Will it be a Fox trot for Conan?

Fox Broadcasting is inching closer to bringing Conan O’Brien back to late night television.

Key Fox executives, including Rupert Murdoch, are on board with the plan and would like to finalize a deal in coming weeks so they can make a splash on May 17 when the network unveils its new fall lineup for advertisers in New York.

Several significant issues remain, and the Fox talks could fall apart, according to people close to the negotiations who asked not to be identified because the discussions were meant to be private.

But people close to O’Brien are cautiously optimistic.

“We’ll get there,” one of them said Tuesday.

Fox executives have been huddling to figure out how much it will cost to mount a late-night talk show that would be profitable for Fox stations and affiliates. Stations, hammered by the advertising recession, rely on the profits generated by syndicated reruns such as “The Simpsons” and “The Office,” and it’s unclear how many stations would be willing to substitute those shows for a risky venture — even one starring a big-name host.

But Fox realizes that if it ever wants to get into the late-night game, this is the time. The network, owned by Murdoch’s News Corp., has had its eye on entering the late-night talk-show wars for years.

Indeed, it was Fox’s overtures to O’Brien nine years ago that prompted NBC’s Jeff Zucker in 2004 to promise O’Brien the “Tonight Show” in order to keep him at the peacock network. Zucker’s plan famously unraveled when longtime host Jay Leno decided that he wasn’t ready to retire.

Fox Entertainment President Kevin Reilly and Entertainment Chairman Peter Rice have been leading the campaign to bring O’Brien to Fox, according to knowledgeable sources. But their bosses have told them to demonstrate that a late-night show would be financially viable. A breakthrough came last week during meetings in New York, when they outlined a late-night scenario that one executive described as “a deal that we could live with.”

It hasn’t been decided whether the show would launch in the fall or January. Meanwhile, O'Brien's camp is weighing whether they can pull off a high-quality network show with the smaller budget -- or if they should roll the dice and shift to cable. 

-- Meg James

Photo: Conan O'Brien. Credit: Evan Agostini/Associated Press.

Florida tax rebate plan could backfire

Seeking to be family friendly, Florida may have learned a hard lesson in how not to be Hollywood friendly.

The Sunshine state startled the film industry recently when a bill was introduced in the state Legislature that would disqualify movies and TV shows that contained “nontraditional family values” from receiving a supplemental “family friendly” tax credit that’s been in effect for a couple of years.

The bill, unanimously endorsed last week by a key legislative committee, is part of a larger $75-million incentive program aimed at luring film and entertainment jobs to the state.

But critics have lambasted the family friendly portion of the package as potentially discriminatory, noting that it could disqualify movies such as “The Kids Are All Right,” this summer’s upcoming comedy about the children of a lesbian couple and their relationship with their father.

Hollywood’s chief lobbying arm also expressed disapproval. “We believe the language that was first proposed raises some serious constitutional issues,” said Vans Stevenson, senior vice president of state government affairs for the Motion Picture Assn. of America. “We are working with the sponsors of the legislation to see if we can craft some language that would pass constitutional muster.”

Peter Dekom, a veteran Los Angeles entertainment attorney, said the bill, if enacted, would spark costly litigation and discourage filmmakers from shooting in Florida, where about 20 TV shows and films were shot in fiscal 2009.

“It could serve as a major deterrent to Florida,” Dekom said. “There are a lot of actors and high-profile producers who have a powerful belief in gay rights and equal treatment under the law.”

Responding to the furor, the Florida Senate is poised to remove the controversial language from the bill this week and the House is expected to follow suit.

No other state has a similar tax credit, though Texas comes close. Texas stipulates that it is not required to provide tax breaks on projects that contain “inappropriate content” or “content that portrays Texans or Texas in a negative fashion.”

 The chief backer of the Florida bill, Rep. Stephen Precourt (R-Orlando), was unavailable for comment.  In a recent interview with the Palm Beach Post, Precourt said the aim was not to target the gay community but to promote wholesome movies for family audiences.

“Think of it like Mayberry,” Precourt said, invoking the fictional community that was the setting for “The Andy Griffith Show,” the iconic 1960s sitcom. “That’s when I grew up — the ’60s. That’s what life was like. I want Florida to be known for making those kinds of movies: Disney movies for kids and all that stuff.”

Graham Winick, president of Film Florida, an organization that promotes the state’s film and entertainment industries, said the bill was about creating jobs, not restricting content. He noted that the controversial language involves a “voluntary credit,” not the state’s main incentive. “This is not about turning away projects,” he said.

