Turner Chief on March Madness Money, Whether Conan is Worth $12M and Kevin Reilly's Mandate
David Levy, president of Turner Broadcasting, opens up about sports rights, his push for originals and how to bulletproof No. 1 TBS beyond 'Big Bang Theory' reruns.
This story first appeared in the April 10 issue of The Hollywood Reporter magazine.
In summer 2013, after 27 years at Turner Broadcasting, David Levy — who joined the company as a junior account executive — was elevated to the top job with oversight of seven networks, including TNT, TBS and Cartoon Network (but not CNN). It's a time when the cable business is being forced to reinvent itself on several fronts. With the exception of The Big Bang Theory, relying on sitcom and procedural reruns no longer is economically sustainable. Meanwhile, large network groups like Turner's face the threat of unbundling and pressure to make content available a la carte to the growing ranks of cord-cutters.
Levy, 50, a married father of two sons, completed an overhaul of Turner's executive ranks in November with the hiring of former Fox chairman Kevin Reilly to run TNT and TBS. The latter was cable's No. 1 entertainment network in primetime in 2014, but with robust competition from television rivals as well as a growing roster of digital streaming services, Levy's mandate is to reinvent Turner's original programming identity. Reilly busily has been stocking the pipeline with scripted fare, and Turner CEO John Martin has said the Time Warner-owned company's investment in original programming on TNT and TBS will double to $1 billion annually by 2018.
Based in New York, Levy, who played hockey at White Plains High (which his former boss, Phil Kent, also attended) and Syracuse University, also has run Turner's sports assets since 2003. He has forged multibillion dollar deals for NCAA men's basketball, the NBA, Major League Baseball and golf's PGA Championship tournament. Turner's joint deal with CBS for the NCAA "March Madness" tournament — their 14-year, $10.8 billion pact began in 2011 — was hailed as a model of cross-network cooperation at a time of skyrocketing sports fees. In October, Turner and ESPN-ABC extended their deals with the NBA by nine years, with Turner's share of that rights package set to funnel $1.2 billion annually to that league. Levy invited THR to his office in Time Warner Center to discuss sports rights, his push for originals and whether TBS' Conan is a success.
Where is the ceiling for premium sports rights?
Consumption of media is completely changing in this market, probably at a pace none of us anticipated. Nobody watches the Super Bowl on Monday; you're not going to watch March Madness a week from now. We're not a 24-hour sports channel — I don't need filler. We're focused on premium sports properties that are going to drive subscription rates for our brands. It's a supply-and-demand business. No one knows where the tipping point will be.
What about the long term, as consumption habits continue to evolve toward over-the-top options?
What I'm worried about each and every day are the "nevers." The nevers are people who are never going to buy a cable, satellite or telco hookup, so you are starting to see a falloff in subscriptions. As that continues, the math on sports rights becomes a little more challenging.
Digital sports rights also are changing these deals.
Yes. One of the things about sports is it's also one of the genres that actually really works cross-platform. You used to be able to write a contract on about 15 to 20 pages; now they're 150 to 200 pages. A negotiation used to take a couple of days; now there's a whole negotiation about windowing and digital rights. There's a lot of monetization in those rights. And it allows us to really enhance a brand like Bleacher Report.
The company’s 2014 holiday card featured caricatures of Turner personalities including Anderson Cooper, Conan O’Brien, Eric McCormack, Robin Meade and Inside the NBA’s Ernie Johnson, Charles Barkley, Kenny Smith and Shaquille O’Neal.
There are lawsuits over this issue: Do you think college players should be able to share in the billions in TV revenue they help generate?
If they [rule] that college athletes should be paid, it has to be all college athletes: swimming, tennis, golf, volleyball. Everybody's focused on basketball and football. And yes, I do think there need to be changes. I was surprised to find out that scholarships are really only for one year — each year they renew. If they really wanted to commit to the players, shouldn't they do four-year scholarships?
But obviously it would affect TV deals.
It would. But this is not going to be decided over the next couple of days. This is a big, complicated issue. I can see both sides of the argument. How do you differentiate between the star and the 12th player on the bench?
You've hired a lot of the on-air talent for Turner Sports — Shaquille O'Neal, Reggie Miller, Steve Kerr, Ron Darling. What's the secret to dealing with talent?
(Laughs.) A lot of it depends on who their agent is. But I think reputation is very important, and the talent and agents do talk to each other about which companies are good to work for. And what I've heard is our reputation is very strong. It's [about] learning from the best. When you bring in somebody like Chris Webber or Grant Hill, who hadn't done [sportscasting] before, and they get to work with Marv Albert or Ernie Johnson or Kevin Harlan, it's pretty special.
