The top tier of syndicated shows-stalwarts like "The Oprah Winfrey Show," "Wheel of Fortune," "Jeopardy!" "Everybody Loves Raymond," `Seinfeld" and "Dr. Phil"-sport the spots where advertisers want to park their messages. The lower-tier shows that struggle to eke out a household rating over a 2, programs on the bubble like "The Jane Pauley Show" or "Pat Croce: Moving In," are a tougher sell.
The battle for ad dollars that in the last 10 years have spread into more places, including broadcast, syndication and myriad cable networks, is indeed a dogfight, says John Nogaw-ski, president of Viacom's Paramount Domestic Television, distributor of perennial hit "Entertainment Tonight" and spinoff "The Insider."
"Now it's even more important for the advertiser to have the best show, and for the syndicators it's more important than ever to have those leading shows," he says. "You still want to be the No. 1 show, you still want to have the highest ratings. But it's even more important than ever because when the music stops, hopefully you will have a seat at the table rather than being the person scrambling."
The syndication business is far different today than it was 10 years ago. Many studios have consolidated over the last decade. Paramount acquired production company Big Ticket Television and distributor Worldvision in the late 1990s. Other mergers include the recent combination of NBC Enterprises and Universal Television Distribution to form NBC Universal Domestic Television Distribution. Sony Pictures Entertainment this year should take over MGM's syndicated TV and movie library as part of the larger acquisition of MGM by a consortium that includes Sony and Comcast.
Seven large studios now control most of the production and distribution of syndicated shows, and independent producers have been squeezed out. What's more, the remaining players haven't upped the number of offerings, leaving station groups scrambling to fill the same number of syndicated hours on their air.
Despite these changes, the ad dollars flowing into syndication remain strong. National syndication spending for 2004 should be about $3.8 billion, an increase of 17% over the previous year, says Mitch Burg, president of the Syndicated Network Television Association.
A lot of that growth is driven by the upper-tier shows. When blockbuster sitcoms like "Sein-feld" (Sony), "Friends" (Time Warner's Warner Bros. Domestic Television Distribution) and "Everybody Loves Raymond" (Viacom's King World Productions) entered the syndication world over the last several years, their ratings were so high that spots began getting priced closer to broadcast, says Ray Dundas, senior VP-group account director, national broadcast, at Interpublic's Initiative, New York.
"Ten years ago, advertisers looked at syndication as a cost alternative. Now it's a premium," he says. "The only place to find `Oprah,' `Friends,' `Raymond,' `Seinfeld' is syndication."
While the off-network sitcoms do fare well, advertisers also want more variety, Mr. Dundas says. "We know `My Wife & Kids' will be in syndication next year, but we are looking for the next `Dr. Phil,' `Judge Judy' or `Jeopardy!' "
The benefit of such blockbuster hits is they do serve as broadcast replacements, says Donna Speciale, president-U.S. broadcast of Publicis Groupe's MediaVest, New York.
"We consider them along the same level as prime-time shows," she says. "I think more people are trying to purchase that inventory vs. less of the lower-rated stuff, so dollars are shifting within the daypart toward the top-rated shows."
That also means syndication isn't quite the low-cost alternative that it was a decade ago. In particular, package-goods advertisers whose businesses are based on low margins have gravitated toward cable with its better efficiency, Mr. Dundas says.
That's OK, Mr. Burg says, because syndicated fare is drawing dollars from advertisers with big-ticket items to peddle. Growing categories include mobile phones, which saw a $26 million increase in syndication ad dollars last year, and consumer electronics goods with a $40 million rise, according to SNTA. "Our viewers are buying big screen TVs," Mr. Burg says. "They are buying cars. They are interested in fashion."
The tougher economics are manifesting in the daytime slots and in the type of shows that get launched. In some cases, station groups aren't paying license fees as high as years past, especially between 9 a.m. to 2 p.m. The high-revenue slots like access and early fringe are dominated by the syndicated stars, Mr. Nogawski says. The lower license fees in daytime mean only a studio with deep pockets can weather the storm until a show pays off, he says.
"When `Judge Judy' was launched, it was launched by Big Ticket and Worldvision, and they went in and took a big hit [financially]," he says. The show, in its ninth season and part of Paramount's stable, is now a money maker. Today, launching a new genre is much dicier.
To lessen the risk, Paramount is making a practice of incubating new shows on existing shows, like it did with "The Insider" as a segment on "Entertainment Tonight."
Mr. Nogawski says the launch of "The Insider" is a prototype for how Paramount will develop syndicated properties in the future. "Before it premiered, we were able to test it on `Entertainment Tonight,' culture it, groom it and then launch," he says.
As TV audiences fragment and ratings in general trend down, shows with lower ratings can stick around longer, though. In some cases, a show that regularly captures a 2 rating from Nielsen Media Research is on the path to success, says Barry Wallach, president of NBC Universal Domestic Television Distribution. Even NBC Universal's "Starting Over," which generates a low 1 in households, has life in it, he says, because it does well with younger women.
Syndication still seems to exist somewhere between red hot and ice cold, says Harry Keeshan, exec VP-national broadcast buying at Omnicom Group's PHD, New York. "Some clients will love it and take advantage of it and have utilized it for years, and others will look at broadcast networks and then go into cable because it's a good efficiency jump for them."
Wheel of Fortune
RUN: Debuted in syndication, via King World, in 1983.
REACH: The game show airs on 207 TV stations.
RIGHT STUFF: Pat Sajak began selling vowels in '81, when "Wheel" was on daytime network TV.
The Oprah Winfrey Show
RUN: Premiered as syndicated show in 1986.
REACH: King World distributes it to 212 stations.
RIGHT STUFF: Winfrey reups through 2008; success of "Dr. Phil" may prompt more spinoffs.
Everybody Loves Raymond
RUN: Debuted as off-network sitcom in 2001.
REACH: King World has the reruns on 188 stations.
RIGHT STUFF: Nine-year CBS run ends May 16; then syndie will be Barone family's sole broadcast home.
RUN: The comedy began in syndication in 1995.
REACH: Sony has show in 199 markets.
RIGHT STUFF: No. 6-rated syndie show, even after 4 million copies of "Seinfeld" DVD have been sold.