Commentary

Moving Away From The Mutual-Fund Model For Buying TV Shows

 

Give them credit: TV broadcasters still talk about different kinds of financial models for building TV shows.

Many still search for some big magic -- the fairy dust that will help them grab the big numbers of viewers/consumers they used to find more easily, say two decades ago. The good news: People still watch TV and video. The bad: Finding and accounting for viewers -- with varying degrees of attention, and in too many disparate places -- can be a chore.

For TV producers, the financial model for producing top-level TV shows is harder. Rick Rosen, head of television for William Morris Endeavor Entertainment, said the talent agency feels the heat, and every now and then tries to experiment.

The TV development season can be a tough process -- made harder by demands on networks when it comes to license fees, as well as right fees for the Internet, mobile, etc.

Rosen would agree many people still watch TV and video -- either via their friendly cable/satellite/phone service, or hulu.com or other time-shifting services/devices, or on iPhones, iPads, and Blackberries. But there is a problem: Why can't actors and producers get paid for all this -- the right way?

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That's because measurement systems are all over the map; few if any digital standards exists. Still, the future is here. What about giving one big TV advertiser -- or perhaps a couple of big TV advertisers -- a major stake in a show before it starts? Say the next "Glee"?

In this vein, Rosen says one of his agency's clients, American Express, has been interested in financially backing a new TV pilot -- along with Sony. This is a rare move by a TV marketer. Problem is, hits like "Glee" are rare.

What happens if that pilot performs like the average of what other new shows/pilots do-- that is, at a dismal 10% success rate? That's bad news for a TV advertiser -- especially against the current model, in which marketers still get viewership guarantees across many shows, kind of a like mutual fund of TV shows. Even with continued ratings erosion, that kind of protection is hard to beat.

Still, many big marketers - an automotive, a consumer products, or a big movie/entertainment company -- might want to use some of their media dollars for more riskier ventures, with a very big upside.

Digitally, NBC and other media companies already work the way experimental William Morris/American Express does. They will only do an original Web series if an advertiser/marketer sponsors it -- typically a 10-episode series, four to six minutes for each episode. The good news here is the guarantee comes in the form of digital distribution -- and, for some, maybe unique viewer guarantees and other metrics.

But it's not big-time TV -- where the big money still lies for networks, talent agencies, and TV marketers. And the risk.

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