To compete with states including Louisiana and Georgia that offer richer incentives, the proposed Florida law would beef up the current 15% production rebate to a 20% transferable tax credit for producers, as well as increase the additional family friendly tax credit to 5% from 2%. Since the family friendly credit debuted in 2007, six projects have been approved and two denied.

Currently, “family friendly” is defined for the tax credit’s purposes as content that would be considered suitable for children and did not exhibit “any act of smoking, sex, nudity, or vulgar or profane language.” The proposed change adds “gratuitous violence” and “nontraditional family values” to the definition but doesn’t explain those terms.

“We feel that the term ‘nontraditional family values’ is a way they could prohibit funding for any motion picture or TV program that has a gay in it,” said Ted Howard, executive director of Florida Together, a federation of groups that advocate for gay rights. We're finding a lot of support to pull that language."

-- Richard Verrier

The Morning Fix: Conan and Fox inch closer! Windows cloud ShoWest. Make it a VOD night. I'm moving to Goldsboro, N.C.!

After the coffee. Before finishing up your March Madness office pool picks. 

Keeping up with Conan. Former "Tonight Show" host Conan O'Brien is back in the news today, and it's not for his tweets. The Los Angeles Times' Meg James updates us on his talks to take his late-night act to Fox. The two sides are inching closer to an agreement, although nothing is guaranteed. Sticking points remain, including the fact that the Fox-owned TV stations and Fox affiliates already have deals for sitcom reruns in the 11 p.m. hour. If O'Brien does go to Fox either in the fall or January, he might not have a uniform start time across the country for at least a year. The Wrap, meanwhile, weighs in with a piece about whether O'Brien might go the syndication route in late night. It is, the story acknowledges, a long shot, but his camp has met with some syndicators. Finally, Deadline New York's Mike Fleming reports that O'Brien's upcoming comedy tour may end up becoming a movie as well. 

Windows debate clouds ShoWest. Usually, the movie industry's annual Las Vegas gathering is little more than a cheerleading festival for the industry. Stars are paraded out, and executives say how great everything is going. But this year's ShoWest has a different tone as movie-theater owners gripe about the push by studios to shorten the window between when a movie ends its theatrical run and comes out on DVD. The Associated Press with an overview. 

Forget the Blockbuster-night thing. One-time video giant Blockbuster warned shareholders it might have to file for bankruptcy. It also said Hollywood studios might tighten their credit deals with the chain. Details from the Wall Street Journal. 

Make it a VOD night. While Blockbuster struggles and DVD sales decline, the cable industry and Hollywood are teaming up on a $30-million push to promote video on demand. More from the Los Angeles Times. 

Stop the presses! President Obama must really want that health bill passed. He's going on Fox News to make his case, reports the New York Times. Fox News has been trying to land Obama, but their opinion shows have, uh, made that difficult, and the network has been criticized in the past by the administration for not being so fair or balanced. Nice to see them all get along.

Yes, they really are watching you. This has nothing to do with show biz, but since we all goof off at work sometimes and look at YouTube or Facebook, here's a USA Today piece on how employers are getting more sophisticated in tracking what their people are doing during the workday. Keep it in mind as you go to check out the NCAA tournament on Thursday and Friday. 

I'm moving to Goldsboro, N.C.! Time Warner Cable goofed the other day and ran a video promoting the Playboy Channel on two cable networks aimed at kids, according to the Triangle Business Journal. Time Warner Cable apologized for the incident that caused a huge ratings spike for the two channels (kidding on the ratings spike). 

Inside the Los Angeles Times: Producer Scott Rudin is in talks to leave Walt Disney Co. Katherine Heigl looks at life after "Grey's Anatomy." The premiere of HBO's World War II epic miniseries "The Pacific" gets 3.1-million viewers. 

-- Joe Flint

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Studios, cable companies band together to promote video-on-demand

The nation's biggest cable operators and movie producers are teaming up on a $30-million promotional push for video-on-demand.

Long the ugly stepsister of the local video store, VOD is finally gaining momentum as the service becomes more broadly available and consumers grow more comfortable with the technology, which can be used to catch up on missed TV shows or watch music videos. The cable industry's failure to better market VOD services beyond stuffing cable bills with advertisements has long been a sore subject for the studios.

The TV, print and online marketing blitz will tout the convenience of renting movies from the couch and the increasing availability of hit movies offered for rent on the same day as the DVD release. Over the last two years, there has been a seven-fold increase in day-and-date releases. Indeed, eight of the top 10 films of 2009 -- including "Bride Wars," "He's Just Not That Into You" and "Twilight" -- were offered on cable VOD as soon as DVDs reached stores.

