Roundtable: Primetime production

Nine television executives survey the landscape of production, profits and the emergence of digital delivery.

Once more unto the breach. On the verge of the start of the 2006-07 television season, presidents of the six major studios and the largest independent player in the scripted primetime programming arena sat down with The Hollywood Reporter editor Cynthia Littleton for a deep dive into everything from the digital media revolution to cast and scene sprawl in big-budget dramas. The round-table dialogues were held Aug. 24 with Lionsgate TV's Kevin Beggs, NBC Universal TV Studio's Angela Bromstad, Touchstone TV's Mark Pedowitz and Warner Bros. TV's Peter Roth; and Aug. 25 with CBS Paramount Network TV's David Stapf, Sony Pictures TV's Jamie Erlicht and Zack Van Amburg and 20th Century Fox TV's Gary Newman and Dana Walden.

The Hollywood Reporter: The wide open road of digital content and distribution is all anyone's talking about in the industry these days. From your perspectives as the stewards of primetime development and production, what does digital mean for your businesses today?
Gary Newman: From the studio perspective, I think it's the most empowering opportunity that's come along during our careers. It has changed our studio from a traditional television production company to really a global content company. We find it incredibly empowering. The whole point of it is that it was the networks that traditionally had the relationships with the audience. Now this enables studios and our shows to develop direct relationships with the audience.
Peter Roth: We are content companies. Any time any form of distribution increases the value of our product, that's a good thing. How that will be monetized still remains to be seen. But the principal and most immediate and obvious advantage and opportunity that exists is really in marketing. There's this proliferation of choice, of thousands of choices for the viewer, and getting your message out there to as many people as you possibly can is hard. You don't want to miss any opportunities. I believe marketing is the best value that (digital) offers us in the digital space. Eventually, there will be additional value to our content as well. I'm not sure that any of us have our hands on exactly what that means just yet.
Angela Bromstad: When we saw what iTunes did for us in terms of "The Office" ... that was huge for a show that was a little on the bubble and a little precarious. Primarily right now it (digital's value) is promotional. And I think the Web has a lot to offer to our creators in the sense of a place to experiment. Eventually we'll do (original) content.
David Stapf: It's all in its somewhat nascent stages. ... From where we sit at the studio, we think about how we can enhance the viewing experience for a show by opening it up to another platform. We don't see it all that differently from how we looked at "Entertainment Tonight" and those facets of publicity when they came along a long time ago. It was just another way to get eyeballs to your show.
Mark Pedowitz: As much as the Web as distribution is interesting, all of us have to keep in mind that our executive producers must be focused on the core property. If they lose that focus, there is no other ancillary market, there is no ability to do anything. I do agree with Angela that the Web will offer something more valuable to our writers and producers. Take the same money you'd get for a script and shoot something. A piece of film is a lot more valuable to look at than sometimes a script.
Zack Van Amburg: I think because the rules haven't been written yet, there's a spirit of experimentation. Because we're not exactly trying to quantify what digital distribution means to our television shows today, that gave us the security to say, "Let's go try something like 'Rescue Me 2.5,' " where we produced a brand extension episode that was exclusive for the digital space and would keep the show alive between seasons. We need to pay attention to and come at it from two standpoints: one, a marketing and promotional standpoint, and two, something that we're trying to be aggressive in figuring out how we can create content for in a different way.

