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COMPANY TOWN : Studio's new take on cost cutting : Fox Television's low-risk approach to producing programs could become the new model for network TV.

November 14, 2009|Joe Flint

The first thing Emiliano Calemzuk did when he was tapped to become president of News Corp.'s Fox Television Studios was to move it out of its posh locale on the Fox lot in Century City -- and into offices neighboring an old gas station on Santa Monica Boulevard.

"I wanted to get out of the 'lot mentality,' " explained Calemzuk, referring to the assistant-and-fresh-cut-flowers style of business that is pervasive among major Hollywood studios. "We're here to do things differently."

By differently, Calemzuk means cheaply. A pet project of former News Corp. President Peter Chernin, Fox Television Studios was formed to develop new approaches to making and financing network-level shows for cable TV. With audiences becoming fragmented, production costs rising, the Internet siphoning off TV viewers and an uncertain economy, finding low-risk ways to create compelling programs has become a priority for Hollywood.

Now Fox Television Studios, producer of hit dramas "Burn Notice" and "White Collar" for USA Network, is evolving into what could become the new model for network TV production that other studios are closely watching.

When it comes to making scripted dramas, Fox Television Studios has hit the reset button: Actors and writers are paid less, 11-day production schedules have been crammed into seven days, and costly digital effects are often replaced by old-fashioned stunts.

If the traditional TV studios, with their large overhead, superstar writer deals and spare-no-expense approach to production are big elephants, "we're the junkyard dogs," said David Madden, executive vice president at Fox Television Studios and who oversees programming.

"They're aggressive, resourceful and scrappy," said Dana Walden, chairman of 20th Century Fox Television, which oversees Fox Television Studios. "They have a level of hunger that is rightfully being rewarded."

Now Fox Television Studios, after years of plying in the back channels of cable, wants to expand into the bigger waters of the broadcast networks using its bargain-basement methods.

To do that, Calemzuk is testing a new financial model for making shows at a time when the major networks are looking to reduce their programming costs. Under the current, decades-old system, a producer spends millions of dollars making a pilot episode, then risks losing it all if a network doesn't buy the show, a process that has become unbearably costly for the studios.

Fox Television Studio's strategy, on the other hand, is to co-produce shows with international partners willing to commit to a series right from the start -- bypassing the expensive and uncertain pilot process -- and sell the completed shows to a U.S. network. A similar model has been used to finance production of independent films before they find a distributor.

Last summer, for example, Fox Television Studios was able to sell 13 episodes each of the dramas "Mental" and "Defying Gravity" to Fox and ABC, respectively, with backing from several international partners.

The advantage to a network is that the fee they would pay for a show is dramatically lower than the $1.5 million to $2 million per episode that has become the industry benchmark.

"Everybody is clamoring for change, we had to act," said the Argentine-born Calemzuk, who cut his teeth in the television business by programming cable and satellite networks in Latin America. "This idea was born out of necessity."

Calemzuk said this approach came out of the frustration he felt when he ran networks in Europe and Latin America for News Corp.

"I would come to the L.A. screenings [where the Hollywood studios sell their shows to foreign networks] to buy a show and then it's canceled four weeks later, and I end up with a dead asset in my hands," Calemzuk said.

So far, Calemzuk's track record is mixed. Neither "Mental" nor "Defying Gravity" survived past their initial summer run, and no amount of creative financing can transform a show on the bubble into a hit. From a financial standpoint, however, it wasn't a disaster since both shows were fully protected.

"At worst you come out break-even as opposed to losing $10 million," he said.

Also, although 13 episodes is not nearly enough for reruns or DVD sales in the U.S., it is nonetheless a sufficient number for reruns in overseas markets. Another Fox Television Studios show, "Persons Unknown," is waiting to go on NBC and is expected to premiere next year.

Chernin, who picked Calemzuk to run Fox Television Studios two years ago after being impressed with his ability to make "high-quality productions for Sky Italia for much cheaper prices," said, "There is such economic pressures on the broadcast business, I think this model is going to be very potent."

Calemzuk has learned a few lessons from his early experiences with "Mental" and "Defying Gravity." If the networks are not involved in a show from the beginning, the program can fall through the cracks when it comes to marketing and promotion.

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