The 12-week campaign promoting VOD and rental offerings that include such recent movie releases as "Precious: Based on the Novel Push by Sapphire" and "The Twilight Saga: New Moon" started Tuesday with advertisements on Fox’s top-rated show, “American Idol.”

Motivating the push by cable companies and Hollywood are declines in the sales of DVDs, which are off almost 30% since their peak in 2004, and the problems being faced by Blockbuster, the ailing video rental chain.

Cable companies involved in the hype effort include Comcast Corp., Time Warner Cable and Cox Communications. Participating studios include Universal Pictures, Warner Bros., Sony Pictures and 20th Century Fox.

Studios saw a 63% increase in the number of consumers using VOD in the fourth quarter of 2009, compared with a year earlier, according to the Digital Entertainment Group. VOD, together with digital sales, accounted for about 10% of the $20 billion in home entertainment spending last year.

"We're seeing very robust growth in that category over the last year," said Thomas Gewecke, president of Warner Bros. digital distribution.

Warner Bros., which was the first to offer VOD rentals on the same day as the DVD release in 2008, will extend the rental period to 48 hours, up from 24. 

Cable companies are similarly motivated to improve VOD to keep up with the competitive threat posed by Internet movie services such as Amazon, Apple, Netflix and Vudu, which provide on-demand video into the home.

YouTube takes on MySpace Music at SXSW

YouTube wants to rock MySpace.

Google Inc.'s online video-sharing site is expected to announce on Wednesday a new program -- dubbed "Musicians Wanted" -- to lure independent musicians to its social networking site.

The program targets independent artists by offering them an easy way to create their own homepage, or channel, on YouTube and share in the ad revenues generated by their videos. Up until now, YouTube has only offered the revenue-sharing option to artists who have contracts with record labels or who have carved out special contracts with the video-sharing site.

"We're now opening up the program to all independent musicians," said Michele Flannery, YouTube's music manager.

For YouTube, which announced a similar program called "Filmmakers Wanted" in January at Sundance, the effort is part of a larger push to generate more revenue and become more of an entertainment destination for viewers, rather than just a repository for homemade cat videos.

For News Corp.'s struggling MySpace, competition from the world's largest search company comes at a time when the site is struggling to regain some of its former luster, when MySpace was the premier social network among musicians and their young audience.

Despite its recent travails and management turmoil, MySpace Music remains the No. 1 music site, according to comScore. Last month, MySpace Music logged about 30 million unique visitors, up 63% from a year earlier, browsing through the profiles of some 13 million artists on the site.

Some musicians, however, have been migrating away from MySpace as its traffic dropped below that of other social networks, including Facebook, whose 112 million visitors in February is roughly twice the traffic MySpace garnered in total that month, according to comScore.

One of those is Saul Paul, an acoustic hip-hop artist from Austin, Texas, who has moved away from his four-year-old MySpace page and doing more with Facebook, Twitter, WordPress and YouTube.

"Activity on MySpace has died down significantly," said the 33-year-old independent musician. "No doubt people still go there, but my use of it has really minimized. MySpace was a trend. And trends are just that. They come and go."

YouTube's approach is more video-centric, while MySpace focuses more on allowing users to quickly sample and discover music. MySpace also lets artists sell concert tickets from their MySpace page via a partnership with LiveNation and Ticketmaster. 

But the two are increasingly incorporating similar features, including the ability for fans to buy digital music downloads and sell merchandise. Both capture millions of eyeballs a day, and they face a similar challenge, said Russ Crupnick, an analyst with the NPD Group.

"The big issue for both YouTube and MySpace is how do they monetize this huge audience," Crupnick said. "This is an industry that's lost 50% of its revenue in the last decade."

-- Alex Pham

Comcast won't make promises about your cable bill, has no problem with bundling

News flash: Comcast won't promise to tie its cable rate increases to inflation.

In response to questions about its plans to acquire control of NBC Universal, Comcast told Sen. Russ Feingold (D-Wis.) that it would not make such a commitment.

"Times are tough, and we are highly focused on controlling costs and improving value for the benefit of our customers," Comcast said. The company added, however, that "we must adjust prices to account for our increased costs of doing business."

Feingold was also met with a negative response when he asked Comcast if after it acquired NBC Universal it would stop the common practice of cable programmers requiring a distributor to "carry several less popular cable channels in together to get a cable channel that they and consumers really want." Known in the industry as bundling, that approach has been criticized by consumer activists and some lawmakers.

