Saturday, July 12, 2008

Law & Order: The Reality Version

Today’s weekend Wall Street Journal has a very interesting article on Law & Order's Dick Wolf’ and his battle with NBC over the profits for the shows. Could it affect the future of the franchise?

The article and a link are below. It’s long, but worth the read. It gives an excellent peek behind the scenes of those who control the show on both sides – Dick Wolf, and NBC Universal. It would make a great “ripped from the headlines” story, although I suspect Dick Wolf would have his own special spin on it. You know, something like Jack McCoy (Sam Waterston) taking on a big network for a murder that happened on a show, or Stabler (Chris Meloni) and Benson (Mariska Hargitay) going after a pervert network executive, or Goren (Vincent D’Onofrio) and Eames (Kathryn Erbe) going after an embezzling, murderous network executive? I think those would all suit Dick Wolf just fine.

Law and Disorder

Producer Dick Wolf and NBC Are Battling Over the Profits
Of One of the Richest TV Shows Ever. These Are Their Stories

July 12, 2008; Page A1

NBC Universal and Hollywood producer Dick Wolf have built "Law and Order" into one of the most lucrative properties in the history of television, generating billions of dollars from the franchise's three procedural crime dramas. The 19-year-old marriage was never an idyllic one, but as long as both sides were getting rich, it remained intact.

Now, it's on the rocks.

This spring, Mr. Wolf faced off against his corporate bosses in two major legal battles over the series's revenue, prestige and legacy -- a high-stakes saga that played out largely behind closed doors. If it were a TV show, it would be called "Law and Order: Law and Order."

According to Mr. Wolf's friends and employees, the producer believes he has been systematically cheated by NBC. He thinks the company has sold the show at a cheap in-house price to its own cable outlets rather than getting the best deal possible by letting other networks bid on it. NBC denies this, and in a private hearing this spring, an arbitrator sided with the network.

Compounding the offense, Mr. Wolf's circle believes, NBC has both under-promoted and over-played his shows in reruns, risking viewer fatigue in favor of short-term ratings gains. To help prove his complaints, one of Mr. Wolf's assistants has been tasked with counting the number of seconds NBC devotes to promoting "Law and Order" -- and the number of seconds CBS devotes to promoting its "CSI" franchise. His findings: In a typical week "CSI" gets about 200 seconds worth of promos, double what "Law and Order" gets.

NBC believes Mr. Wolf is being greedy. Provided his shows survive a few more seasons, he will make around $750 million for his work on five shows in the "Law and Order" franchise. His contract gives him more power than perhaps any other producer in the industry. It includes a provision that Mr. Wolf believes entitles him to a multi-million dollar "kill-fee" if the network cancels any of his shows. NBC disagrees. NBC also says its rerun strategy is good for business because it is one more way to promote the franchise.

The main cause of the friction is the simple reality that "Law and Order," which is three years away from beating the record of "Gunsmoke" as the longest-running drama on television, has lost audience. Ratings have declined so much in the past few years -- as production costs have risen -- that NBC last year came close to canceling the original series.

This year, negotiations to renew "Law and Order: Criminal Intent," which airs on the NBC Universal-owned USA cable network, were held up for weeks, with Mr. Wolf refusing to take a pay cut. Neither side will elaborate on the terms of the final deal except to say that it involved significant cost cuts.

"One of Dick's virtues is that he can be strongly opinionated. He is a rhinoceros, and he attacks with his horn ready for combat," says Tom Fontana, the executive producer of a number of hit television shows, including NBC's "Homicide: Life on the Street," and a close friend of Mr. Wolf. "What makes it difficult to work for NBC is that they're like a pack of wolves, always nipping at the rhinoceros's heels."

The backdrop of this drama is the evolution of the television business in the past two decades into an industry controlled by half a dozen corporate monoliths.

Mr. Wolf, who still shares in the profits of his shows, became a producer in an era when regulatory rules prevented major networks from owning the shows they aired in prime time. Those rules were formally repealed in 1996, paving the way for media consolidation and sidelining the role of independent and for-hire producers like Mr. Wolf.

