TV: More Bang for More Bucks
This fall’s freshman class of prime-time network shows is shaping up to be the most expensive ever. A full season of a television drama now costs as much to make as the average feature film.
More than half of the 14 drama pilots produced this fall for the major networks -- CBS, ABC, NBC and Fox -- cost $6 million or more. That’s up 50% from just two years ago.
The price tag for a full season is more than $62 million on average, a jump from about $45 million in 2004, according to three industry executives who declined to be named because studios don’t like to publicize these figures.
“Each year the costs have been creeping higher and higher,” said Nancy Tellem, president of the CBS Paramount television group. “Although this year, it feels crazier than most.”
The big budgets could be a boon for viewers, considering the level of creativity, talent and special effects this money can buy. Storytelling devices once reserved for the cinema have come en masse to the small screen.
Unfortunately for the TV industry, however, viewers this fall have given a warmer embrace to familiar shows such as “CSI: New York,” “ER” and “Dancing With the Stars” than to costly newcomers such as NBC’s “Kidnapped” and ABC’s “Six Degrees.”
That makes executives nervous. The networks are not paying the program suppliers much more than in previous years for the rights to air these shows. Advertising dollars that underwrite the networks’ costs for these programs are slowing, not growing. And new media outlets, such as Internet downloads, may not pay big dividends for years to come.
“The business just doesn’t sustain this kind of growth in production costs,” said Gary Newman, president of 20th Century Fox Television, which produces “24" for Fox and CBS’ new legal drama “Shark.”
Television’s soaring inflation has been caused by a “perfect storm” of factors, executives said.
One is the “Lost” effect.
The ABC drama set a record two years ago for how much a company would spend in the race for ratings. Shot in Hawaii with an ensemble cast and a plane crash, the two-hour pilot cost more than $14 million to make.
In search of the next hit, hypercompetitive TV executives this year set out to trump their rivals by duplicating the “Lost” experience. After all, “Lost” helped snap ABC out of its funk. And the networks, particularly fourth-place NBC, could use a jolt.
“It’s not only competition that is driving this,” Tellem said. “There’s a little bit of desperation out there.”
Viewing habits have also changed the nature of the game. As consumers erect home theaters complete with surround-sound and 50-inch high-definition plasma screens, TV shows are forced to compete head-to-head with movie DVDs.
That’s why network television is now chock-full of special effects and producers, writers, directors and actors who made names for themselves in the movies.
Although there were only a handful of actors who earned more than $100,000 an episode two years ago, television is now teeming with high-rollers. This year’s batch includes Matthew Perry, James Woods, Sally Field, Calista Flockhart and John Lithgow, who stars in NBC’s new comedy “Twenty Good Years.”
“Smith,” the new CBS drama about a gang of sophisticated thieves, stars screen actors Ray Liotta and Virginia Madsen. While “CSI” has its close-up of a speeding bullet and “24" has its heart-thumping chases, “Smith” has featured a museum heist, a boat chase and fiery explosions. Last week, one of the stars took a menacing, high-speed ride through Venice Beach crowds on a motorcycle.
“Television used to be the Cinderella,” Tellem said. “But television is by no means an inferior medium anymore.”
But TV is a wacky business. Three-quarters of new programs fail. So far, several of the networks’ biggest bets this season, including “Kidnapped” and Aaron Sorkin’s drama “Studio 60 on the Sunset Strip,” which stars Perry, have opened to disappointing ratings. Their pilots each came in at close to $7 million.
Other new programs that haven’t produced the hoped-for results include “Six Degrees,” a mystery about chance encounters among strangers; “Shark,” a drama about an ethically challenged prosecutor with James Woods; and Fox’s courthouse drama “Justice,” the latest from Jerry Bruckheimer Productions.
In the past, TV studios could produce plenty of profit because a program such as “The Simpsons,” “Law & Order” or “Friends” would eventually come along and more than make up the costs of forgettable failures such as “LAX” or “Life as We Know It.”
But these days, a big payoff is less certain. So-called serialized dramas such as “24" or “Lost,” whose stories advance from one week to the next, are some of the priciest shows on television. The trouble is they don’t repeat well, limiting the advertising dollars that networks can squeeze from them and reducing their value in syndication.
The flow of ad revenue is also under siege from new technology. As more viewers get TiVos and other digital video recorders that can speed through commercials, sponsors are increasingly questioning the wisdom of paying $200,000 or more for a 30-second spot in prime time.
This year, advertisers refused to pay hefty increases for network ad time and steered more dollars to popular Internet sites that draw younger consumers.
“If the ad market was more robust they could probably justify those production costs,” said Bill Cella, chairman of Magna Global, one of television’s top ad buyers. “But it’s a pretty tough environment out there.”
Network executives know this all too well. In the last two years, networks have had to spend much more to promote their shows. A decade ago, broadcasters almost exclusively used their own airwaves to hype their new fall shows. But that has changed as networks compete for attention amid a clutter of cable channels, the Internet, video games, iPods and other entertainment options.
“You just can’t rely on your on-air promotions alone to make some noise,” said John Miller, chief marketing officer for NBC Universal Television.
The problem is particularly acute in the fall, when the networks launch about 25 new shows in the short span of a month.
Industry sources estimate that the five major English-language networks -- ABC, CBS, Fox, NBC and the new CW -- together spent almost $100 million to promote their fall shows in outside media outlets such as magazines, newspapers, cable channels, billboards, radio and the Internet. Some spent nearly twice what they did three years ago.
“It’s like a major product launch or launching a major motion picture,” Miller said.
He isn’t the only TV executive to see similarities with the movie business.
“We have become more like the feature film business, and the expectation that we score right out of the box is intense,” said Peter Roth, president of Warner Bros. Television, which produces such ratings stalwarts as “ER” as well as the new “Studio 60,” “Smith” and “Justice.”
“But unlike the film business, in which a movie can have a big opening weekend and its success is quickly determined, ours is a more long-term business,” Roth said.
Studio and network executives have spent the last two weeks in hyperdrive, trying to persuade reporters -- and more important, viewers -- to not rush to judgment on the fate of big-ticket programs such as “Studio 60,” “Smith” and ABC’s family ensemble “Brothers and Sisters.”
Who can blame them with so much money on the line?
The networks have scored some wins, including NBC’s “Heroes,” a show about ordinary people with extraordinary powers; CBS’ “Jericho,” about life in a small Kansas town after a nuclear explosion; and ABC’s “Ugly Betty,” an adaptation of a popular Colombian telenovela about a plain Jane in a poncho trying to break into the snooty world of fashion.
But so-called star vehicles such as “Studio 60,” which showcases Sorkin’s writing, “Smith,” “Shark” and “Brothers and Sisters,” the latter starring Field and Flockhart, have not worked as well as new programs with little-known actors such as “Heroes.”
One bright spot for the industry, however, has been the resurgence of the international market, executives said. U.S. shows have been selling briskly overseas, helping to defray production costs.
Television executives also are gambling that opportunities in new media, such as selling Internet downloads of shows, will become their saving grace. But that is far from a sure thing. The angst is ratcheting up on production lots in Burbank and Los Angeles.
“At some point, this out-of-control arms race has got to stop because it makes no sense economically,” said Marc Graboff, president of NBC Universal Television, West Coast.
But as Tellem observed, “Right now, there is no sense of containment.”