Cable boosts U.S. syndication biz.

When it comes to primetime, cable has provided the U.S. syndication market with a much-needed boost, both as a buyer of programming and as a supplier.

With a limited number of off-net hours available on the broadcast affiliate stations, cable offers producers of scripted programming a lucrative oasis. According to trade figures, Third Watch earns $700,000 in license fees per episode in re-runs on A&E, The West Wing enjoys a $1.2 million fee and Without a Trace commands a hefty $1.35 million per episode. In return, the cable channel gets a high profile program that attracts new and old viewers, and increased advertising revenues.

Significant deals in recent months include Universal paying $1.9 million per episode for syndication rights to Law & Order: Criminal Intent, which will be aired on Universal-owned USA Network and Bravo; and Spike TV agreeing to dole out $1.9 million per episode for CSI: NY.

While dramas are enjoying a resurgence, comedies--especially those in the middle of the Nielsen Ratings pack that stayed on the air for years but never enjoyed break-out hit status--are finding their back-ends much less valuable than in past years. But even shows that don't reap the highest fees still find cable an important revenue stream. Although Twentieth Television sold the CBS sitcom Yes, Dear to the TBS Superstation for a fee reported to be under $100,000 per episode, it negotiated the retention of a minute and a half of barter, which industry experts say is worth more than the cash license fee. And it's not just U.S. suppliers who have benefited from cable; Spanish-language channels such as Univision (which is now the fifth most watched network in the U.S.), have become important buyers of programming from Latin America. Many MSOs, such as Time Warner Cable, are offering Spanish-language tiers on their service.

Additionally, cable nets are providing new homes for other cable shows, and coming up with deals that don't require an exchange of money. Sony Pictures Television stripped the TBS series Ripley's Believe It or Not as a half hour. The stations paid no money up front but Sony retained three minutes of ad time, which were in turn sold to national advertisers.

In other cases, cable channels use syndication to help keep a hit show on the air. When Showtime found itself squeezed by the high cost of producing Stargate SG-1, the company asked MGM to allow for syndication of the show. Syndication gave the series a much broader audience, so when Showtime dropped it, the Sci-Fi channel picked it up, and Stargate remains its highest-rated series. Other cable channels are expected to follow the Stargate model because, as one executive put it, they want to "go after the pot of cash that's sitting out there in syndication."

Cable has also become a true player in syndication as a supplier of programming. With almost every cable channel devoting resources to developing their own original programming, some of the hottest syndicated properties were born on cable. HBO became the first cable channel to reach the $100 million syndication plateau when it sold Sex and the City to Tribune's 26 TV stations. Just last February, the cable company made headlines again by selling second-run broadcast rights to Mob series The Sopranos to A&E for a record $200 million ($2.5 million per episode). "We're finally seeing a major trend in first-run cable shows going into syndication," said Bill Carroll, director of programming for the Katz TV Group. "Until recently, cable wasn't producing series that lasted long enough to build up to 100 episodes." Garnett Losak, vp for Petry Media, added: "Cable networks are finally producing higher-quality programs, which have real value in the marketplace, post-first run."

The increase in cable programming has coincided with the broadcast networks' love affair with reality programming. Although that romance is starting to cool, broadcasters gave cable a window of opportunity to establish themselves as syndication powerhouses. Now shows such as The Shield, NIP/Tuck, Strong Medicine, Dead Zone and even South Park are waiting in the wings to be the next syndication crown jewels.

Another advantage to syndicating a series in cable is that viewership levels, while individually not as high as any broadcast network, are more consistent throughout the year. SNTA president Mitch Burg boasted, "Overall syndicated ratings remain consistent throughout the year and even in the summer, when most networks experience re-run ratings lags. Even networks that put on new programs this summer have not held consistent ratings patterns; but syndicated fare has."

The upshot to all this has been an overall rejuvenation of syndication, in general, and television, as a whole. According to PriceWaterhouseCoopers' Global Entertainment and Media Outlook: 2004-2008, the U.S. remains the fastest-growing television market in the world, enjoying a compound annual growth rate (CAGR) of 7.5 percent. Growth in Latin America comes in at 6.1 percent. Together, U.S. broadcast and cable TV networks brought in $47 billion of revenue in 2003, a 10.3 percent increase over 2002. License fees across the board increased 11.7 percent to $16.3 billion. As Sony Pictures TV president Steve Mosko observed, "The days of making a label which says, 'That's a cable show and that's a broadcast show' are gone. Starting now, you can throw out all the rulebooks."