Dick Wolf Can Solve Crimes--And Count Advertising And License Fee Dollars

by Wayne Friedman, Mar 20, 2006, 3:00 PM

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Dick Wolf knows his TV math--and his advertising. He once told me on the way out the door of a little press party, a couple of years ago: "You know, I worked in advertising on accounts such as P&G!"

We all know that. But from the perspective of a major TV producer, with his "Law & Order" series, Wolf's ad history and financial skills make sense in the new world of all the on-demand programming.

Here is what he told Variety:

"Let's say five years from now the 'Desperate Housewives' of 2010 gets downloaded a million times per episode. (At $1.99 a download), that's a gross of $44 million per season. On the current two-thirds split, that's $30 million for ABC for 22 episodes. That doesn't include profit participants or the studio, of course, so let's say ($30 million) is cut 50-50 with the studio and everybody else. To the network, that's a grand total of $15 million-- and 22 episodes of a hit like that are worth a lot more than that."

Had Wolf gone on, he would have easily given the reader more details--ones that have to do with advertising.

Let's say "Housewives" averages $250,000 over the course of a season for a thirty-second commercial spot. With about 20 thirty-second spots an episode for ABC to sell, that comes to $5 million--for just one episode. Over the course of a season, that's $260 million in average gross revenues ABC pulls in from "Housewives." That is way more than one gets from downloading, according to Wolf's model.

All this doesn't necessarily mean ABC would abandon its traditional advertising revenues. What Wolf is really worried about is a future 10 years from now, when perhaps those one million downloads will be the only customers for "Housewives"--not the 15 million to 20 million it currently gets per week.

Then what? Then producers might get far less in license fees for its shows--and far less promotion and marketing. That hurts a producer's aftermarkets. Producers may need to amp up--cable, syndication, iTunes, VOD, IPTV, brand entertainment, or DVRs windows. Wolf's whole business structure would change.

But here's his secret. In an exponentially growing pool of content, more than other producers, Wolf has what everyone wants--something he learned about a long time ago from his advertising days--a well-known, lucrative, and still valuable TV brand name.

Why do you think NBC still pays hundreds of millions for something called the "Olympics"?

It's because everyone knows that TV brand name. Even with the Torino Olympics, a bronze winner gets to go home with precious metal.

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