Sony to Close Network TV Production Division

In a move with sobering implications for Hollywood’s creative talent, Sony Pictures Entertainment confirmed Thursday its plans to fold its network production division and lay off about 20% of the studio’s domestic television operation employees.

Sony’s decision is one of a series of cost-cutting moves by major television production companies to reduce overhead in the face of a worsening advertising market and rising programming costs.

Among the 50 to 70 employees who will be leaving Sony are Len Grossi, president of the Culver City-based studio’s Columbia TriStar Television division, and Tom Mazza, a former Paramount executive who was named Columbia’s president of network production less than a year ago.

As anticipated, the remaining operations will be consolidated under Steve Mosko, president of the studio’s domestic distribution arm.

Mosko’s unit oversees syndication sales of long-running network shows such as “Seinfeld” and “Mad About You” as well as series such as “V.I.P,” starring Pamela Anderson, which are sold directly to local television stations.

The timing is particularly awkward, given that Columbia TriStar not only launched several new prime-time series this fall but is in the midst of selling concepts for the 2002-03 television season, noted sources at rival studios.

In fact, the studio continued to pitch projects to networks this week, including a proposed situation comedy starring actor Nathan Lane.

It remains unclear how Sony will handle dozens of current deals, worth about $30 million annually, with writing and producing talent, signed by the outgoing management team. Nor would studio officials set a specific timetable for the layoffs.

Still, it’s expected that most of those deals will be allowed to lapse or be bought out, removing a significant purchaser of programming just as other studios seek to cut back on relationships with anything less than marquee producers.

Sony insisted the studio is not withdrawing from the television business, stressing that it will fully support its existing roster of prime-time programs, which include the CBS series “The King of Queens” and “The Guardian” as well as WB network’s “Dawson’s Creek.”

“Our goal is to continue to be a major player in the television business,” Mosko said, adding that the industry’s economic structure is changing and “what we’re looking to do is take a leadership role in defining the new model.”

Top Sony officials are said to have chafed at spending levels by the television arm, such as a recent three-year, $9-million development deal with actor Danny DeVito’s Jersey Films. The studio initiated an internal financial review of all its operations, known as the 21st century project.

Sony President Mel Harris said Thursday’s announcement was not undertaken lightly and that the buoyant advertising market of the 1990s masked problems with the television business exposed by a recent economic slowdown.

“The numbers don’t match up even when you do it right,” Harris said.

Sony has been handicapped in selling prime-time shows because it doesn’t own a broadcast network, unlike AOL Time Warner Inc., Viacom Inc., News Corp. and Walt Disney Co. Because Sony is a Japanese company, it has been effectively barred from pursuing a network by Federal Communications Commission rules that restrict a foreign entity’s right to own radio or TV stations.

Suppliers without network affiliations have felt the squeeze since the mid-1990s, following the elimination of federal guidelines limiting a network’s ability to own and produce programming. That regulatory change caused many smaller companies to go out of business and another studio, Universal Vivendi, to shift control of its television assets to Barry Diller’s USA Networks.

“This is what everybody ultimately feared with the abolition of [the federal rules],” said Larry Gerbrandt, chief content officer at Kagan World Media. “It is rather historic to think of a studio without TV production.”

To get programs on the air, Sony has entered partnership arrangements with networks to produce several of its shows--a maneuver that helped offset up-front costs but also limits profit should a series become a hit, Harris noted.

Sony officials say they plan to continue developing programs on a more targeted basis, pointing to the studio’s “Ripley’s Believe It or Not”--a low-cost series that plays on both the WB and cable channel TNT--as an example.