr. Phil began making his lucrative and top-rated house calls and almost single-handedly revitalized the syndication marketplace as a lead-in to afternoon news.
This season, The Ellen DeGeneres Show
is the only new first-run series in syndication that can be called a hit.
With the reality craze constricting the pool of new scripted hits and with most new first-run series striking out, the buyers are worried. "The sad thing is that, because of reality programming that's become so vital for the networks to survive, the pipeline of programming in syndication in terms of off-net is really getting somewhat limited in terms of new and fresh product," says Starcom's McKinzie.
EARLY FALL BUZZ
New fall-season syndie entries with early buzz include Paramount's The Insider, designed as a companion piece to its Entertainment Tonight, and The Jane Pauley Show, from NBC Enterprises Domestic Syndication. The syndicated version of Fear Factor, also from NBC Enterprises, may run into advertiser squeamishness, warns Starcom's McKinzie.
Jane Pauley can do great, predicts OMD's Warren, of the former Today anchorwoman's new syndicated talk show. "It's a fresh face, in that she's not been on television for a while, but it's a familiar face and a very well-regarded face."
The Insider has a good shot, too. "It's an insatiable appetite that the American public has for celebrities," says Warren.
The biggest question marks for any new show are time period and clearances, but The Insider, which will be occupying the Hollywood Squares slot in access in many markets, has the inside line, particularly at Paramount's sister stations in the powerful Viacom Television Group.
More than one buyer calls The Tony Danza Show, from Disney's Buena Vista, a "question mark."
Says OMD's Warren, "They say he connects with women like nobody's business, so the question will be, in the markets that he's cleared at, in the times that he's cleared, are those women the ones who are watching?"
As for Fear Factor, he adds, "I don't know if it's going to have a lot of advertisers in it.
Besides questions of taste and appropriateness for some advertisers, the other big issue about a reality show is, "Do you watch it twice?"
In fact, buyers rarely mention any of the other shows unveiled in January at NATPE, either as possible hits or likely losers. The only other potential new shows on the buyers' radar at this early stage are Sony's Life & Style and eBay TV, Twentieth's Ambush Makeover, Litton's Hot Topics, and October Moon's That's Funny.
As for the question of where the new hits are coming from, ultimately that's a problem for the syndicators themselves, rather than the buyers. "I'm not worried about that," says Warren. "The syndicators have to worry about it. We've got places to spend the money."
PLUSES AND MINUSES
One of the biggest systemic changes in today's syndication marketplace is a result of consolidation and vertical integration. These days, the biggest syndicators are divisions of companies that own their own TV production arms and station groups. Unlike in the old days, when launching was a painstaking market-by-market process, today a show can launch by simply "clearing" its own sister station group.
"There's a downside to that as well," cautions Muszynski, "because not all of those stations are extremely strong, no matter whose [station] package you look at.
"Prior to these big group deals," he adds, "syndicators—the good ones—were able to go in market by market. It was tougher process, but they were able to generate stronger, more targeted clearances for their respective shows."
Buyers still admire syndication's unduplicated reach (often with a higher concentration of younger viewers than comparable broadcast-network shows). Syndication also compares well for its year-round programming consistency, especially compared with broadcast's fickle fall schedules, where cancellations come quickly. And buyers like syndication's generally advertiser-friendly environment, especially compared with the networks' sometimes gamier reality fare.
"I believe in syndication. It provides an absolutely fabulous alternative to [broadcast-network] programming, "says McKinzie, who is also one of the organizers of Starcom's annual syndication day in Chicago. "In daytime, if you only buy network soaps, you're missing audience."
As SNTA aims to point out this week, syndicators don't want buyers to miss a thing.
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By Kent Gibbons