O'Neal's sportscasting deal with Turner includes an entertainment component. He recently had a scripted pilot picked up by truTV. Are more athletes seeking these types of broader deals?
With Shaq, we knew his ambitions were far greater than just a studio show. And yes, more and more are going that way. The most important part is that it still has to be a good show; we're not going to greenlight a show that we don't believe is going to be successful just because we have an on-air deal with an athlete.
O'Neal's deal is up soon. I assume you want to keep him on Inside the NBA?
Yes. We'd love to have Shaq back. I think he'd like to come back. One of the things that most talent recognizes is that being on a weekly show and being relevant weekly is good for all your other businesses. If you have a national voice to the public, it helps in everything else you do.
To promote Turner’s coverage of the 2004 NBA All-Star Game, Levy agreed to sponsor Jeff Burton’s car in that day’s Daytona 500. "I called [then-NBC Sports chief] Dick Ebersol and said, 'If I sponsor this car, I want to make sure you show it on camera.' "NBC showed the car, but only after Burton blew an engine piston. Says Levy, “The only shot we got of the car was pulling into the garage."
Kobe Bryant will retire soon. Have you spoken with him about joining the network?
As far as I know, Kobe is still an active player. We believe Kobe is a big talent. He'd be great on-air in either a studio show or as an analyst.
Last year, Turner extended its deal with Conan O'Brien through 2018. His show is not a huge ratings hit. Is he still worth $12 million a year?
Well, I hope so since I renewed his deal! (Laughs.) While his ratings may not be as large as we would like, I still believe they're going to grow. I don't think we marketed Conan as well as we could as a company. Look at what he did in Cuba recently — those ratings were huge relative to what he has been delivering. So there's an opportunity to bring Conan back out into the community. Conan also has a huge social following and digital following. So it wasn't just about the television show; it was about all the other businesses that Conan will help us with. He's an identity for the brand, and I felt it was important for us to keep that identity.
Turner is putting more resources into scripted, but does the company have the stomach for the inevitable expensive failures?
Yeah, absolutely. I'm thrilled to have an executive of Kevin's caliber here. But even prior to that, it was a definite strategy of our company to focus on owning our own content because the metrics for success are changing. It's not just about ratings anymore; it's, what do we think we can do in international? What can we do in digital? If we don't own our own content, we can't play. One of the things Kevin has been educating me on is that you've got to find gaps in the marketplace. If you keep chasing the next zombie show, then you're chasing.
How involved are you in programming decisions?
Kevin's going to make the calls on the shows, just like Chris [Linn] will [at truTV] and Christina [Miller] will at Cartoon [Network]. But obviously I'm going to be involved in what the shows are, what the concept is.
In putting together your team, what feedback have you received from Hollywood about Turner brands?
A lot of them didn't know what Adult Swim was. I got comments like, "Well, you don't spend money for Adult Swim programming." So we launched an expensive show for Adult Swim, [Robert Smigel's] The Jack and Triumph Show. TNT was a good but safe place; TBS, great No. 1 network, but tons of acquired series.
Which is no way to build a network.
Not anymore. I want to ride Big Bang until no one's watching it anymore, but we now have to get into the original content business on TBS as well — and fast.
When a Madison Square Garden executive asked Levy why there weren’t pictures of the New York Knicks in the Turner suite, Levy countered that the team had not "won in a long time." So he sent Levy this framed photo of the 1969-70 championship team including Willis Reed, Dave DeBusschere, Bill Bradley, Walt Frazier and coach Red Holzman posing for a photographer.
Levy's Championship Deals: Billions for Top-Level Sports Rights
Turner's share of a nine-year, $24 billion deal through the 2024-25 season, which also includes ESPN-ABC, amounts to $1.2 billion annually — a threefold increase from the previous pact. The deal calls for Turner's management of digital assets including NBA.com.
In 2012, Levy inked an eight-year deal with Major League Baseball worth $325 million annually. The pact, which extends through the 2021 season, includes TV Everywhere rights to stream games and other programming online and via mobile.
In 2010, Levy and CBS Sports chairman Sean McManus orchestrated a $10.8 billion, 14-year deal for March Madness by which the companies share Final Four and championship games. Says Levy, "We always debate whether I called Sean or Sean called me."
Levy also extended Turner's rights to the PGA Championship tournament and the Grand Slam of Golf events through 2019 in a deal that has Turner's Cartoon Network Enterprises serving as the PGA's licensing agent in the expanding youth marketplace.