Comcast countered that it does not bundle and, while NBC does, it "offers discounts to distributors who agree to carry multiple networks" and that the practice "makes programming more affordable [and] helps programmers launch and distribute new programming services, including niche services." Should the NBC deal get approved, Comcast said it does not have any plans to change how NBC sells its cable networks.

Though that may be true for big media companies that have clout to bundle, such as Walt Disney Co. and NBC Universal, the practice also takes away channel space from smaller media companies that don't have an array of assets to leverage. It is a lot easier for a big media company to launch a network than it is for a newcomer, and bundling is a big reason why.

As for the discount, what that really means is that a big programmer will charge more to a distributor who only wants to carry one of its channels instead of five.

In response to questions from Sen. Herb Kohl (D-Wis.), Comcast said it has no plans to offer an Internet-only subscription model for consumers who don't want to subscribe to cable. Though Comcast has a service known as Fancast Xfinity TV that allows its cable subscribers to watch content online, that's as far as the company is willing to go right now.

-- Joe Flint

Studios may tighten credit on Blockbuster, force bankruptcy

Blockbuster's credit may be no good in Hollywood anymore.

Major studios are looking to cut off credit for the DVD renter and retailer, which could potentially push the struggling company into bankruptcy.

Blockbuster disclosed the looming threat in its annual report, filed with the Securities and Exchange Commission on Tuesday.

"Given our liquidity limitations and uncertainty surrounding our ability to finance our obligations, we are currently in discussions with several of the large studios regarding the credit terms for our inventory purchases," the company said in its filing. "If the studios tighten their credit terms or if studios eliminate their provision of credit to us altogether, this could result in up-front cash commitments that we may be unable to sustain on a long-term basis."

Blockbuster then added that if the studios go through with their efforts to tighten credit terms and its financial situation doesn't improve, bankruptcy is a possibility.

"Should we not be able to generate sufficient cash flow from operations and should the studios tighten or eliminate credit terms," Blockbuster said, "we may determine that it is in the Company’s best interests to voluntarily seek relief through a pre-packaged, pre-arranged or other type of filing under Chapter 11 of the U.S. Bankruptcy Code."

During the quarter ended Dec. 31, Blockbuster's same-store revenue dropped 14.7% and it reported a net loss of $434.9 million.

Last year the company shut down 586 stores worldwide, including 353 in the U.S.

--Ben Fritz

Producer Scott Rudin negotiating to leave Disney

With the recent demise of Miramax Films and its possible sale, the specialty label’s biggest movie producer, Scott Rudin, is negotiating to end his lucrative production deal with corporate parent Walt Disney Co.

A prolific producer who supplied Miramax such movies as Oscar winners “No Country For Old Men,” “The Queen,” and “There Will Be Blood,” Rudin is in talks to settle out his contract, which still has three years remaining, said a person familiar with the situation.

Under his arrangement, Rudin collects about $9 million a year to cover overhead at his New York headquarters and offices on the Disney lot. That sum includes a $3-million fund for buying projects.

Negotiations between Disney and Rudin comes as Disney is in talks to sell Miramax with various bidders, including hedge funds and Miramax founder Harvey Weinstein, with whom Rudin has had a strained relationship. Rudin has more than a dozen projects in development at Miramax and wants to be able to control where his projects land, a knowledgeable person said.

Rudin's departure would mark the latest upheaval under the new regime of Walt Disney Studios movie chairman Rich Ross. Just last week, Disney announced it was shutting down the Northern California digital studio co-founded by filmmaker Robert Zemeckis, who most recently directed the studio’s costly holiday movie, “A Christmas Carol.”

Ross also recently ousted Miramax chief Daniel Battsek, a close ally of Rudin’s, and subsequently shut down the unit’s New York and Los Angeles offices. Under a mandate from Walt Disney Co. chief executive Bob Iger, Ross has been aggressively cutting costs at the Burbank studio.

A logical place for Rudin to set up shop next is Sony Pictures, where he has close ties with studio chief Amy Pascal and made last summer's comedy hit "Julie & Julia," starring Meryl Streep. He also just completed production on Sony's "The Social Network," a movie about Facebook directed by David Fincher, and is prepping Bennett Miller's "Moneyball" with Brad Pitt and Jonah Hill. At Sony, Rudin is also expected to make "The Girl With the Dragon Tattoo," based on the first of three Steig Larson novels, which Fincher also may direct.