THR: How do you evaluate all of the emerging opportunities in Web, broadband, streaming, download-on-demand, wireless, etc.? Your phones must be ringing off the hook with pitches.
Dana Walden: Last year, we hired a dedicated executive (Mark Pearson, senior vp brand and franchise management) at the senior vp level who works very closely with (20th senior vp marketing) Steven Melnick, whose job is brand management, to be out there looking for opportunities and evaluating the choices that we have out there. We realized we needed someone with expertise to help make a determination after presenting options to Gary (Newman) and myself. It's clearly an important area.
Pedowitz: You have to ask, does this partner offer you an opportunity to platform the show and market it and help you with the branding? Can it potentially help you accelerate any profitability? That's a more recent occurrence than when the original (Disney/ABC) iPod deal happened (in October). You have to look at what that platform is going to do for you and your product. If that platform is going to put you up next to a user-video porn site, you can't do it.
Kevin Beggs: On a number of cable deals, the initial proposition has been, "Let's stream them all." We've pushed back and said, "Let's stream the first one, and if it gets the bang and the buzz, then let's talk." But if (digital distribution rights) just become part of the package, what do we have left, back-end or otherwise? Or what are (the channels) going to do to enhance the license fee to make sense of it for us? We support the marketing side of it completely, but as it potentially devalues the back-end, it's not so interesting for us.
Jamie Erlicht: For the immediate future, whether that's six months or nine months or two years, I think you have to see it as mostly a marketing tool. It helps you get exposure that you otherwise wouldn't get, especially for the 18-34 demographic. ... We think a really good midrange plan is to use it to not only monetize existing assets, but as an incubation device and find the next group of talent that's out there. I think there are really interesting voices that can find a way to break through the traditional Hollywood system.

THR: Are you starting to scout talent on YouTube and its ilk?
Walden: At Fox 21 (20th's lower-cost production unit), we have creative execs who spend a lot of time looking at nontraditional sources of material. At the studio, we're getting most of our talent through traditional avenues. Quite frankly, I think the chances of finding someone (on a viral video site) who is very interesting and a person you can build a show around are slim. But, for example, we just made a deal with (writer-producers) Steven Levitan and Chris Lloyd. If they came to us and said, "We've found someone who has an original voice that we'd like to supervise," we'd say yes in a heartbeat. Because then you have the people in place who can guarantee you 22 episodes, and you're not going find yourself shutting down production by episode three.
Stapf: The acting pool, the directing pool that we pull from on our shows -- they're really good at what they do. They're trained. You're not going to shut your eyes to a diamond in the rough, but ...
Van Amburg: We did a pilot for a character called Gay Robot with (Adam Sandler's production company) Happy Madison for Comedy Central. And it didn't get picked up. But we believed in it so we took Gay Robot the character -- and he is exactly what it sounds like -- that comes from Adam's comedy CD (2004's "Shhh ... Don't Tell") and we created a MySpace page for him. And we leaked a couple of clips. And now we're getting inquires about getting him booked on some of the late-night shows. So we're creating a digital strategy for Gay Robot, as grand as that sounds, that we hope will lead back to actually getting the television show on the air.

THR: How much are you thinking about potential digital ancillaries when you're developing new shows these days?
Walden: Is it impacting the way we develop shows? Not really. We do look at the DVD marketplace and the international marketplace and try to be savvy about the arenas that we go into, particularly if it's going to be a big-ticket item, like our "Prison Breaks" or "24s." In the digital space, the extensions seem to come after the fact. We're trying to create brands on the (broadcast) networks that are enhanced by digital opportunities. So right now that's the way we're viewing it.
Van Amburg: As we begin to understand this business a bit more and understand how it can be monetized and quantified, we've had a lot of conversations recently about whether we are structured the right way. The more prolific we become in (the digital) space, the more it starts to become stand-alone work and not just an adjunct of an existing job.
Newman: It's everything from creating original content that allows audiences to dig deeper into the show to furthering the brand and deepen the experience. "24: Conspiracy" was the first mobisode series, and that was a few years ago now. It was primarily done for a European audience, and it was a marketing tool and a launch platform for us there. It helped us monetize our asset and enrich the experience for the viewer.

