The cancellation and revival of Family Guy is an illustrative case study on the changing economics of television. Premiering after the 1999 Super Bowl, the animated series was first threatened with cancellation in 2001. While given a short reprieve and picked up in 2002, the program was eventually cancelled a year later after three seasons. The episodes produced were sold into syndication to Time Warner-owned Cartoon Network, where they proved a considerable draw for 18-34-year old men, who also purchased the series on DVD. The success of both these ventures resulted in 20th Century Fox Television reviving the show, signing a deal with creator Seth MacFarlane reportedly worth $100 million.
In this excerpt from our interview with Gary Newman, Chairman of 20th Century Fox Television, we discuss the role DVD distribution and syndication deals played in Fox’s decision to bring back the animated sitcom.
Friday, April 30, 2010
NEWMAN: First, it was a network decision to cancel the show. The studio loved it and we would have continued production. After it was cancelled, a few things happened. Steve MacDonald, who works in our syndication division, loved the show and was frustrated he couldn’t take the 50 episodes that existed and sell them to a cable network. Typically 50 is too few episodes for a cable network to syndicate because they want to be able to strip it 5 days a week, and 50 episodes is just 10 weeks of programming. But Steve convinced Cartoon Network to “buy” it and he convinced me to let them have it for free for the first two months. After that, Cartoon had an option to continue for another period of time for a very low price, which I believe was $25,000 per episode. So this was a very small deal, but Steve hoped to ignite interest in the show so that when the contract with Cartoon Network was up he would be able to raise the prices.
The deal with Cartoon Network happened at about the same time we began releasing the show on DVD and our sales were through the roof. A part of the reason we were willing to sell the show so cheaply to Cartoon Network was that we had a DVD release coming up and we wanted to create awareness on Cartoon Network. We figured our consumers were watching that network, or at least the children of our consumers were, and they would convince their parents to buy it. So we thought of the sale to Cartoon Network as a synergistic marketing campaign for our DVD.
At about the same time I took my older son, Jordan, back to Yale on a college trip. I spoke at Pierson College, and took questions from students after my presentation. Twenty hands shot up and almost every question was about Family Guy. “Would it come back? Why was it not the air? Do I know Seth?” It was just that confluence of events, coupled with our great relationship with Seth MacFarlane, who was still in business with the studio. Seth never let go of the dream of bringing back Family Guy. He used to call me or come in and see me every few weeks to convince me to bring Family Guy back to television.
Eventually we just decided that we should do something. So I went back to talk to the network but they just flat out passed. They had no interest in bringing it back. So I went to my boss, who oversaw both the network and the studio, and I would bug him every couple of weeks about it. Eventually, I said, “what if we can figure out how to do this without a network and still pay for it?” He said fine never imagining we could do that. We got our DVD division to give us estimates on the value of new episodes, we got Steve McDonald to go to Cartoon Network to see how much they would pay for new episodes, and we made deals to bring the show back. Because we knew our network could easily change its mind, and because it would be helpful to us to have the network relaunch the series to create awareness, we negotiated a Cartoon Network deal with a potential window for the Fox network, in the event they changed their minds. Of course, once we got into production, they did change their minds. We had gone into production on 48 episodes, which is what Cartoon Network was prepared to buy. The Fox network only agreed to buy the first thirteen. Later, they agreed to take all of the episodes. And it turned into one of the studios most enduring and valuable series.
How valuable is it compared to something like The Simpsons?
That is hard to estimate, because both shows went into syndication at very different times, a factor that has worked to the benefit of Family Guy. When The Simpsons began it was the first animated show in two or three decades to work. State of the art at that time was that a program owner sold the full run of the series, no matter how many seasons were produced. That means episodes are still sold pursuant to deals done when it went into syndication in the early 1990s. Family Guy on the other hand has been through a number of syndication cycles, each with their own, increasing rates.
Clearly, then, DVD offered the prospect of an alternative financing model. With the DVD market dropping, what models are you are looking at today that make it possible to leave the conventional path when bringing something to air you believe in?
It’s really show-by-show. I think shows like Prison Break or Glee, really don’t make financial sense without the DVD market. While the DVD market as an overall sector is declining, it isn’t declining in the case of certain shows such as Glee, Sons of Anarchy, and Prison Break. These shows all have great sales even by comparison with shows from four or five years ago.
Over the last seven to eight years we have recognized that we are in an even more hit driven business. It isn’t about market share, it isn’t about volume, it’s about very brand-specific properties. Shows that are serialized, or are genre or animation, and that appeal to a young and male skewing audience still perform great on DVD. We are not going to be able to sell serialized programming in syndication to broadcast stations or cable networks so you must rely on home entertainment
There is a level of complexity to our business that simply didn’t exist when I started. I know it sounds simplistic, but twenty years ago all we cared about was the network and its needs. Almost everything went from network to syndication and worked. As that changed, we began to look at each show separately to determine whether in ratings success if there was a path to financial success?
So far, there have only been two paths to success -- either DVD sales or syndication. I think Glee is maybe our first show that has found a third avenue to success, which is music. Our music sales on the show are really kind of mind blowing. We took Glee on a ten day concert tour last summer. It was not a big financial windfall by any stretch, but it was remarkably popular and with our growing ratings in season two we plan to do a big arena tour this summer which we think could be financially very successful. And I think there are also other businesses that could spin-off, whether it’s a Broadway version or a feature film version of Glee. It’s the kind of property that can travel from platform-to-platform.
What we learned from Family Guy is that in terms of audience value, the intensity of the fandom is more important than its breadth. You can take a relatively conventional TV show, maybe a procedural drama, and if you have enough breadth you are going to be successful. You are going to syndicate it to one of the older skewing cable networks, as is the case with NCIS on USA. That will be quite successful. But if you are not in that fairly narrow window, you better have an audience with an intense passion for your show. One way we try to monitor this is online.