Thursday, March 30, 2017

The business behind network television... or "stacking" the deck

Once upon a time a writer would come up with an idea for a series. He would then align with a studio (major or independent), go and pitch it to the networks. In theory, the best ideas got selected for pilot scripts. The best pilot scripts got selected for pilot production. And finally, the best pilots got on the air and became series. (No, I can’t explain GILLIGAN’S ISLAND.)

Then things started getting more complicated. At one time networks could not own series. They bought them from studios, paid a license fee to cover production, got to air the show twice and kept all the money it received in advertising. The shows usually cost more to produce than the license fees the studios received so they financed any overage. If the show got cancelled after thirteen weeks the studio took it in the shorts. But if the show became a big hit (like FRIENDS), the studio sold it into syndication and made billions.

So the networks wanted in on that action. They convinced the government in the mid ‘90s that with the proliferation of cable and the new economics it was impossible to make a profit unless they could claim some ownership. The government worried that the networks would then only buy shows they owned. But the networks claimed that their business since depended on ratings so it was in their best interest to put on the best shows regardless of who owns it.

The government fell for it. The networks began putting on primarily shows they owned. And if they did buy something from an outside studio they generally wanted 50/50 partnership.

Independent companies like MTM disappeared overnight.

So things got more complicated. Programming decisions were made not just on quality and content but ownership, potential syndication, etc.

More cable networks emerged. Streaming services arrived. Networks tried to weather the storm by buying cable networks and partnering with (or starting their own) streaming services.

The model for a hit series success began to change. In the “old days” a show like MASH would air twice on CBS and then 20th (owner of the franchise) would sell it to independent local stations for whatever they could get. For the big hit shows there was a bidding war. But now Fox owned FX and needed content. So they put MASH on FX. Alan Alda, one of the profit participants of MASH, sued them, stating that the show would bring in more money in open syndication. For 20th to put it on FX meant that the partners made less but they made more since they received the advertising, along with a launching pad for their network. Mr. Alda won.

Syndication is no longer the cash cow it was. Why? Lots of reasons. Many independent stations are now hooked with networks like the CW. So less need for product. Syndication deals are no longer exclusive. Why pay huge bucks for a show when a cable network also has the reruns as does a streaming service? And you can buy the DVD’s in some cases.

So networks (now the owners) need to find other ways to make big money. This is especially true with dramas. They are very expensive to produce and if they’re serialized they often don’t have the rerun value a show like LAW & ORDER or NCIS has. Networks also face the problem that linear ratings are continuing to slowly decline. Advertisers don’t want to spend as much for dwindling audiences.

So networks have begun “stacking” series. In other words, making the entire series available on streaming services, and in some cases charging for them. But “stacking” diminishes the syndication value even more. And then there’s the pesky problem of how much should actors, writers, and directors make as a result? If actors, writers, and directors made residuals from repeat airings and now the networks don’t re-air them because they’re all available on line, then those folks get screwed. See, it’s a head scratcher.

At one time the networks were allowed to stream only five episodes of a current series at a time. But now they want to stream the whole season (referred to as “stacking”). And here’s where pilots come in, until recently these “stacking” negotiations took place when a network wanted to pick up a pilot, now they take place before a pilot is even green-lit.

If you are an outside studio, it then becomes harder to get a pilot picked up because outside studios benefit more if they control the “stacking” rights and can sell their series to say Netflix.

Oh, and then there are the global considerations – how does “stacking” affect foreign sales? Is your head spinning yet?

So that’s what’s going on behind-the-scenes as network pilots are being made this week. You could argue the pros and cons of these business models, but my point is – nowhere in the last twelve paragraphs did the creative merits of the pilots figure in the mix. It’s a new world.

But as intricate and complicated as it is, it still is easier to explain than GILLIGAN ISLAND.

21 comments :

Mike Barer said...

Gilligan's Island says it's a microcosm of society stuck together on an island, but really, Gilligan was the symbol of something going wrong with even the best laid plans.

Terrence Moss said...

I hate all of it. When networks started streaming shows online about ten years ago, they all did it the next day and for the full season.

CBS and NBC still make their shows available online the next day (even if not for the full season), but ABC and FOX make you wait EIGHT days unless you have a cable subscription (which is completely idiotic).

I refuse to believe everyone can still make their money without frustrating viewers with this foolishness

John E. Williams said...