Since the 2004 merger of NBC and Universal, for example, the company owns both the studio that makes "Law and Order" as well as the various TV networks that broadcast the shows.

This article is based on court documents and interviews with people on both sides of the standoff.

'Triumph of the Familiar'

Twenty years ago, neither side expected it would get so nasty.

Mr. Wolf, 61 years old, created "Law and Order" in the late 1980s when he was working as the head writer on "Miami Vice." He wanted to do his own cop show. Working with the then-president of Universal Television, Kerry McCluggage, Mr. Wolf came up with the concept of a show that would split in two: The first half would focus on police officers making an arrest; the second on a team of prosecutors taking the suspect to trial.

The pair took the project to the upstart Fox broadcast network, but Chief Executive Barry Diller rejected it. Mr. McCluggage says Mr. Diller didn't like the show's "locked perspective" -- its cops and D.A.s solved one distinct crime each episode, then moved onto the next one, with no character development along the way. Mr. Diller says the real reason he didn't think the show would work for Fox was because "it never particularly appealed to what you would call a young demographic," which Fox was targeting.

Mr. Wolf and the Universal executives had better luck at NBC, which premiered "Law and Order" in the fall of 1990. Before it aired, Mr. Wolf made one change. Compared to everything else on television, "Law and Order" moved at a lightning pace, with no scene lasting more than two pages. This was giving test viewers whiplash. Mr. Wolf added a "chung chung" chime and inserted a location card between scenes to let viewers take a breath.

Otherwise, the show has remained almost exactly as Mr. Wolf envisioned. A former advertising copywriter, he sees "Law and Order" as a brand. He tells his writers that the series should be like Campbell's Soup: many different flavors, all of which are of consistent quality and predictable taste. "Episodic television is the triumph of the familiar," he is known to say. One way Mr. Wolf maintains this consistency is by making most of the victims wealthy white people, which he believes viewers are more interested in watching. He limits the number of shows containing minority victims, including blacks and Muslims, to four or five episodes a season out of 22 to 24.

"Law and Order" built a healthy but unspectacular audience of around 15 million viewers in its first four years on television. It didn't have the "cachet of a Bochco series" -- producer Steven Bochco had "L.A. Law" and "Hill Street Blues" -- "or the sexy heat of Miami Vice," says Warren Littlefield, an independent producer who was president of NBC Entertainment in the 1990s.

But the fortunes of "Law and Order" began to change after Universal sold reruns of the first few seasons to cable channel A&E in 1994. A&E ran episodes several times a week, exposing "Law and Order" to a wider audience. And because of the show's self-contained storylines, viewers could tune in at any time without needing to know what happened on the previous episode.

Ratings on NBC climbed to around 16 million in the fifth season. The show also began to receive more positive critical attention, winning both a Peabody and the Emmy for best dramatic series in 1997.

The acclaim paid dividends in 1999, when Universal cut its second rerun deal, this time for a higher price with Turner Broadcasting's Turner Network Television. A&E had been paying $150,000 an episode for the first few seasons; in contrast, reruns of "ER" commanded around $1.2 million an episode around that time. Turner agreed to a deal that would start in 2001, paying $200,000 each for the same 181 episodes licensed to A&E, and $700,000 an episode for the newer seasons -- a total of $150 million.

On top of the syndication deal, Universal sold a second series in the franchise, "Law and Order: Special Victims Unit," to NBC.

Rerun Mania

Pretty soon, "Law and Order" reruns seemed to be everywhere.

In the late 1990s, Mr. Diller, the former Fox executive who had once rejected the show, took over Universal's TV business, which included its production studio and an array of cable channels. Because Universal owned both the show and the USA network, Mr. Diller was able to arrange a deal to run episodes of "Law and Order: SVU" on USA just days after they first aired on NBC -- an unprecedented rerun arrangement.

As a result, in 2001, when the Turner deal kicked in, episodes of the two "Law and Order" series could be found at different times airing variously on NBC, TNT, A&E and USA.

