What Sells a Show, the Pitch or the Pay?

David Levine is frustrated. His company, Promark Television, has a great deal invested in a new science-fiction series, “The Secret Adventures of Jules Verne,” which he is trying to place on TV stations to run each weekend, much like “Xena: Warrior Princess” or “V.I.P.”

Instead of discussions about the show’s creative direction or ratings promise, however, Levine maintains the question he has gotten from some station executives is more basic.

How much will you pay us to put it on?

“It’s just the reality. This is what’s happening out there,” Levine said.

When local television stations assemble their daily schedules, the idea in theory is to put together a lineup that will be most attractive to viewers within their community.

Yet increasingly, stations appear to be falling back on a somewhat different equation, one based not on what will garner the most eyeballs but who will pay the most money.

Though such practices have occurred for years, program distributors, or syndicators, say it is becoming more common for TV stations to demand payment in exchange for broadcasting a television show--especially in the case of weekly series from small companies that lack significant clout within the industry.

The syndication formula has traditionally allowed the distributor to retain a certain amount of the commercial time to sell advertisers--which is how they make their money--and let stations keep the rest. Additional revenue comes from other sources, with “Jules Verne”--which was shot in Montreal--already being shown in Canada and on the Sci-Fi Channel.

For a company such as Promark, however, having to compensate TV stations just to carry the show--usually a fee of a few thousand dollars per hour--could jeopardize its ability to compete and survive.

“If you have to buy your way onto the air, obviously the stations are not fulfilling their mandate,” Levine said.

Most program distributors were reluctant to be quoted about the practice, afraid to alienate potential buyers of their product. Unlike networks, which offer one-stop shopping to reach the U.S. population, syndicators go from city to city peddling their wares to television stations in more than 200 distinct markets recognized by Nielsen Media Research.

Still, industry sources say Sinclair Broadcast Group--which owns TV stations affiliated with all six broadcast networks in 40 U.S. cities--is among the most brazen operators in this regard, regularly requiring that syndicators pay stations to carry programs.

When reached in his office and asked about the matter, Bill Butler, Sinclair’s vice president of group programming and promotions, said, “I’ll have somebody get back to you.” The call was not returned.

Because Sinclair operates stations in many major cities, distributors sometimes have little choice but to comply. Markets such as New York, Los Angeles, Chicago and San Francisco are vital if stations are going to reach enough households to sell national advertising time during programs, with New York and Los Angeles together accounting for 12% of all U.S. homes with television.

Unlike smaller companies such as Promark, major distributors like Paramount or King World supply TV stations with hit shows such as “Entertainment Tonight” and “Jeopardy!,” which puts them in a strong bargaining position in their dealings with broadcasters.

As a result, industry sources say the practice is far more common with weekly shows than the profitable Monday-through-Friday programs generally handled by major studios. Usually, they say, the payment occurs when several programs find themselves competing for the same time slot.

“One distributor comes in and offers money, and suddenly the logjam is cleared,” noted one studio source.

KCAL-TV Channel 9, as the only independent VHF station in Los Angeles (the other six, located on channels 2 through 13, are all affiliated with broadcast networks), has also exacted fees to run certain programs, industry sources say.

However, KCAL General Manager Don Corsini disputed that characterization, saying what the station does is “ask some of our program suppliers that they provide money for external promotion. We’re not saying if they want the clearance, they have to pay for it. . . . The bottom line is those dollars are used to promote their TV shows.”

Corsini conceded that distributors have offered money to get programs on but maintained KCAL hasn’t engaged in that sort of arrangement for several years. Still, distributors say payments to TV stations often carry labels such as “promotional money” but that the message is a program won’t be sold without meeting such incentives.

What remains clear is that companies owning large groups of TV stations are placing more emphasis on supplying themselves programming, making shelf space on TV stations ever more scarce. In addition, decision-making over which programs to buy has become more centralized, as group owners decide what programs to acquire as opposed to letting individual general managers make those choices at the local level.

Some see the current environment as an inevitable outgrowth of industry consolidation. Federal law currently caps the number of TV stations a single entity can own at reaching 35% of U.S. households, though owners of the major networks--including News Corp., Viacom, Disney and NBC owner General Electric--are petitioning to raise those limits.

Norman Horowitz, a veteran TV sales executive who once headed MGM and Columbia Pictures’ distribution units, suggested the payment issue is indicative of the stacked deck small distributors already face.

“They can’t play in the game anyway,” Horowitz said. “Courtesy of the government . . . broadcasting has been encouraged to be run as a powerful, semi-monopoly by a half-dozen companies. The little syndicator is going to be out of business.”

Under Federal Communications Commission rules, stations are free to sell blocks of air time, which explains the hours of infomercials and other paid programming that turn up on weekend mornings and late in the evening.

Though syndicators view paying to get shows on as unsavory, the FCC’s Enforcement Bureau has no clear statutory jurisdiction over such deals. The agency’s focus rather has been on stations fulfilling their mandate to offer children’s programming, complying with fairness rules governing political content and violations of obscenity guidelines.

Moreover, the commission has pushed for further deregulation under new FCC Chairman Michael Powell. One FCC source did say paid programs should be identified as such, which would mean listing the program distributor as a sponsor; however, failing to do so would be a minor infraction and unlikely to merit much attention.

John Winston, assistant chief of the FCC’s Enforcement Bureau, declined comment.

According to Horowitz, regulatory agencies and elected officials have evinced little interest in such matters due in part to the lobbying power of media conglomerates. At the same time, he said, “Who lobbies for the public? Nobody. [And] who is going to hire an FCC commissioner or a staff member later? Only the industry.”

For his part, Levine, like most syndicators, is convinced he has a hit on his hands, with more than $40 million spent producing 26 episodes of “Jules Verne.” Those figures are moot, however, if he can’t get the show on in enough homes at a time when people might see it.

Still, Levine insisted there is another party whose interests are not being served. “At the end of the day, who’s getting dinged? It’s the viewer,” he said.