Ken, this may be off-topic and I hope it's not a stupid question, but I cannot fathom why it is some TV series are unavailable in any form whatsoever. Off the top of my head, I'm thinking about series like MONK and HOMICIDE: LIFE ON THE STREETS. MONK was available on Hulu for awhile, then on Netflix, but it's gone from streaming entirely. HOMICIDE has to my knowledge never been available for streaming, and its DVDs are I believe out of print, leading to skyrocket prices for even a single season on disc. So my question is (and if it's not too stupid, feel free to consider it a Friday question), why is there this deliberate scarcity of product? MONK was a big hit, and it's not all that old, and HOMICIDE, while never a ratings buster, must certainly have an audience. In fact, there are several seasons up on YouTube with thousands of views -- you'd think NBC (which owns it) would pick up on that and put the series at least up on Hulu.

I have no doubt there are all kinds of at least partial answers to my questions -- licensing issues, deals with writers and performers, foreign distribution stuff, perhaps even legal snags or litigation -- but as a consumer I can't understand why I am blocked from easy access to these shows. Are the backroom entanglements and legal considerations more powerful than simple supply and demand?

Greg said...

Friday Question:

What is the process for writing a crossover episode? Recently watched the three-part cross over of the Dick Wolf Chicago franchise (Fire into PD into the first episode of Justice) which also had a parallel usage of the Med franchise.

I can't imagine this is easy to script, scheduled or shoot (or maybe it is)...

Peter said...

I just read that the next chapter in Oprah's mission to win an Oscar is a remake of Terms of Endearment with her in the Shirley Maclaine role.

Between that, her hints at running for president, and taking to wearing glasses in her new guise as a pseudo intellectual, she's one busy narcissistic fake, I mean great humanitarian and unrecognized acting genius.

Carson Clark said...

I don't know that I can explain Gilligans Island, but I still get a kick out of it if I'm just looking for the entertainment version of simple carbs. And if they had known those three seasons would have lived on in syndication, it would not have been canceled in order to save Gunsmoke.

McAlvie said...

Well, something must have been right with Gilligan's Island. I'm not sure what, but it's still better known than most high quality shows. I suspect it just hit that sweet spot that made it comfort viewing. But I wouldn't knock it; there is worse dreck on tv right now. Did networks and studios just have a better understanding of audiences, and far better taste, back then?

Anyway, stacking the deck: My own view is that's its rather stupid on the part of the networks. Sure, you get a handful of days when the show seems like a runaway hit; but, and I think this is pretty big, it's months and months before another season is released. By that time, because they watched it all on day 1, your audience's attention span has moved on. Back in the "old" days, shows had a summer hiatus, but audiences had being living with these characters for 8-9 months so they were invested and looked forward to the new season. Heck, that's what made reruns popular - you were invested, there was a comfort aspect, and it was a way to recap before the new season. Basically, someone was watching your show all year long. How is that not a win?

I suspect that networks and studios have fallen prey to the same evil as so many other businesses: trends. Everyone is so worried now about being trendy, they even hire numbers nerds by the boatload to try to figure it all out. Of course, that's actually a losing proposition in the long run because trends, by definition, can change overnight, never mind from season to season. So it's actually pretty dumb.

But a whole industry has sprung up around the idea that businesses don't know their own business or customers. Business is convinced they need the nerds because the nerds have convinced them. It's a long con, and the only people who are really making money from it are the nerds running the 'workshops' and seminars. They are this generation's snake oil salesmen.

Mike Doran said...

My reading of closing credits from many shows of the '50s and '60s shows that NBC and CBS in fact owned many of their series from that period, at least in part.
CBS-TV was the credited producer of Gunsmoke, Have Gun - Will Travel, Rawhide, Perry Mason, Twilight Zone, and many others.
Likewise, NBC owned Bonanza - and that's the only one I recall offhand, but there must have been others.
ABC, being not as wealthy as its rivals, didn't own any of its shows (that I know of; correction welcomed), at least not outright.
I often read of entities called CBS Films, NBC Films, and even ABC Films, which were all big in syndication for years, even if in a second-hand way; this was a time when even series that had short network runs could get a syndie afterlife (examples on request).
All of the above is from memory; as noted above, corrections are welcomed.

Lew Irwin said...

