"ER," the Mona Lisa of contemporary television, is about to be put up for auction - and every network in America wants this work of prime-time art hanging on its wall.
With a rare opportunity to change the competitive balance of network television riding on the outcome, the bidding for NBC's hit drama could be the most frenzied and unrestrained in the history of television, rivaling the competition for rights to the Olympics or other major sports events.The battle is likely to include every network and many of the most prominent names in the entertainment industry. The negotiations are expected to end with "ER's" owners signing a contract for a price far higher than any ever paid for a television series.
"ER," the anchor of NBC's mighty Thursday night lineup, is in the final year of its four-year contract with that network. According to three senior executives involved in the negotiating process, Warner Brothers, the studio that owns the series, is preparing to demand a fee of $10 million an episode for a renewal of the show. That figure would explode every previous price standard for television.
By comparison, NBC's other Thursday night titan, the half-hour situation comedy "Seinfeld," signed a new deal last spring for an estimated $5.5 million an episode. The typical hourlong drama costs about $1 million an episode; the current cost for "ER." is estimated to be about $2 million.
Networks pay studios license fees for programs. They raise revenues by selling advertising in the shows - the more viewers, the higher the price they can charge.
The networks hope to make a profit after two showings of a series episode because, unless they own a share in a show they do not have a stake in syndication sales. The studios usually produce programs at a deficit, anticipating the revenues to be made back when a show goes into syndication. The repeats of network shows are syndicated on local television stations or, increasingly, they are sold to cable channels.
NBC does not have any syndication rights in "ER." Any additional money it must pay to retain the series will have to be made up in advertising revenue - or else come directly off the network's bottom line.
"It's going to be about a $500 million, two-year deal," said one senior network executive, who will be among the bidders if NBC is not successful in retaining "ER" during an initial negotiating period. Like almost every executive involved in the hunt for "ER," he spoke on condition of anonymity.
Network programs normally produce 22 to 25 episodes a season. Putting the size of the deal in perspective, the senior network executive said, "This is an NFL-type deal."
The sports comparison is especially apt, because before it begins to negotiate with Warner Brothers for "ER," NBC must settle hugely expensive sports rights deals with the National Basketball Association and the National Football League.
Those two deals are expected to cost NBC $200 million to $250 million more a year. As a senior executive with a competing network put it: "NBC made $500 million in profits last year. The `ER' deal coming on top of the sports deals could eat up almost all of that."
Even with that daunting prospect, most industry executives believe NBC can't afford not to pay the price to keep television's most potent weapon in its own arsenal. No network except NBC is permitted to negotiate with Warner Brothers at this point, although the studio is, as one executive put it, "always allowed to listen."
So far, executives including Leslie Moonves, the president of CBS Entertainment; Peter Chernin, the president of the News Corporation, Fox's parent company, and Stuart Bloomberg, the chairman of ABC Entertainment, have "dropped hints of interest" in the ears of the Warner Brothers officials in charge of the negotiations, one executive said.
The studio officials involved so far include Bob Daly and Terry Semel, the co-chairmen of Warner Brothers. Eventually Gerald M. Levin and Ted Turner, the two top executives of Time Warner, the parent company, are likely to take part.
NBC will almost certainly call in its own A-team, starting with Don Ohlmeyer and Warren Littlefield, who run the entertainment division, and including the network president, Robert C. Wright, and, in all likelihood, Jack Welch, the chairman of NBC's parent company, General Electric.
NBC will have an exclusive period, between Feb. 1 and March 1, to work out a renewal with Warner Brothers. If no deal is done by then, Warner Brothers must set a final dollar figure for NBC to meet.
If the network passes, and another network makes an offer in excess of that figure, Warner Brothers must take that deal, though exact terms can still be negotiated, especially if more than one network beats NBC's offer. If a network offers a deal equal to or less than what NBC was offered, NBC would have the right to match the offer.
While numerous executives expressed the opinion that NBC will do everything possible to keep the show from going to an outright auction, one senior executive with a competing bidder said, "Bob Daly has said that this is a total jump ball."
Like many others involved, Daly declined, though a Warner representative, to be interviewed about the status of "ER."
But Wright of NBC said the $10 million figure "would be just awful." He said, "Our flexibility on this deal is really limited."