More was to come. Desperate to retain its audience after losing hits such as "Seinfeld" and "Friends," NBC began plugging the holes in its schedule with repeats of "Law and Order." By 2003, more than two dozen episodes of "Law and Order" were being broadcast on TV every week.

Mr. Wolf grew frustrated, believing that the networks were using his show to bring in viewers while doing little to encourage people to watch the new episodes airing on NBC. He complained frequently to then-NBC Entertainment president Jeff Zucker. Tensions grew.

"All networks are alike in the fact that once they have a successful show, they want to keep it and repeat it over and over and make it at the lowest possible cost to them," says Mr. Diller, now chief executive of IAC/InterActive Corp. The relationship between a network and a producer is never "without tension."

End of an Era

In 2003, Mr. Zucker helped orchestrate NBC's acquisition of Universal from Vivendi SA. The merger was the last of a series of television mergers that had been sparked by the 1996 repeal of longstanding federal rules blocking TV networks owning shows they aired in prime time.

For NBC, bringing Universal under its wing was a way to get Mr. Wolf and "Law and Order" under its control. The show was Universal's biggest franchise, and the studio had recently been trying to squeeze more money for it out of NBC.

After acquiring Universal, NBC renewed all the "Law and Order" shows. It also syndicated the third show in the franchise, "Law and Order: Criminal Intent," to two of its cable channels, Bravo and USA, for around $2 million an episode. Mr. Wolf felt that the deal allowed Bravo and USA to run the repeats too frequently throughout the week. The show became so overexposed that viewers grew weary of it, some in Mr. Wolf's camp say.

"Literally all the bad things that the studios were saying the networks would do if they had the financial interest and syndication rules taken away, everybody kind of doubted. It sounded like hyberbole," says Mr. McCluggage, Mr. Wolf's ally in launching "Law and Order." "In reality, all those things have happened." Mr. McCluggage left Universal in 1991 but is still in close touch with Mr. Wolf.

In January 2005, Mr. Wolf began arbitration proceedings against NBC, claiming these syndication deals favored Bravo and USA over him. He said the networks were paying a lot less than they would pay for shows not owned by NBC. Though he received part of the profits related to the deal, Mr. Wolf claimed it was too little.

The arbitration at times became heated. NBC Universal included Mr. Wolf's ex-wife on a witness list, although she was never called to testify. The case was argued in secret over three weeks in February, and Mr. Wolf lost.

Prickly Stalemate

The producer and his staff have since settled into a prickly stalemate with the network.

NBC has balked at the rising costs of producing the programs, particularly the salaries for the top stars. Between 2002 and 2007, ratings for the original series dropped precipitously. They ticked up last season, when the show moved back to Wednesday nights after a temporary run on Fridays.

Cost-cutting steps taken by NBC have irritated some "Law and Order" staff. Among other restrictions, Starbucks coffee is no longer offered free, according to some of the show's writers.

Like other heavyweight producers, Mr. Wolf was once treated like royalty by network bosses who bent over backwards to keep him happy. Now, aside from his financial gripes, Mr. Wolf complains to colleagues about slights by the network. In 2003, for example, he asked NBC's Mr. Zucker to not schedule "Law and Order" on the same night as ABC was airing his new show, an updated version of "Dragnet." The network refused. NBC says it makes scheduling decisions based on what is most advantageous for the network.

Then last fall, Mr. Wolf went in for a meeting with Ben Silverman, the new co-chairman of NBC entertainment and NBC Universal Television Studio, but was miffed when only Mr. Silverman's deputy showed up. NBC says Mr. Silverman doesn't always go to such meetings.

Mr. Silverman's first major programming initiative, which he announced April 2, was to put shows on the air that conformed to a theme of "escapism" and featured characters "trying to make the world a better place."

Since then, Mr. Wolf's production company, Wolf Films Inc., has received a note from the network informing him the shows are too "gritty," according to two people who work at the production company. NBC says the note referred to the picture quality of one episode, not the content.

Mr. Wolf earns around $300,000 in producer fees per episode of "Law and Order" and around $250,000 per episode for each of the two spinoffs. With three shows on the air for at least 22 episodes per season, that means he earns about $18 million in producer fees alone each year on top of an undisclosed cut of syndication and other fees.

