In the risky business of television, Genesis Entertainment has managed to survive for a decade by avoiding big gambles.
The Agoura Hills-based television syndicator and sometime producer has typically taken on only one or two projects a year. And by relentless salesmanship, it has never failed to sell the TV series it represents to TV stations around the country.
So when Genesis began hawking the late-night talk show, "The Whoopi Goldberg Show," for producer One Ho Productions last year, it was a pivotal moment. "Whoopi" was Genesis' most high-profile project yet, and, the company had tied up a hefty $9 million of its capital to launch the program.
While Genesis successfully convinced 150 TV stations to add "Whoopi" to their schedules, the "Sister Act" star proved more potent at the box office than as a TV talk show host. The show flopped. "Whoopi" will officially go off the air in August.
Genesis President and Chief Operating Officer Wayne Lepoff insists the company won't lose money on "Whoopi" because it sold sufficient advertising early on to cover its investment. But it left Genesis somewhat strapped for cash.
Enter billionaire Ronald O. Perelman, whose holdings include cosmetics (Revlon), outdoor camping equipment (Coleman), plus banking and comics (Marvel). Perelman, worth $2.9 billion, according to Forbes magazine, also owns the TV production company New World Entertainment ("Wonder Years"). And Perelman was making his latest foray into Hollywood when he got word of Genesis' plight.
Nine months ago Perelman's New World Entertainment hired Genesis to sell a new animated kiddie show, "Biker Mice From Mars," to TV stations. The contact led to talks and last month Perelman's purchase of a 50% interest in the syndicator.
The deal immediately catapulted Genesis, a small syndicator doing about $40 million a year in revenue, into a higher plane. For all its success, 10-year-old Genesis has never scored the major hit to push it into the entertainment industry's big leagues. Now, with Perelman's resources behind it, that may be possible.
"Projects that wouldn't have been offered to us in the past are now open to us," said Genesis' 39-year-old chairman, chief executive and founder Gary Gannaway. "It put us in the lineup to be that first call."
Perelman hasn't revealed how much he paid for half of Genesis, but sources in the TV syndication business estimate it at near $20 million.
TV syndication refers to the selling of programming- TV reruns, old movies and original shows--on a station-by-station basis to the more than 100 TV stations in the United States. Syndicators like Genesis make their money by charging TV stations license fees for the rights to air their shows. But in the current weak economy, TV stations sometimes don't pay these fees; instead, they turn over commercial time, which the syndicator then sells to advertisers.
To launch original programming like "Whoopi," syndicators will often advance production costs, but they hope to recoup that money from ad revenues.
By buying half of Genesis, Perelman returns to the domestic TV syndication business, which he left in 1991 when he transferred New World's domestic syndication assets to Sony Pictures Entertainment.
Perelman has been on a Hollywood shopping spree lately. In June, Perelman's New World struck an agreement in principle to buy the assets of Reeves Entertainment, producer of ABC's daytime "Home" show, NBC's "Homicide: Life on the Street" and owner of a large library of programming. The billionaire also recently acquired a 52% stake in the SCI Television Inc., which owns six TV stations around the country, for $100 million.
Perelman's spokesman in New York wouldn't comment about what Perelman is assembling in Hollywood. But watchers of the billionaire said they believe he's building an entertainment operation in which Genesis will play a key role. Genesis and Reeves will produce and distribute programming, with the TV stations providing a place to sell the shows and test new programming concepts.
Genesis' survival for 10 years is no small feat in a brutal business where many independents have folded as power has consolidated in the hands of a few.
It's managed to use its size to its advantage. "Genesis has been brilliant in making a virtue out of being small," said syndication consultant Bob Cohen, who runs Allen Entertainment Corp. in Santa Monica. "They can make decisions quickly and that's a considerable plus since dealing with studios often involves layers of management."
One of Genesis' noteworthy triumphs came in the late 1980s when Gannaway convinced Michael Landon to allow it to syndicate reruns of "Highway to Heaven." Gannaway talked Landon into forgoing large guarantees of upfront money from bigger syndicators, promising the full commitment of the Genesis staff.
But when local TV stations stopped buying one-hour network shows, Genesis came up with the then-novel approach of selling the show for advertising time rather than cash. "Highway to Heaven" became the first off-network TV show to be sold in this manner in the late afternoon time slot. Today, it's a common industry practice.
As part of its deal with Perelman, Genesis now has a distribution agreement with Perelman's Four Star library. That means Genesis will probably be out there pitching independent TV stations to buy rights to air reruns of 1960s TV series, such as "Honey West," "Burke's Law," and "The Big Valley." The library also includes 200 feature films, which Genesis may also try to sell to stations in movie packages.
In addition, Genesis gains remake rights to some of the Four Star TV series--rights that could prove valuable, given that more films are being made that revive '60s TV series.
Lepoff said he and Gannaway carefully considered Perelman's offer, reluctant to give up total say over the company they've nurtured for 10 years. The Gannaway-Lepoff partnership works well, by all reports. Lepoff, a certified public accountant with a cautious manner, complements the more mercurial Gannaway, who is said to ride his sales staff hard. Gannaway likes to say that when he convinced Lepoff, his one-time accountant, to join Genesis, he "saved him from himself."
At present, Genesis has 44 employees, 27 in Agoura Hills, the rest in New York. It has no plans to switch from its out-of-the-way headquarters. Lepoff argues that its location doesn't make any difference since Genesis' business mostly focuses on TV stations far from Los Angeles anyway.
Now with extra cash from Perelman, Genesis can produce new episodes of "Real Stories of the Highway Patrol," a five-day-a-week reality show featuring recreations of actual adventures of the lawmen of America's freeways. Genesis also syndicates "Emergency Call," a reality series now in its third season, and "Paradise Beach," a new soap opera chronicling the lives and loves of svelte teen-agers in Australia's Gold Coast.
It's currently developing programming for daytime TV and in the future, for cable. There's Family Circle Magazine, a one-hour daytime show it may produce through an arrangement with the women's magazine, and "Tabloids Behind the Headlines," a magazine show examining how shows like "Hard Copy" and "Geraldo" get their material.
Genesis' business plan calls for 15% to 20% annual revenue growth. Lepoff said he hopes to achieve those goals by making its existing shows more successful--getting them carried on more stations or placed in more highly rated time periods--and by stepping up the number of new shows it backs.
"There's still a long way to go," concluded Lepoff.