When USA Network saw competitor TNT threaten to poach a prized asset, NBC Universal President Jeff Zucker stepped in to keep the valuable Law & Order franchise in the corporate family.
Zucker had NBC renew L&O for an 18th season, move primary runs of L&O: Criminal Intent to USA and extend creator/Executive Producer Dick Wolf's studio deal to 2012.
NBCU insiders downplay the notion that TNT was likely to walk away with the so-called mothership after its informal 11th-hour bid, but others familiar with the deliberations insist that it had become a real possibility.
“TNT was really propelling the whole thing,” says a source familiar with the situation. “[NBCU was] genuinely undecided. Dick was pushing hard, and TNT had come on really strong. It caused a lot of consternation. No one knew what to do.”
The cable network told NBCU that it would be willing to pay $2.1 million for each of the 22 new episodes of Law & Order, an sum that would have lifted the costly series into the black. For the cost-conscious, GE-owned entertainment conglomerate, that was a tantalizing prospect.
The $3 billion-plus L&O franchise has long taken center stage at NBCU, where it had saved the network from ratings oblivion in recent years—but at great financial cost.
When Universal TV sought dramatic license fee increases for the trio of shows, which also includes L&O: Special Victims Unit, NBC found it cheaper to buy the studio in 2004 than pay the proposed inflated renewal prices.
After the sale, L&O and CI started to lose ratings steam, leading to the possibility that they could meet their demise next season.
TNT's offer, which some insiders suspect was instigated by Wolf's camp a few weeks prior to the upfronts, would actually have provided NBCU with $3.1 million per episode—the license fee combined with the $1 million it was already spending for the off-net reruns of L&O.
Wolf, in the meantime, committed to reducing episodic production costs of the show, from $4 million to $3.4 million. He has declined to comment on financial aspects, as has NBCU. TNT has never officially confirmed its interest.
NBCU could have more than made up the small deficit through international revenue, including an expanding, localized format business, and by eliminating NBC's license fees of $3 million per episode.
However, USA and Sci Fi President Bonnie Hammer, according to sources, loudly argued that selling L&O to TNT would cause substantial harm to USA by letting its chief rival use originals to boost the strength of the L&O reruns.
Since NBC's acquisition of Universal, USA has grown in value from $5.5 billion-$6 billion to as much as $7.5 billion. By comparison, NBC, like other major broadcast networks is estimated to be worth only $4 billion-$5 billion without the stations in the mix.
A knowledgeable insider says NBCU methodically weighed a multitude of “moving pieces” before having Zucker make the final call, which put an end to the exploratory talks with TNT only a few days prior to the Mother's Day renewal announcement.
And since USA already owned the backend rights on Criminal Intent, say sources, it made sense for the in-house cable network to take over the original runs.
As a result, USA can likely get a much-needed bump in its CPMs (cost per thousand) from the single digits to at least the mid teens. TNT, sources say, could have probably achieved even higher CPMs with L&O.
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