The purse: Advertiser deals that for at least one red-hot property, "The Apprentice," reputedly approach a single-episode-placement fee as high as $5 million.
The furor over who owns the right to sell brands into network TV shows has reached fever pitch in recent weeks. It doesn't only affect the networks and the production community, but also the cottage industry of executives that barter deals to embed marketers in the content of TV shows.
The rise of reality TV has led to changing economics as marketers that traditionally worked with the TV networks for placement-or got placement as a bonus for their media buy-increasingly go straight to content creators such as Mark Burnett, or to media agencies who integrate their brands into the content. The networks, meanwhile, are scrambling to maintain control, setting up a bitter battle.
"Are they [the networks] going to suggest where advertisers spend their print money, too?" said Mitch Kanner, an entertainment consultant. "The networks don't own clients' integration money."
"If the networks want to control these deals, then they need to own the programming," said Lori Sale, exec VP-worldwide promotion at Miramax, which produces the brand-integrated series "Project Runway" for Bravo. "They need to pay for 100% of production costs. If they own the house, they can say who lives in it."
Network executives want to funnel marketer deals for shows funded by outside producers through their ad sales departments to extend the marketer's overall media buy. Marianne Gambelli, NBC Universal exec VP-sales and marketing, said at Ad Age's recent Madison & Vine conference that NBC has been trying to "rein in" producers who cut their own deals.
Scripted shows can often make up deficits for producers through international sales and syndication, but there's no such upside for most reality series because the shows generally do not repeat well, don't have syndication value and don't export to other markets. Reality-show producers argue they need to pocket some or all of the advertiser revenue to make up the deficit.
"Networks' ad-sales mentality is very different from ours," said Dave Broome, one of the executive producers of "The Biggest Loser" on NBC. "They want to sell ads, and I understand that. But you can't cram an integration into a show just because someone sold an ad."
NBC, for one, recently dedicated several executives to the area of brand integration, working on smoothing out the relationships of all involved parties.
"You can't just slide a paid product integration into a show without the network's knowledge any more than you can just slide in a particular storyline, casting choice or off-color joke," said Steven Melnick, 20th Century Fox TV's senior VP-marketing. "Ultimately the networks are responsible for the content on their airwaves, so as a producer you have to respect that."
Anatomy of A Deal
Producer/owner: Contender Partners
Cost of production: upwards of $1 million per episode
License fee from NBC: upwards of $2 million per episode
Integration fees from marketers such as Toyota, and Home Depot: low six-figures
Other revenue sources: Everlast stock warrants worth about 5% of the company; rights to sell six spots per episode; future rights to the fighters; ticket sales for boxing finale