The New Reality Deal: TV Execs Take a Piece of Stars' Side Jobs
This story first appeared in the April 12 issue of The Hollywood Reporter magazine.
As MTV's Buckwild began generating buzz in January, the series' cast was rewarded with offers for paid appearances at bars and taverns. In exchange for time spent smiling for camera-phone pictures and signing autographs, the West Virginia twentysomethings each collected between $5,000 and $10,000 a night, plus airfare, says a source. But MTV, the network that provided the platform that made them household names, saw no piece of it.
It's a situation the Viacom-owned network likely won't repeat in future deals, as many cable networks increasingly are looking to take a cut -- as much as 10 percent, say sources -- of their reality stars' ancillary revenue streams. That includes books, vodka lines or even speaking engagements. (Until Buckwild star Shain Gandee's death April 1, he was among the castmembers in demand.) "I've heard people call it the post-Skinnygirl world," says one top agent, referring to Beam Global's $100 million acquisition of Real Housewives vet Bethenny Frankel's Skinnygirl cocktail line in 2011, for which Bravo saw no financial upside. Others point to the eight-figure empire that the Kardashian family built on the back of its E! reality series as a turning point.
Perhaps it is for that reason that Bravo and E! parent NBCUniversal is said to be among the most aggressive with its requests for equity from its unscripted stars, a topic that has been hotly debated in reality circles of late. Food Network has been actively involved in all facets of its chefs' empires for years, say sources. Viacom and Discovery networks are said to be making more of these asks, too, while the A&E Networks group is believed to be the most lenient with what its stars can and cannot do -- at least for now. (A&E Nets instead is forging strategic profit-sharing partnerships with talent for ancillary products, including Pawn Stars casino games and Duck Dynasty Hallmark greeting cards.)
The size and specifics of the network demands vary dramatically considering talent comes to these shows with vastly different experience -- and thus vastly different leverage at the bargaining table.
Such asks typically are one of 25 to 50 financial elements that factor into a talent deal, and rarely are they a primary one. Retail lines are much more appealing than, say, speaking engagements. Still, two producers who would only speak on the condition of anonymity say that they ultimately took projects to NBCU rivals to avoid having to give up equity in their stars' businesses.
Beth Roberts, NBCU's Cable Entertainment Group executive vp business operations, argues that it's only "fair" that the network providing the springboard to fame -- or in the case of existing brands, the network that accelerates that trajectory -- be able to take part in the upside. "This is a time-honored business practice," she explains. "If you provide a platform to someone in business that enhances their business, then you take some of the benefit of the enhancement that you gave them." (Producers increasingly are looking to take a cut, too, with such veterans as Mark Burnett and Craig Piligian having a long and lucrative history of partnering with the brands that they feature on their shows.)
Longtime reality producer-turned-Fremantle North America CEO Thom Beers, however, suggests networks should leave reality stars alone when it comes to nonshow activities, just as ABC wouldn't ask for a piece of Modern Family star Sofia Vergara's Diet Pepsi endorsement deal. "They've done very well with these shows, and they've launched hundreds of networks around the world with these shows," he says, adding that allowing stars to make big money on the side can take some pressure off of the production. "If they're making that kind of money, they're not going to come back and rob us because they realize if they're off the air they're not going to get that money."
Increasingly, reality show subjects are lured more by the financial halo effect that the TV platform can offer than by the fame. In fact, the show can be the smallest revenue generator (reality subjects start out making as little as $1,000 an episode). "I always tell my clients, you will spend the most amount of time on your show and make the least amount of money on it, but it's still the engine," says one rep.
The stars of History's Pawn Stars, for instance, saw their Las Vegas operation, the World Famous Gold & Silver Pawn Shop, explode thanks to their TV exposure, with one source suggesting foot traffic grew from 75 people in a day to 4,000 a day. Beers recalls that Jesse James, the star of his 2002 Discovery series Monster Garage, sold about $40 million worth of West Coast Choppers T-shirts at Wal-Mart. And the stars of A&E's Duck Dynasty are being paid between $50,000 and $100,000 an appearance to travel to mega-churches and Christian colleges to meet their fans, say sources. That's on top of the soaring sales of their famous duck calls and other merchandise.
Fair or not, the network push for equity is not dissimilar from that of the record labels, which years ago began locking music talent into 360 deals where the label could collect a portion of money made through such avenues as touring and merchandise. That shift came as music executives saw the revenue generated from album sales decline considerably, just as television executives are looking to expand their revenue pie as the TV business fragments.
But unlike with music's 360 deals, networks with a piece of their stars often do not collect what they contractually are owed. Pursuing the revenue rarely is worth the network's time, money or potential acrimony from a messy audit. The deals simply guard against losing out on the next Skinnygirl. Quips one network exec, "What it is is schmuck insurance."