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No. 14

NBC Deals for “ER”

In a move that sent shockwaves throughout the entertainment industry, NBC agreed to pay Warner Bros. Television $13 million per episode to renew TV’s top drama, “ER” the highest price ever paid to renew a series. The three-year deal is worth $286 million a year for 22 episodes, or $858 million for the entire package.

The “ER” deal has caused major changes in the way network television creates and finances its programming.

Rather than licensing the right to broadcast a series for the traditional four-year run, networks are now demanding that producers make five- and six-year deals. The networks also have rushed to develop their own in-house projects, thereby eliminating the need to renew a series at such an exorbitant licensing fee.

How did Warner Bros. get NBC to dig so deep? Ironically, the studio offered to renew the medical drama after its second year at a more modest licensing fee. NBC, which at the time was flying high in the ratings, declined, paving the way for Warner Bros.’ big payday two years later.

By that time, NBC was desperate to keep its top slot as the ratings champ (it had just lost “Seinfeld”). To do that, it needed “ER,” the top-ranked network show. To make matters worse, CBS had let it be known that it would be willing to pay $12 million per episode for the series if NBC passed. NBC was compelled to sign on the dotted line, forever changing the rules of the game.

Frank Swertlow