Heritage Networks wins showdown: Frank Mercado-Valdes plans to build a bigger brand after landing the rights to 'Showtime at the Apollo'.

With financial backing industry-leading clout from one of the top producers of syndicated TV, The Heritage Networks has won the battle for Showtime at the Apollo.

The Heritage Networks (No. 61 on the BE INDUSTRIAL/ SERVICE 100 list with $61.5 million in revenues) teamed up with Warner Bros. Domestic Television to bid $1.6 million a year for five years--a guaranteed $8 million over that period--to win syndication rights for Showtime at the Apollo, beginning with the 2003-2004 season (see "Showdown at, the Apollo," January 2003). Led by Frank Mercado-Valdes, The Heritage Networks will be managing partner of the venture.

Having again wrested the show from Percy Sutton's Inner City Broadcasting Corp. (No. 55 on the BE INDUSTRIAL/SERVICE 100 list, with $65 million in revenues), Mercado-Valdes has set his sights on the future. That future could include millions in advertising revenue and an extension of the Apollo brand that could eventually birth everything from CDs and Internet merchandising to TV programs linked to the popular Showtime at the Apollo variety show.

The battle over the show and costly legal fees apparently forced Inner City, the show's producer of 15 years, to walk away. Among the legal action was a trademark lawsuit filed by the Apollo Theater Foundation against Inner City and its Los Angeles-based distributor, Western International Syndication. In the spring, the foundation claimed that Inner City copied its program when it launched Showtime In Harlem, a spin-off now simply called Showtime that is remarkably similar in format to Showtime at the Apollo. Amid the controversy and low ratings despite airing on FOX, UPN, and 161 stations nationally--Showtime will end after the fall 2003 season.

The show represents a key plank in Mercado Valdes' goal of building a powerful syndicated network, which includes original properties such as Livin' Large and Weekend Vibe, as well as the rights to broadcast reruns of The Parkers and Moesha.

Although he could not be reached for comment, Sutton said in a prepared statement, "No report on our withdrawal from production of our television show, or our reason for our departure from our relationship with our distributor, Western International Syndication, could be complete without stating how very difficult it has been for us in our relationship with Western and their lawyers, and the Apollo Theater Foundation lawyers. ... The Apollo Theater Foundation lawsuit continues. ... The legal action was both painful and economically injurious to the Suttons and Inner City." Efforts to get a comment from Chuck Sutton, Percy Sutton's nephew and Inner City's president, also were unsuccessful.

This fall, Western plans to launch It's Showtime at the Apollo--Seasons 1-15, a collection of episodes from the show's first 15 years that Western apparently still owns. Chris Lancey, president and CEO of Western International Syndication, could not be reached for comment.

Mercado-Valdes expects his show to generate $12 million to $13 million in advertising sales this year, up from $9.5 million in 2002. He also says the company will reap additional advertising dollars since it will no longer face competition from Sutton's Showtime. Last year the show lost between $1.2 million and $2 million, says Mercado-Valdes, as a result of higher production costs. He anticipates the Apollo Theater Foundation, Heritage, and Warner Bros. will make between $5 million and $8 million a year in profits and distribution fees.