THR: Was it a business for you? Did 20th make money on "24: Conspiracy"?
Newman: It was primarily promotional for us -- that was where we'd started from. But it began a new platform. And we monetized it in the sense that we started a new platform that everyone will be monetizing in the future.
Stapf: What we at the studio get a lot, and it's fun, is your more entrepreneurial showrunners who come in and pitch the whole arc of their season and then say, "And this is what I'd like to do on a digital platform and hopefully marry it up (with broadcast episodes) at some point." ... We have yet to really do it but we've been hearing a lot of those pitches internally, which at some point will be exciting once we figure out the business model of how to do it.
Erlicht: (Gesturing to Stapf) We're now working on a project together on a show that was a pilot for CBS that didn't land on the fall schedule. It was a different and innovative piece of material. And we're now trying to figure out if there's a digital platform for that to let the show live, and then maybe it goes back to the network or maybe we find a way to monetize it and keep in the digital space.
Bromstad: You always have to start with a great product. "The Office" was something that just seemed perfect for playing out on the Web. It'll be interesting because "Office" webisodes have done very well this summer. It'll be interesting to see (the success rate) with our new series. "Heroes" is a show that is more conducive to being on downloads. We'll see how it works with (new NBC shows) "Friday Night Lights," "30 Rock" or "Studio 60 on the Sunset Strip." I don't think every show is tailored for that.

THR: What is this considerable new exposure doing to shows' traditional syndication value? Are there any metrics you can use now to quantify what it means to the back-end? Or for that matter, ratings for the first-run airings?
Pedowitz: We think it's additive. ... ABC did an experiment a few months back with streaming. What we did discover was that 5.7 million streams occurred in which we had limited advertising. Eighty-seven% of the people who watched a stream of an episode remembered who the advertiser was, and we found that the average age of the user was right in the sweet spot of the demographic, about 29. So we've actually gotten some information. We don't believe it affected the ratings of our shows.
Roth: I don't think there's anything but anecdotal information at this point as to the additive value of any other form of distribution. I think time will tell. My personal experience is people are watching more television than ever before, and they're watching in more and various ways. Any time you get your product out there to people who wouldn't see it through traditional television viewing, it seems to me that adds value to the content.
Newman: All of us are continually balancing the benefit of the additional exposure against the deterioration of our potential revenue. That's what we're all talking about. At the start of the fall season with a new show, it's, "Yes, get it out there to be seen by more people (through Web streaming and download-on-demand platforms)." If a show breaks out and becomes a hit, you'll probably see us shift more to protect the asset so there can be a revenue payoff down the road. The DVD was the first way of doing it. Now the question is, Will that same dynamic shift to the digital side of this business? Now that you can go buy episodes some three or four hours after they've been on the air, this is going to impact our syndication revenue.
Erlicht: The future of the economics of the business is digital, whether you pay $9.95 a month to get exclusive content on a show or are selling your episodes. I think the future of the business is digital, and it's going to help all of us produce our shows in the future.

THR: It would seem you all need help with the boom in costly, large-ensemble serialized dramas. How are you handling the era of $3 million per episode dramas? What's the single-biggest cost driver?
Walden: It's largely above the line. It's also the cost of serialized dramas; for us on our dramas, it's the number of scenes. Where traditional dramas used to be told in about 50 scenes, last year you had "Prison Break," which averaged about 88 scenes an episode. When you're having to move the whole company 88 times in an eight-day period, inevitably you're going to have to pick stuff up and there'll be additional second-unit work to be done. So it is both above the line and the genre of television that you're in.
Roth: Jerry Bruckheimer in particular has brought a visual style that has been called "feature television," and that has increased needs for production. The viewers' appetite for more and more and more keeps growing. We have to compete with each other for not just a great script, great story and great writers, but also for great scope as well. This has caused production costs -- for our pilots and our series -- to be absolutely astronomical. Fortunately, we're in a very robust international marketplace, (and) that helps balance some of these costs. It's still a great business if you have a hit.
Beggs: It's all about the costs. A lot of those cable shows, a big part of the (cost) discrepancy is where you shoot. Some cable shows shoot in L.A., but many of them are shooting everywhere and anywhere. We're in Albuquerque, we're in Toronto, we're in Pittsburgh, wherever those tax deals are driving us. For us, that's money in to offset the money out, along with the license fee and whatever the international and the video (sales) might be. And you should be breaking even or ahead on a cable show or you shouldn't do it.
Pedowitz: It is interesting. You can go into cable and you can produce your shows for two-thirds of the price of what you spend on a broadcast show, and a lot of that is from the expectations. You're only doing 13 episodes. The cast, the writers, the producers all have lower expectations on salary. For some reason, if you take that same show and say, "I'm developing it for network," that extra one-third comes in. It's the most fascinating thing I've ever seen. The needs get bigger, the wants get bigger, and that's from everybody, the buyer, too. ... But what Peter said was very true. The viewer has become very, very sophisticated in what they want to see. It has to feel and taste and almost look like a feature. The hardest part of our jobs is containing all those costs as best we can while our management waits for the hit to come to pay for it all.
Bromstad: It's about discipline. It's about holding to certain expectations. We need to have the discipline (knowing) that some shows like (new NBC fantasy-drama) "Heroes" are designed to be of massive scope and with large ensembles. So that means we have to have shows like (new NBC drama) "Raines," which is a procedural. We're not skimping on that by any means, but because of the nature of the show, it is more (cost) containable.
Stapf: That also speaks to the audience we're catering to. Things are faster. Many older things, you look at (them) now and they feel slow. Now there is that demand to increase your page count on your scenes. Eighty scenes in a script is fairly common now. It's difficult.
Roth: There is a tendency toward trying to be bigger and better every year. But that razzmatazz only goes a short way with the viewer. Eventually what they invest themselves in is great characters.
Pedowitz: And whether Meredith will go with McDreamy or the veterinarian (referring to the cliffhanger of ABC/Touchstone's "Grey's Anatomy").

