Wednesday, May 18, 2016

Let's be up front about the Upfronts

There’s yet a new wrinkle in this year’s Upfronts (when the major broadcast networks announce their new Fall schedules).  It's called "stacking."  First some background:

Negotiating with the networks has always been a challenge. But over the years it has gotten even more complicated and way worse.

Originally, before networks could own shows, the fights were with studios over number of episodes ordered and license fees. The license fee is what the network gives the studio to produce the show. The network was allowed two airings. If the cost of the show was more than the license fee then the studio paid the difference. The networks made their money by selling commercial time.

So if a series was cancelled after thirteen weeks and the studio shelled out a lot of additional costs it took a bath. But if the show was a hit, like say FRIENDS, then the studio owned it outright. At the time, syndication was the brass ring. Warner Brothers has made billions on FRIENDS. 20th continues to rake in money from MASH. It’s like a slot machine that just keeps paying out for over forty years.

Studios made so much money that the networks eventually cried poverty and lobbied the government to participate.  They won and were allowed to own studios and shows.  There was concern that the networks would then just pick up their own shows and squeeze out outside studios.  "Oh no," they promised, "Our goal is to get the highest ratings so we'll buy the best shows regardless of who produces it."   You know the result.  For the most part networks only picked up shows they owned. If they bought a show from an outside studio they usually required partnership.

If you had an ownership stake in a series (let's say you were the writer/creator/showrunner) you now had another partner. Sort of reminds you of the Sopranos,’ doesn’t it? And even the big syndication dollars were in jeopardy. Why? Because networks began buying cable networks and selling their shows essentially to themselves at reduced rates. The ownership partners were undercut again. The networks profited in that they had quality programming for their upstart networks and they alone profited on the advertising. This prompted several lawsuits by folks with ownership stakes, like Alan Alda.

And now comes something new. The syndication market isn’t what it used to be. DVD sales are drying up. Streaming is the new source of big income.

Instead of selling their hit series to independent TV stations in syndication, they now sell to Netflix or Hulu for big bucks. But those outlets understandably want exclusivity for their astronomical fees. Series owners were able to provide that… until this year.

The arrangement with networks was always that they could stream only five episodes at a time. So you couldn’t binge on an entire series until it went to (say) Netflix.

This year the networks want to stream all episodes of new season’s shows. That's “stacking.” They feel it will generate more interest in the shows, and it’s another way to bring viewers into the tent. And that’s fine, except there goes exclusivity and a big payday down the line.

And just as the networks wouldn’t pick up a show if the studio didn’t agree to become partners, now they can’t get their shows on the schedule unless they acquiesce to this new stacking demand. NBC and ABC have been particularly hard line on this. And negotiations have been very contentious.

You will notice that the actual quality of the product has not been mentioned even once in this post. Once upon a time, the best pilots got on the air. Now, the best deals get on the air.

Will this be a great new Fall Season?  As a viewer I'd say the odds are against you.   Stacked against you. 


VP81955 said...

Is this why I can't see episodes from early in season 3 of "Mom" on CBS All Access?

Ted Kilvington said...

But Ken, you forgot to answer the big question: "How will this affect my ability as a cheapskate to binge on my favorite quality programs like Two-and-a-Half Friendly Girls"?

Craig Nesbit said...

Is it any wonder why I only watch two scripted shows on network TV? All of the good shows are on cable or online.

A. L. Crivaro said...

Very interesting. Made me think of a Friday Question:

When either writing or creating a sitcom, how much compromise would you consider to be too much? At what point do the powers-that-be's hands go from stifling your creativity to killing it?

gottacook said...

On a related topic, I was wondering what you thought of today's Vulture article, "The Business of Too Much TV" ( It seems to be well-reported journalism, but it's difficult to know how representative the named sources are, who they didn't talk to (besides yourself) but should have, etc.

Diane D said...

That was a lengthy but fascinating article about the subject. Would love to know Ken's opinion of it. I hope he responds.

I know it was intended for Ken, but I'll just say "thanks for sharing" anyway. I thought the author's comparing top actors to the 1% (in
this new model) was particularly astute. That world already seemed so brutal, it's a shame that mid-level actor's incomes should go down
while the already super wealthy goes up, not to mention all the other seemingly unfair changes this article suggests for writers, show runners, etc. However, crew are apparently doing very well!

cb said...

As I learn about stacking - with which I was unfamiliar until about two weeks ago - I have wondered how this works with the "7 day window" that resulted from the writers' strike. Does this effect residuals in any way...?

Andy Rose said...

I don't know much about industry salaries, but the programming overcrowding is a serious issue.

The TV industry tends to go through the same problems as the radio industry, only 10 or 20 years later. People blame radio's problems on deregulation -- and that didn't help -- but the business was also hurt by a rule the FCC passed in 1980 that caused the number of FM stations in the country to explode, and allowed a lot of existing stations in exurban areas to target their "rimshot" signals at the big cities. As a result, cities that previously had 10 FM stations (with maybe half of them actually making a decent amount of money) suddenly had 25 or 30. And they were all competing for a slice of a pie that wasn't any bigger than when there were only 10 stations. It helped to set the stage for massive consolidation because the smaller ones couldn't survive. And I doubt many people would argue that it improved programming.

forg/jecoup said...

This season I've observed Warner is the only studio that could still sell their shows with the network's co owning it. Sony's shows are now co-owned by the networks they are airing now

i could be a bob said...

Besides the Vulture article mentioned above, now there is this from Deadline today. Ratings just don't matter to Les. It's all about ownership.