From network television's earliest days through the early 1960s, virtually all primetime television programs were produced in-house by advertising agencies. (That was also the case throughout almost the entire history of network radio.) Writers such as Rod Serling, Paddy Chayefsky, Horton Foote, and Reginald Rose were employed by the agencies and often worked on several dramas airing on competing networks.
http://adage.com/article/adage-encyclopedia/production-programming/98963/

YEKIMI said...

Now comes the crap CBS is pulling with their new Star Trek: Discovery series (and The Good Fight)....show the first episode for free but if you want to watch anymore you'll have to pay for it with their CBS All Access streaming service. Sorry, but NO. "But....but....but...it's only 5.99 a month [with limited commercials] and we can curse and show nudity and offer untouchable subjects that the networks would NEVER allow" And if you don't want commercials, it's only $9.99 a month. Big deal and who decides how many commercials are "limited"? Yes, and add up all the other streaming services that charge and you'll soon be paying more than your cable company charges per month. And how long before they decide $5.99 or $9.99 a month isn't cutting it and jack the price up to whatever they want? I don't mind sitting through some commercials because it basically keeps the product free [and allows me to go to the bathroom which is getting more important with my advancing age]. If TV ends up like radio where they play one or two songs and then 8-12 or more commercials in a row THEN I may consider paying for it. As it is one of the digital sub-net channels is Heroes & Icons and they show all of the Star Trek series from Star Trek The Original Series to Star Trek: Enterprise and there's a lot of them that I hadn't been able to watch the first time around. In my area we're up to about 56 free OTA channels if you include the digital sub-nets, granted that about half of them have crap that I will never watch.....but even so they're free. If you have cable, good luck finding those digital sub-nets.

Anonymous said...

YEKIMI, I'm with you. It is incomprehensible that I have to pay for cable and pay for CBS All Access. HBO, Showtime,Starz...almost any cable channel will let you watch on another avenue with your cable company sign on. Not CBS. Talk about greed.

Pam, St. Louis

estiv said...

Off-topic, but definitely relevant to one of your interests, Ken: this year's list from the Library of Congress naming new additions to the National Recording Registry includes Vin Scully. He's in for calling the game between the Brooklyn Dodgers and the New York Giants, in their last meeting at the Polo Grounds, on September 8, 1957. Details at https://www.loc.gov/item/prn-17-029/

Anonymous said...

How does Amazon make money on their series like "Bosch" and Sneaky Pete"? There's no advertising revenue and Amazon Prime's subscription rate is very low. The production on both these series is first rate, and must be very expensive to produce. Where's the income???

Myles Warden said...

Abc shows available on the free abc app that requires no sign in after the very next day.

Andy Rose said...

@Mike Doran: The "fin-syn" rules that kept the networks out of most productions were enacted in 1970 by the Nixon administration. Viacom is actually the spinoff of what was CBS Films. ABC Films turned into Worldvision.

In 1987, the FCC gave Fox an exemption so they could start up their TV network without having to spin off Twentieth Television. Once that precedent was established, it was only a matter of time before fin-syn was repealed entirely. One of the first shows to benefit was The Fresh Prince of Bel-Air, co-produced by NBC Productions. It replaced ALF, which was the last network prime-time show to be produced by an independent company with no network or studio support.

Buttermilk Sky said...

This seems to be an open thread, so here's my comment a propos nothing: I recently saw the pilot of ER, and Miguel Ferrer played a man who gets a diagnosis of terminal cancer. Needless to say, this was very eerie. Have you ever written a part for an actor which turned out to be tragically prophetic?

Edward said...

Gilligan's Island is an american classic!

50 years after its cancellation, men still ask:

"Ginger or Mary-Anne"

That says it all.

Cap'n Bob said...

A pox on all their houses. I watch old Westerns on YouTube and am happy as a clam.

Janine said...

Friday questions:
Hi! Big fan! So I'm 17 and I really feel like I have the ability to write my own sitcom, this may be a stupid question but once I have a finished screenplay of my pilot, how do I actually go about getting it on air?

MikeN said...

Stacking is a good idea. If it is a serial show, and I have not seen the first episode, then I am out. Someone who didn't hear of The Catch when it started, could catch up by the start of the second season. I would have watched Ransom except for this.

Greg even more difficult is the cross network crossover that happened with SuperGirl and The Flash followed by Arrow and Legends of Tomorrow.

Jesse Carping said...

Hey Ken, I'm a younger reader and would like to be TV comedy writer someday. Unfortunately, I can't ignore the hole TV seems to be in at the moment. What should I do?