$3-Billion Syndication Business Feels a Pinch : Television: Weak advertising demand and heavily leveraged stations squeeze product into safer, lower-cost ranges and barter arrangements.

For the once-thriving television program syndication business, these are lean times.

Weak advertising demand and scarce time periods for new programs have combined to make this one of the worst years in the last decade for the major studios and independent producers selling TV programs to local stations.

“This year has been an affirmation of the new realities in the marketplace,” said Scott Carlin, senior vice president of Warner Bros. Television.

Nowhere was the sluggishness more keenly felt than at the National Assn. of Television Program Executives’ annual convention this week in New Orleans, where more than 5,000 sellers and buyers of TV programs came to haggle, gossip and ruminate about the television business.

Furthermore, the recession is leading the distributors to change the ground rules by which they have traditionally sold programs, and this could have a profound effect on a TV station’s bottom line down the road.

Until recently, program syndication was the California gold rush of the television business. Companies popped up overnight and investors were quick to back anyone who had a novel idea for a new TV show and could sell it to local stations.

Little understood outside the tight fraternity of program salesmen and local broadcasters who would buy the shows, the $3-billion-a-year syndication business can be immensely profitable. While it can cost $1.5 million to produce a one-hour drama or $800,000 for a half-hour comedy, a game show costs between $90,000 and $150,000 a week. Talk shows and magazine shows are also far less expensive to produce than comedies and dramas.

Lower costs notwithstanding, the syndication business--which increasingly is dominated by the major Hollywood studios--is now in the grips of a serious downturn.

“There has been a consolidation among distribution companies and a dramatic reduction in the number of new shows launched,” said Robert Jacquemin, president of Buena Vista Television, the syndication arm of Walt Disney Co. “No longer can you wing it.”

In fact, the number of new shows being pitched in New Orleans was half what it was two years ago. The recession has increased the reluctance of TV station managers to cancel shows already on the air because many are still getting respectable ratings.

Also, the high failure rate of new programs launched last year--most of them game shows--has forced the studios and independent distributors to scale back their development for the upcoming season.

In 1991-92, only eight new programs are expected to be launched in syndication, compared to 13 last year and 16 the year before that.

“Syndicators and stations are opting instead for tried-and-true programs such as ‘Family Feud,’ ‘Hard Copy’ and ‘People’s Court,’ ” said Mike Levinton, vice president at Blair Television, a New York TV consulting firm.

Another obstacle they face is that shows such as “Wheel of Fortune,” “Jeopardy!” and “Family Feud” still occupy the valuable 7-to-8 p.m. time period and cannot be dislodged.

“Renewals are making it very difficult to get a new show on the air in a key time period,” said Charles Larsen, president of domestic distribution at Republic Pictures Corp.

Not surprisingly, only three new game shows are on the drawing boards for syndication next season, and it is by no means guaranteed that any of them will actually go into production. Typically, a syndicated TV show needs to be sold in more than 70% of the country before it will attract interest from national advertisers.

Instead, the big push this year is for one-hour talk shows, which are not as cheap as game shows to produce but have a lower risk of failing since historically they attract higher ratings.

“I’ve never seen anything like it,” said Richard Kurlander, vice president at Petry Television, a New York program consultant. “The talk shows tend to be a safe route.”

Five new talk shows are being positioned for next season, nearly all from the major studios. Orion has “The Chuck Woolery Show,” Warner Bros. is selling “The Jenny Jones Show,” Paramount already has enough commitments to launch “The Maury Povich Show,” MCA has “Up Late With Ron Reagan” and Viacom International is pitching “Realities With David Hartman.” These five join seven other entrenched talk shows already in syndication, including “The Oprah Winfrey Show” and “Donahue.”

One reason for the resurgence in talk shows is that affiliates are becoming more aggressive about dropping network programs, since payments to carry the shows have been reduced by the networks in an economy measure. Further, NBC announced last month that it is giving back one hour from its daytime schedule to affiliates.

The lackluster economy for local TV stations also does not invite innovation or risk-taking.

As Warner Bros.’ Carlin explained, “a lot of TV stations were bought in highly leveraged situations, and their growth prospects are not panning out. So it influences their decisions to play it safe.”

One area that is not panning out as anticipated is local TV advertising, which can account for up to 50% of a station’s revenues. Local TV ad revenues grew only 3.5% in 1990 to $7.8 billion, according to the ad agency McCann Erickson, and most analysts estimate 1991 will be no better.

In the past, the program supplier would charge a license fee for the show and also keep three or four 30-second spots for itself to sell to a national advertiser. But now the stations, many of which are facing huge interest payments on their debts, do not have the cash to pay for the show.

This has encouraged the suppliers to strike deals with stations, a practice known in the industry as “barter syndication.” The supplier will give the show to the station but keep half of the ad spots for themselves, as many as seven minutes in an hour show.

“Barter is becoming the only way to finance new syndicated shows,” said Dick Askin, president of Samuel Goldwyn Television, an independent producer. “Many stations don’t have the money or don’t want to pay cash.”