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How Tribune's Bankruptcy Filing Will Ripple Through the TV Business
The media company's TV creditors, from Warner Bros to Fox, are only part of the pain that insolvency will bring.
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If the Tribune Company’s $12.9 billion bankruptcy filing in December signaled the death knell for newspapers such as the Los Angeles Times, the Chicago Tribune and the Baltimore Sun, the ripple effect on television has yet to be fully felt.
The bankruptcy includes Tribune’s 23 local television stations, many of them in the country’s top markets and prime licensers of such shows as “Two and a Half Men,” “Family Guy” and “Friends.”
Those shows, and the production companies that make them, are among the creditors that will be taking pennies on the dollars owed them from licensing deals -- a harsh blow in an already strained economic environment.
* Disney-ABC Domestic Television is taking a massive $60 million write-down on its deals with Tribune stations, the studio confirmed.
* News Corp, owed $8 million, is allocating $10 million to cover potential losses from the Tribune bankruptcy. During a quarterly earnings conference call last month, CEO Peter Chernin said Tribune has been making its payments on time.
* And Warner Bros. -- Tribune’s largest studio creditor – is owed $23.7 million, according to the bankruptcy filing.
But that’s just the first layer of pain likely to be felt in the television business.
For example, the future of WGN, the Tribune’s flagship station in Chicago, remains very much in doubt, according to knowledgeable television executives. Founded in Tribune Tower itself, WGN is well known for its local programming and relationship with the Tribune-owned Chicago Cubs.
Tribune sold the Cubs for $900 million in January.
Gary Weitman, a spokesman for Tribune, told TheWrap, “Our stations are all doing business as usual, and our broadcasting operations are not affected by the filing.”
But the television industry is rife with rumors that Tribune may turn WGN into a national cable station. Tribune’s WGN America network already reaches 70 million American households.
A number of cracks in Tribune’s empire are already showing. The company’s deal to syndicate CBS’s new daytime talk show featuring preacher T.D. Jakes has been put on hold until 2010.
And the bankruptcy leaves one of the two largest buyers of syndication programming in financial distress. Tribune and Fox are the two largest buyers of syndicated programming.
Fox recently outbid Tribune for the rights to syndicate “How I Met Your Mother,” a show that is expected to net $350 million in its first four years of syndication. The deal was particularly significant since that show was one of the few half-hour comedies available for syndication.
NBC-Universal’s “30 Rock” and CBS’s “The Big Bang Theory,” produced by Warner Bros., are the next shows up for syndication.
Lisa Howfield, general manager of KVBC-TV NBC in Las Vegas, said Tribune’s bankruptcy has not affected her station, which is not owned by Tribune.
However, she predicted that Tribune’s decline will change the way local stations and their owners license syndication rights from studios. Typically, the studios agree to license the rights to a show for one to five years for a fixed rate. Howfield, for one, prefers to set contracts for her station on a year-to-year basis.
“When the contracts begin to expire, we’ll have to negotiate more carefully,” Howfield said.
Comments
Shiny Says
The lack of syndicated shows has been coming down the pipeline for years. The networks have focused too much on disposable reality tv that amounts to used toilet paper. The viewership for reality TV plummets once the "winner" is revealed at season's end, yet dramas and sitcoms stay fresh for years afterwards. The real money is in syndication; so why is it that the nets have been so quick to cancel critically acclaimed scripted shows in favor of cheap reality TV? Don't they only just hurt themselves later down the road when they lose out on synidcation revenue?
Anonymous Says
I think I saw this movie before.
Titanic.
NHB Says
Yo Jimmy! There aren't enough PI lawyers in America to make up for Chrysler's ad budget let alone GM (the number one advertiser on most local TV stations). Then there's Ford, Toyota, Honda...ad nauseum! The whole concept of broadcasting non-live entertainment is devolving before our eyes. Broadband and bit torrents are putting the power of a time shifting DVR in everyone's hands simultaneously. Just ask the producers of "Heroes". Their audience is arguably bigger off the air than first run on NBC. YouTube creates more original content in a week than broadcast TV creates in a year. But most importantly (and you saw this with Murdoch buying the Wall Street Journal over investing in MyTV) Broadcast networks can't compete in the long run with the duel revenue stream of cable networks. As for your cell phone video it will be delivered over the internet not from broadcast TV.
Jimmy Says
I could not agree less. The economy is tanking, and a lot of people are cutting back on things that are not necessary, such as cable tv. Viewers are already unhooking their landlines, and that started when the economy was good. Cell phones however, they are keeping. (Ever hear anyone brag about how the price of cable is going down?) The digital switch is coming at a GREAT time because now people will not only have better FREE over the air television with a better picture, and better sound, but television stations are already offering more digital channels in their already FREE lineup. More channels means more advertising to sell! Car dealers certainly are advertising much less, but personal injury attorneys are advertising more. THEY are spending what car dealers used to spend and more. (Even some of the smaller local firms are spending $1 million dollars a year or more.) PLUS, television stations have the additional platforms of mobile phone content, not to mention online content. But TV execs need to figure out how make the most of the ad space on cell phones. Viewers want it now, and they want it in the palm of their hand. More platforms for ads and content are going to mean more people will be needed to keep things running and the money coming in. Instead of cutting back on staff, the smart stations should be HIRING more people now when they can lock them into cheap, long term contracts, because in the station of the future there is going to be A LOT of money to be made and a hell of a lot to do.
NHBill Says
Broadcast TV is in serious trouble, almost as bad as newspapers and magazines. The digital switch couldn't be coming at a worse time. Some stations such as CW and MyTV with low-to-no local news or sports will go dark. NBC moved late night into Prime with a corresponding drop in ad rates. There is no new "Friends" or "Seinfeld" in the syndie pipeline. Local spot rates are soft with PSA's running back-to-back in some pods. TV's life support system, the car business, is in the toilet. Throw in broadband video viewing and there is a very bleak future for the guys with the antennas. In five years you'll be saying, "Remember TV? It was so 20th Century."