The latest spat between the two sides was over a provision in Mr. Wolf's contract called the "48 Episode Guarantee." Mr. Wolf takes it to mean NBC owes him two years of producer fees, or around $15 million, when it cancels any of the "Law and Order" shows.

This year, NBC filed a case in Los Angeles Superior Court, arguing the clause requires the network to pay only a small fraction of that or nothing at all. This summer, NBC decided to try to settle the dispute with Mr. Wolf outside of court.

The original "Law and Order" celebrated a milestone earlier this year: 400 episodes on the air. NBC Universal executives wanted to host a small party for the cast and crew. Mr. Wolf proposed instead an expensive soirée at Cipriani in New York with every actor who has ever appeared on the series in attendance. The two sides were not able to come to an agreement and the anniversary passed quietly without celebration.

Check out my blog home page for the latest Law & Order information, here.

Also, see my companion Law & Order site,These Are Their Stories.


Music Wench said...

I'm not surprised. NBC treats people who have helped their network to glory in the past like crap. They did it Johnny Carson when he left. They did it to David Letterman, which caused him to leave for CBS. They're now forcing out Jay Leno, who has been doing a good job for them (I'm not a Leno fan but hey, the guy does well for them, doesn't he? Or at least he did).

I'm so anti-NBC it's not funny. They deserve to be last place in the ratings race.

Wallyhorse said...

NBC may be forcing Leno out, but that is because they are concerned that down the road, ABC might cancel "Nightline" or Jimmy Kimmel and try to get Conan to take over one of those spots.

As for "the franchise," sure, the ratings are down, but what is convienently forgotten is ratings for most shows on average are down from 30-40% over the last four years. With more choices than ever for vieweing, unless it's a truly big event, you are not going to see the big ratings any longer.

John K. said...

It, more or less, explains why the 400th episode wasn't promoted. And as for the mega party, oh, the potential reunions! Headdesk.

But, as wallyhorse said, ratings are down everywhere. And, the Mothership did rather well because of the WGA strike (imagine what would have happened to the show, were it not for the strike). It broke the top 20 Nielsen ratings (it was no. 20, but still).

The only reason I care for NBC is because of L&O. Once it ends and/or canceled, I'm dropping it like a rock. And I can't wait for that to happen.

Wallyhorse said...


I don't think it was entirely the writer's strike that caused the ratings upswing on "L & O." There also was a lot of positive buzz about this past season that we have not seen in the last couple, especially with the writers who were there this past season.

Even if NBC does give up on the mothership, it would not surprise me if TNT made another run at the original series as they did this past season because it is as valuable a series as it has been.

Wallyhorse said...

I meant with TNT, after the season before the most recent one.

John K. said...

When Season 18 first aired, I'd be with you, although, don't underestimate the strike's impact. Considering the show was right on the edge of cancellation and then was to be aired on Sundays post Football. Then again, anything beats that terrible Friday slot.

Or another reason could be that people were anxious, particularly as this was the first time the show has aired mid-season. Either way, I'm sure NBC would have dumped it off, anyway. The strike just gave NBC a different tack.

Of course, I'm just speculating, so you're probably right.

And, yes, when I heard TNT might have wanted to pick up the series last year, I was thrilled. At this point, I'll take anything to get away from NBC, like CI did.

Plus, yes, TNT has made many a profit off L&O, so it would make sense to pick it up.

Anonymous said...

Very interesting story. I do hope that Mr Wolf and his writers take some revenge on NBC, by concocting a story that was suggested tongue in cheek in the article...only use it for the long hoped for crossover between all the L&O's. Murders, perverted studio executives, extortion, blackmail, drugs, mob connections, pension theft, everything any of the L&O's have used in the past as crimes! LOL!!!
I really don't care for much of any tv programming nowadays-in fact, much of my tv viewing, is history, science, and news-and of course, L&O. The article did point out one reason why many of us do watch so faithfully. You really don't HAVE to watch faithfully, you don't have to tune in every week to keep up with characters. Good point, as to why the early syndication deals did so much to help the shows ratings