Rudin, whose producer credits also include Nancy Meyer's comedy "It's Complicated" and Wes Anderson's Oscar-nominated animated comedy "The Fantastic Mr. Fox," was wooed to Disney in 2005 by then-movie chairman Dick Cook after he spent 15 years producing some of Paramount Pictures' biggest hits, including "School of Rock," "The Addams Family" and "Clueless."

-- Claudia Eller

Photo: Scott Rudin: Credit: Jennifer S. Altman / Los Angeles Times

A tale of two networks and one chairman

The Tennis Channel is no fan of Comcast Corp. But the Ovation network likes Comcast. Interestingly, both cable channels have the same chairman -- Ken Solomon.

No, Solomon doesn't have a split personality. He just happens to be chairman of two cable channels that seem to have very different perceptions of the nation's biggest cable operator. While Tennis Channel is at war with the cable giant and complained to the Federal Communications Commission that Comcast favors its own channels over those from outside suppliers, Ovation has nothing but nice things to say about the company.

In a letter to Sen. John D. Rockefeller (D-W.Va.), chairman of the Committee on Commerce, Science, and Transportation, and ranking Republican member Sen. Kay Bailey Hutchison (R-Texas), the chief executive of Ovation said Comcast has been key to the arts network's growth. "Comcast has been an outstanding distributor of our unique programming," Charles Segars wrote, adding the cable behemoth has "a strong record of launching viable, independent channels" and has been a "fair partner."

That's quite the contrast from what Tennis Channel said about Comcast earlier this year. In a filing at the FCC, Comcast was accused by Tennis Channel of causing "specific and concrete harm to its ability to compete for viewers, advertisers and the rights to cablecast tennis events."

Comcast has countered that the Tennis Channel doesn't like its current distribution deal and is trying to negotiate a new one before the old one expires. Its gripe to the FCC are "without merit" and need to be "denied and dismissed."

In fairness to Solomon, he is non-executive chairman of Ovation while he is executive chairman of Tennis Channel. Still, hope he has enough hooks in his closet for all his various hats.

-- Joe Flint

Photo: Ken Solomon. Credit: Fred Mullane 

Over 3 million viewers sign up for HBO's 'The Pacific'

About 3.1 million people signed up for the Sunday night premiere episode of HBO's expensive World War II epic, "The Pacific," according to Nielsen.

HBO, which spent around $200 million making the 10-part miniseries and millions more on hype, said the audience for the debut was 22% higher than the premiere of its last big miniseries, "John Adams." The pay cable channel has been heavily promoting the Steven Spielberg- and Tom Hanks-produced event and even took the unusual step of offering the first episode for free on DirecTV as well as on its own website and on Fancast. 

For those curious as to how "The Pacific" stacks up against "Band of Brothers," HBO's first big World War II miniseries from Spielberg and Hanks, which premiered in September 2001, comparisons are more difficult. That's because at that time Nielsen did not measure HBO's individual channels, but rather combined the audience for all of HBO's channels into one number.

Having said that, it seems safe to say that "Band of Brothers" had a bigger audience in its debut. HBO had 10 million viewers that night, and it seems hard to swallow that 7 million of them were actually watching old movies on HBO's various sister channels. 

However, the way people watch television has changed dramatically since 2001 and comparing ratings for individual episodes from these two eras may be stretch. Besides general media fragmentation and a growth of viewing options both on television and online, there was no HBO On Demand then, and the digital video recorder was still a dream. TV shows didn't show up on DVD until months after their premiere. In other words, there was more of a must-see approach to viewing television then.

Ratings for other HBO shows back this up. Last season, a typical episode of "Curb Your Enthusiasm" averaged 1.5 million viewers in its Sunday night run, but when on-demand and DVR and second runs are factored in, that number grew to almost 6 million. In the case of "True Blood," the Sunday night episodes average about 5 million viewers, but when all other viewing options are factored in, that number jumps to over 12 million. HBO insiders are betting on a similar trend for "The Pacific."

Of course, because HBO doesn't sell advertising, it always stresses that ratings are not its main consideration in determining the success of a program. Instead, HBO banks on maintaining its reputation for high-quality programming you can't get elsewhere, building its subscriber base and developing ancillary revenue streams. "Band of Brothers" sold about $250 million worth of DVDs. Still, one needs compelling programming to keep those revenue streams flowing.

HBO has already sold "Band of Brothers" abroad and will likely sell "The Pacific" here to a basic cable network after its run on the pay channel is done. The History Channel bought "Band of Brothers," and it scored 4.6 million viewers when it made its debut there in 2004.

-- Joe Flint

Photo: A scene from HBO's "The Pacific." Credit: David James / HBO