By Joe Flint in the Wall Street Journal:
"Now Sony is returning to broadcast TV, but this time on its own terms. Sony gambled last year on "Joan of Arcadia" — about a teenage girl who talks to God — backing the show after three other studios passed on the premise as too sappy. "Joan" was a hit on Viacom's CBS last fall, although its ratings have fallen somewhat this year.
Sony's pullback from broadcast seemed to some to mark an end to a golden era of television production. Until about a decade ago, studios would bring heaping platters of new shows to the networks every fall, going into debt to produce them yet not getting a share of the networks' ad revenue.
The deficits were seen as worth it: If a hit show could last on the air for five years, the studio that created it could sell it into syndication for hundreds of millions of dollars — making reruns one of the most profitable properties in the entertainment business.
But the industry shifted over the past decade after the Federal Communications Commission lifted regulations that had prohibited broadcast networks from owning television shows. TV networks paired up with corporate owners of studios: ABC merged with Walt Disney Co.; CBS with Viacom's Paramount; General Electric Co.'s NBC with Universal. News Corp., which already owned a studio, was granted a waiver of the rules to start a network. That left foreign-owned Sony a wallflower at the television ball.
Sony found it increasingly difficult to get its shows on the broadcast networks. In the decade leading up to its retreat from network TV, Sony made 200 pilots — but only five made it to syndication. "We were doing lots of pilots and we weren't making any money," recalls Howard Stringer, chief executive of Sony Corp. of America. "We were behaving as if the world had not changed." Meanwhile, even studios with network partners discovered their shows weren't guaranteed success.
After clearing the decks, Sony decided to concentrate on making shows for buyers who wanted them. Cable television was emerging as a viable outlet for original programming. Cable budgets were small, but the timing was right: Cable channels were finally looking beyond reruns of network shows. Sony, which was already producing "Strong Medicine" for the Lifetime cable network, became a partner on "The Shield," a gritty cop drama that had its premiere in 2002 on the FX channel.
The jury is still out on whether reruns of cable shows will ever rival network reruns in their ability to generate cash. Yet a market is emerging. The explosion in sales of DVD collections of TV shows has helped. And with the export potential of the broadcast networks' reality shows proving limited, cable shows such as "The Shield" and "Rescue Me" are fetching foreign licensing fees in the mid-six figures per episode.
Producing for cable is cheaper than for the networks. Creating the typical episode of a drama for broadcast networks can take eight days and more than $2 million. In the cost-conscious cable world, production usually runs seven days and costs about $1.5 million."
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