THR: How do you know when to take a flier on a show?
Newman: There's a kind of ... call it "lotto mentality" ... right now. There's a feeling of, "Let's go for it." One of the turning points in that mentality was "Lost." They spent an amount of money on that pilot ($10 million-plus), and people around town were in disbelief. And yet the risk they took paid off in a major way. I'm sure with their international and DVD sales, (Touchstone) was quite happy with the risk they took. There are rewards for taking risks and offering greater production value.
Stapf: That's what we're paid to do. We're not always right. That's what comes with the job -- you get to champion something or say no to something. It's a very personal decision but it also comes down to being cognizant of what the network landscape is, what people are looking for and what's going to sell.

THR: Twelve years ago, the industry was in a tizzy over the FCC's deregulatory kick, which spurred consolidation in all areas. What's the biggest change in the business you've seen since then?
Beggs: There's a lack of those entrepreneurial titans: the Cannells and the Spellings, may he rest in peace, and the Carsey-Werners, those shops who had their own imprimatur as a supplier. With the consolidation after fin-syn was repealed, they're all gone, that kind of scrappy, "I'm going in and selling on a napkin," Wild, Wild West of television, where guys could become hugely successful in the TV movie business when it was one of the most lucrative arenas of all time. There's something kind of sad about their passing.
Newman: The real impact of the fin-syn rules (being repealed) was that it took a business that frequently, particularly on the production side, was driven by entrepreneurial, smaller-sized companies and chased them out of the business. It put the business in the hands of larger corporations. And in some ways I think that's unfortunate. I think the loss of the entrepreneurial spirit is always a loss for an industry. However, I think the party that we most have to be concerned with is the public. Are they getting the kind of programming they're desirous of? I can't imagine anyone looking at the diverse landscape of programming out there that you could say that people aren't getting the type of programming they want. ... Most of (the changes) have been driven by the fact that as costs rise, you're getting into a much higher-risk business and you need a large company behind you to support the kind of spending we do on these shows.
Pedowitz: The end of fin-syn wasn't the only thing that pushed independent producers out of the business. It's 20 years ago now that the (federal) investment tax credit went away. And when the investment tax credit went away, it affected the Spellings and the Cannells because it made it harder for them to figure out how to deficit-finance these one-hour dramas (by changing the rules on how to account for business losses). In a business situation with an 85% failure rate, the investment tax credit allowed independent producers to come in and play with the big boys.
Erlicht: From our perspective (at Sony), networks consistently buy the best product. Yes, they have sister (studio) companies now and yes there are sweetheart deals sometimes, but at the end of the day, most networks are not going to put on a show they don't believe in because it comes from their sister studio at the expense of a better one from somewhere else.