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Media Outlook: Syndication - Durable Goods

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First-run hits, off-net sitcoms create uptick in ad spending.

On the heels of another rapidly paced and unexpectedly strong broadcast network upfront, syndication sales executives were obviously ready, willing and able to do business. Fueled by what analysts refer to as tempered optimism in the economy, advertiser spending in syndication remained on the upside for the second consecutive year. Estimated ad dollars in syndication this year fall in the mid-$2 billion range, and consensus points to more growth for at least the next few years.

"Last year, we saw an uptick in the advertising marketplace once the recession ended," says Leo Kivijarv, director of research and publications at Veronis Suhler Stevenson, who estimates growth through 2007-08 of another 3 percent annually. "One year later and broadcasting spending—syndication included—remains on the rise because of the basic underlying growth in the economy."

"Syndication is not just riding on the coattails of the broadcasters," says Kevin K. Carton, global leader, entertainment and media practices at PricewaterhouseCoopers. "The value of long-running first-run shows like Wheel of Fortune, … Oprah and Entertainment Tonight, and A-list off-network sitcoms like Friends, Seinfeld and Everybody Loves Raymond are immeasurable." PwC estimates compounded growth of 4.9 percent in broadcasting overall per year through 2007.

"My only concern about syndication is that too much reality in prime time means there could be less eventual, successful off-network product," warns Carton. "Other than Cops, reality does not repeat well."

With durability in syndication a key selling point, 11 current first-run strips past the 10-year mark is a positive worth noting. Veteran Wheel of Fortune, in fact, just taped its 4,000th episode.

"Syndication really is a breeding ground for long-term hits," says Rick Feldman, the recently appointed president and CEO of the National Association of Television Programming Executives. "Viewers seem to be more committed to staying with shows in daytime than they do in prime time."

"You really know exactly who your audience composition is in syndication," adds Dick Askin, president and CEO of Tribune Entertainment. "And the ability to find a new hit in the magnitude of King World's Dr. Phil this year is an obvious incentive."

Although there will be no new hits of that magnitude this year, new Warner Bros. talker The Ellen DeGeneres Show is off to a promising start. According to Nielsen Media Research and based on the overnight markets for the week of Sept. 8, Ellen in week one is up 5 percent in the ratings from its lead-in and 17 percent from the year-ago time period average. Early buzz, meanwhile, points to Entertainment Tonight spin-off The Insider as a show to keep an eye on in 2004.

"Unlike the networks, which often cancel new shows in a matter of weeks, syndicators overall are generally more patient," says John Rash, svp, director of broadcast negotiations at Campbell Mithun. "That in itself sends an important message to the advertising community."

The Syndicated Network Television Association, which held a gathering last February in New York targeted specifically to buyers and advertisers (and separate from NATPE), points to more original programming than that of the networks as an important added incentive for the advertiser.

"What people don't often realize is the number of hours of original programming you get in syndication," says Hadassa Gerber, director of research at the SNTA. "Although the number of original episodes of a network series is generally about 22 or 24 each season, 39 weeks of original episodes in syndication equals 195 episodes. It would take an average scripted series in prime time years to reach that many episodes."

According to the SNTA, no advertising buy is really complete without syndication, whose audience reach is often competitive with that of the networks. "There have been many times, particularly this summer, that Friends in syndication outdelivered Friends on NBC," says Gerber. "And sitcoms like Everybody Loves Raymond and Will & Grace have come particularly close."

Of course, with network spending on the rise, one could say that syndication also is poised for continued momentum.

"With the broadcast networks losing audience every year, advertisers have to spend more to reach the same audience," notes Brad Adgate, svp of Horizon Media. "And the more they spend on the networks, the more they seem to have for syndication and cable. Everyone is benefiting."

Regardless of what the reasons are, all facets of broadcasting—network, cable and syndication—are on the upswing for the second consecutive year, and all three mediums are expected to keep growing indefinitely. "Growth in broadcasting is what you would call a combination of hope and guarded optimism," concludes Carton. "As the economy trickles back, advertiser spending is increasing. It's that simple."

Marc Berman writes the Programming Insider for mediaweek.com.