Sony to Trim Television Operations

In a sign of the worsening economic climate for network television, Sony Pictures Entertainment is expected to dramatically pare back its television operation and cease development of new prime-time programming.

Sony insiders say the decision to scale down the TV division follows an internal financial review--known as the 21st century project--of all studio operations.

It is unclear how many jobs will be eliminated or the exact nature of the restructuring. Sources estimate 50 to 70 employees could be let go at Sony and potentially several hundred more at scores of production companies that had development arrangements with the company. It is likely a core staff will be kept to supervise existing Sony programs.

Sony declined to comment, but sources at the studio acknowledged it is reconsidering the business of producing prime-time network shows. Officials have yet to set a firm timetable for when any job cuts or reorganization would occur.

The studio has been a medium-size player in prime-time programming, with seven shows in production. It ranks behind the other major studios, including Fox--with 20 prime-time shows--and Warner Bros., Disney and Paramount, which each have more than a dozen shows on the air.

Sony’s Columbia TriStar Television produces CBS’ “The King of Queens” and “Family Law” (both co-productions with the network), Fox’s new serial “Pasadena” and upcoming comedy “The Tick,” and WB’s “Dawson’s Creek.” Another comedy, “What About Joan,” was recently canceled by ABC.

A major withdrawal by Sony would ripple through the TV production community, which is already faced with a consolidation of the business.

Rising programming costs--combined with a recent decline in the advertising market as the economy softened--have taken a toll on all of the TV industry.

Sony, however, has faced an additional handicap in prime time because it is one of the few major studios not affiliated with a broadcast network. Companies such as Viacom Inc., owner of CBS; Walt Disney Co., which owns ABC; and Fox parent News Corp., have all put a premium on providing their own programming, squeezing out independent suppliers.

“You have to have a network,” said Christopher Dixon, a media analyst at UBS Warburg. “Without one, Sony is hamstrung. They can’t get the same economics out of production as a studio like Disney or 20th Century Fox”

In that respect, Sony’s dilemma mirrors that faced by Vivendi Universal, which--under the ownership of Seagram Co. in 1997--spun off control of its TV production division to Barry Diller’s USA Networks Inc., becoming the first major studio to function without a fully integrated TV arm.

Yet because Sony has been forced to ally with networks to get shows on the air, studio profits from television have been diminished. Of those programs, in fact, only “The King of Queens” appears destined to yield significant dividends by selling rerun rights to TV stations, and that revenue will be shared with CBS and marketing giant Procter & Gamble Co.

In addition, Sony has spent heavily on deals with TV writing and producing talent without generating the sort of home-run hits that help offset the high failure rate in network television.

Beyond partnering with networks, Columbia TriStar has also sought to stay in business by signing marquee stars. Still, such deals don’t always pay off, as the studio discovered last year in creating a CBS sitcom featuring Bette Midler.

As part of the cost-cutting, sources say Sony will allow many of its existing talent deals to lapse. Sources say the studio could still proceed with TV production on a narrowly targeted basis, such as adapting feature film properties into television series.

Cuts are not expected to significantly impact Columbia’s distribution division, which sells rerun rights to “Seinfeld” and “Mad About You” and syndicates original action shows such as “V.I.P.”.

Sony also owns such valuable and low-maintenance franchises as the daytime soaps “The Young and the Restless” and “Days of Our Lives” as well as the game shows “Wheel of Fortune” and “Jeopardy!” One scenario might involve folding oversight of those shows into the distribution operation.

Several recent deals have raised questions within the entertainment industry about Sony’s commitment to television. In February, the company sold half of the Game Show network to Liberty Media Inc., and last week, Sony and Liberty sold their controlling interest in Telemundo Group Inc. to General Electric Co.-owned NBC.

Management of Sony’s TV division is relatively new. Sony President Mel Harris returned to the studio in 1999, resulting in the departure of then-television chief Jon Feltheimer. Len Grossi replaced Feltheimer 18 months ago, and Tom Mazza was named president of network production last year.

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Times staff writers Sallie Hofmeister and Corie Brown contributed to this report.