NBC’s Prescription for Success: Keep ‘ER’


Still reeling from the imminent loss of “Seinfeld” and pro football, NBC prevented what has thus far been a bad year from getting worse by renewing television’s top-rated series, “ER,” via a staggering three-year rights deal estimated to be worth $850 million.

The record-setting agreement for a prime-time series--by far eclipsing what NBC pays for the previous high-water mark, “Seinfeld"--reflects television’s desperate hunger for hit programming, coming after ABC, CBS and Fox committed $17.6 billion over the next eight years to secure TV rights to NFL football.

The announcement Wednesday may help stem perceptions that the top-rated network is suffering a mass exodus of its most prized assets. Yet, retaining “ER” won’t solve all of NBC’s problems because the network remains unclear regarding the future of another popular prime-time series, “Mad About You,” and has yet to determine how best to replace “Seinfeld,” TV’s highest-rated comedy.

Sources said NBC will pay the “ER” production company, Warner Bros. Television, nearly $13 million per episode. The studio produces 22 episodes of the medical drama each year.

With “Seinfeld” to end its run in May, consensus had grown within the entertainment industry that “ER,” to paraphrase NBC’s promotional slogan, qualified as “Must-Buy TV.” NBC would have been hard-pressed to maintain its No. 1 status and enormous profits if suddenly lacking the medium’s two most-watched shows, each of which attracts more than 31 million viewers during an average telecast.


“Clearly, Jerry [Seinfeld] deciding not to come back ratcheted [the pressure] up,” said NBC West Coast President Don Ohlmeyer, who maintained that the network won’t lose money on “ER” although its cost has increased nearly tenfold.

Despite interest from the other networks--which could have stolen the series if NBC balked at Warner Bros.’ price--few anticipated that NBC would let the series change hands, something that has never happened with a program at the height of its popularity.

Warner Bros. officials preferred keeping the series at its current network and time period--fearing that a move would risk shortening its life span--but said NBC’s risk of losing the program was real.

“We did all our homework in advance. We knew how much ‘ER’ was worth to NBC, right up to the last penny,” said Warner Bros. Chairman Robert Daly, adding that he “would have moved the show in a flash if they had not recognized its value.”

After absorbing the body blow that Seinfeld delivered in late December, when he informed the network that he would not return for another season next fall, NBC approached Warner Bros. about opening discussions before Feb. 1, which marked the beginning of an exclusive one-month negotiating period.

The parties reached an agreement early Tuesday, before the football deals closed. However, it was clear at that point that NBC was losing its football rights and would have had to outbid ABC for “Monday Night Football” to stay in that game.

Dennis Holt, chairman of the nation’s largest media-buying firm, Western International Media, said NBC probably is paying more now than it would have three weeks ago but had little choice in making the deal.

“It was cheap at any price,” Holt said. “If you had to have brain surgery, you wouldn’t negotiate the fee.”

The question now is what repercussions “ER” might have on the cost structure of network television. With broadcasters straining to maintain their dwindling audience amid increased competition, industry officials say the most popular programs enjoy even greater leverage.

As a result, a two-tiered system appears to be taking shape, as in professional sports--with virtually no limit on deals for the most coveted talent, while journeymen players fill out the prime-time lineup.

“Somebody can go in and say they want what ‘ER’ got minus 10%, but they’re not going to get it unless the program commands it,” said Lee Gabler, co-chairman of Creative Artists Agency, the talent agency that represents many of “ER’s” principals.

“I think there was ‘Seinfeld,’ and there was ‘ER.’ After that, it’s a different business,” Ohlmeyer said, given that no other prime-time series comes close to matching their audience delivery.

Such franchises can become a “loss leader"--that is, a program that doesn’t make money by itself but helps in a broader sense by luring viewers to the network.

Like football, “ER” has proven particularly valuable from that perspective. The Emmy award-winning series provides a lift to adjacent prime-time programs, late newscasts on NBC stations, “The Tonight Show With Jay Leno” and even the “Today” show, because many people go to bed Thursdays with their sets tuned to NBC, then wake up to the network Friday mornings.

The program also garners more than $500,000 per 30-second commercial. Hollywood studios, in particular, pay a substantial premium to advertise within NBC’s high-rated Thursday lineup to promote movies opening that weekend.

“There’s a lot of other benefits to ‘ER,’ ” said Merrill Lynch analyst Jessica Reif, who noted that NBC can package the program with other shows when selling advertising time.

“This is a have and have-not kind of business,” she said. “When you have a hit, you’re going to get paid wildly.”

“ER” by far surpasses NBC’s licensing arrangement on “Seinfeld,” the previous record holder at about $5.5 million for each episode (half the length of “ER” and thus containing less commercial time).

In hindsight, NBC can be second-guessed for failing to lock up the rights to “ER” more than a year ago, when the network and Warner Bros. negotiated an extension on another Thursday night hit, the comedy series “Friends.” Though the parties confirm there was a window of opportunity then, Daly dismissed it as “a soft conversation that never materialized.”

Although some industry sources thought that Warner Bros. might use the negotiations to wrangle additional considerations from NBC, Daly described the negotiation as “a straight cash deal.” Part of that had to do with getting a fair price for the studio’s heavyweight production partners, who include novelist Michael Crichton--the program’s creator--producer John Wells and filmmaker Steven Spielberg’s Amblin Television.

The “ER” cast will almost surely benefit from the precedent-setting agreement, though due to the program’s ensemble nature no single actor figures to cash in as handsomely as Seinfeld, who earns more than $1 million an episode for his show.

Most of the actors have been signed through two years beyond the current season. George Clooney--who has launched a prominent feature film career, starring in such movies as “Batman and Robin” and “The Peacemaker"--has a contract that extends only through next year.

NBC’s fee includes two broadcasts of each “ER” episode, plus a third airing of eight episodes, covering 52 weeks each year.

* TV FUMBLE? Critics say the networks will lose millions on the NFL rights deals just negotiated. D1