Keeping it all in the family

How will consolidation affect TV pickups?

Call it an aberration or a sign of things to come: The same day that ABC and ABC Studios announced they were combining operations and making the network the studio's primary customer, the Alphabet opened its January pickup season by ordering "Eastwood" -- from outside supplier Warner Bros. TV.

The consolidation move by ABC followed a similar amalgam a month earlier by NBC, which combined the network and its sister production arm, Universal Media Studios. The Peacock hasn't picked up any pilots from outsiders since.

In the 15 years since the repeal of the financial interest and syndication rule that limited how much programming a network could own or distribute, the broadcast nets have been steadily increasing the share of shows they order from their own in-house studios.

Is the latest wave of consolidation of networks and studios a final culmination of that? Or are the moves simply part of industrywide cost-cutting and streamlining in the face of the deepening recession?

"This is absolutely, 100% a reflection of the economy and the need for more efficient usage of what has been duplication of jobs," one studio topper says.

In the wake of the consolidation at NBC, a slew of top executives were laid off, with one comedy and one drama department now handling development at both the network and the studio under Angela Bromstad, who oversees NBC and UMS.

It will take a few months for the new direction at the Peacock to come into focus, but initial indications are that the bottom line-focused NBC is fashioning a model wherein the studio and the network are pretty much self-sufficient and satisfy almost 100% of their needs internally.

Before the December merger with UMS, NBC had gone to outside studios for three pilots: David E. Kelley's "Legally Mad" and John Wells' "Southland" -- both from WBTV -- and "Lost in the '80s" from Sony TV.

Although "Southland" was picked up to series after long negotiations, NBC's January pilot pickups featured only UMS-produced shows.

Last week, NBC suddenly pulled the plug on "Lost in the '80s."

ABC, on the other hand, has been more open to other studios in its pilot pickups. More than half (nine of 16) of the pilots greenlighted for fall consideration hail from outside suppliers: WBTV, 20th TV or Sony TV.

That might be because ABC entertainment president Stephen McPherson was not directly involved in the development of the ABC Studios projects this season. That is expected to change next season, when he also will oversee the studio.

"You won't see McPherson quite so open next year," one studio source says.

McPherson this week took a series of meetings at the major talent agencies stressing that if writers of ABC Studios-produced shows get a pass from ABC, they would be free to take the projects out to other nets. Still, he indicated that the studio won't develop ideas targeting only outside buyers.

The folding of UMS and ABC Studios into their respective networks can also be seen as a logical evolution because they were set up to focus on producing for their motherships. (For ABC, the consolidation echoes another short-lived merger in 1999 under Lloyd Braun.)

CBS Paramount also is becoming more in-house-focused under the perview of Nancy Tellem, who also oversees CBS. CBS Par produces series only for sister nets CBS and the CW (the latter is half-owned by Time Warner). The only CBS Par show for an outside net, "Medium" for NBC, was developed and sold by Paramount Network TV before it was merged with CBS Prods. to form a producing arm of the Eye network.

CBS brass maintain that the studio will remain its own entity and not be merged with the network, though in December there were senior executive layoffs at the studio.

Fox, on the other hand, has been less "family"-focused, in part because 20th TV predates the formation of the Fox network. News Corp. keeps both operations independent, with 20th TV also supplying other networks.

News Corp. president Peter Chernin has encouraged the studio to take projects to multiple networks and to ask Fox to bid like anyone else.

So, is doing it all in-house a good or bad business model?

On the plus side, dealmaking is easier and helps avoid legal faceoffs like the one between WBTV and CBS over profits from the hit comedy "Two and a Half Men." (Since that suit was filed in December, CBS hadn't ordered a single pilot from WBTV until it picked up comedy "Big D" Thursday.)

On the other hand, if a network buys only from its own studio, the parent company takes on all the risk by footing the bill for the license fees on the network side and deficit financing on the studio side. That's a big financial burden given the high failure rate in the broadcast TV biz.

"In a world where there is an 85% failure rate, you're doubling up a lot on your bets," one studio exec says. "You're spending a tremendous amount of money, and you're limiting the flow of creativity that is coming to your network."

The conventional wisdom is that, with the strengthening of the ties between broadcast networks and their in-house studios, outside suppliers and indies are being squeezed -- or squeezed out.

Even now, studios not affiliated with the network to whom they sell a project are often forced into co-productions and forced to haggle on the license fees once their show is picked up to series.

But if networks become more insular, that could make such companies as WBTV and Sony TV that much more attractive as suppliers.

With ABC Studios, UMS and CBS Par developing primarily for their own networks, the only sure bet for a creator to get more than one shot with pitches (and even to spark a bidding war) would be to go to one of the "indies." That would give such companies as WBTV, Sony TV and to some extent 20th TV an advantage in attracting top talent.

That could also bode well for smaller indie companies looking to break in -- except, as one exec put it, "You still have to be an indie with a lot of money." He doesn't expect many new entrants into this game.

But "thirtysomething" creators Marshall Herskovitz and Edward Zwick must have not gotten the memo.

This week, CBS picked up their drama pilot "A Marriage," which is being produced by their indie outfit Bedford Falls without the backing of a studio.

That was done by choice, says Herskovitz, who, as president of the Producers Guild, has been a vocal opponent of vertical integration and network ownership of their shows.

"I'm very interested in reinvigorating the concept of the independent producer in television," he says. "It's been absent for a long time, and it hurts everybody. We're happy to do it one at a time."