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Don't have a cow but News Corp. may be better off without 'Simpsons'

October 4, 2011 |  1:26 pm

SIMPSONS

Would News Corp. be better off if Homer Simpson retires?

On the surface that question seems absurd. After all, "The Simpsons" has been a staple of News Corp's Fox network for more than two decades and remains one of its most popular shows. Furthermore, the cartoon has pumped billions of dollars into the company's bottom line in the form of reruns and DVD sales around the globe.

But a contract dispute between the actors who provide the voices for "The Simpsons" and 20th Century Fox Television, which produces the show for the Fox network, is threatening the show's future and raising new questions about whether the economics for one of television's most famous programs still makes sense.

In a statement, 20th Century Fox Television said it "cannot produce future seasons under its current financial model." News of the dispute between the cast and producers was first reported by the Daily Beast.

The studio is seeking to cut the salaries of the cast. The cast is willing to consider that but only in exchange for a small percentage of the show's profits, which is not yet on the table. The key cast members include Dan Castellaneta (Homer), Julie Kavner (Marge), Nancy Cartwright (Bart), Yeardley Smith (Lisa) and Hank Azaria (Moe the bartender, Chief Wiggum and Apu).

"The Simpsons" is no longer the powerhouse it once was. So far this season, it has averaged 7.1 million viewers. That is a sharp drop of nearly 20% from five years ago, when "The Simpsons" averaged 8.7 million viewers. Among the coveted adults ages 18 to 49 category, "The Simpsons" ratings have fallen 17%.

To be sure, most shows experience ratings declines as they age. The conundrum is that the cost of producing shows also goes up as they get older because producers and actors tend to get big raises the longer a program remains on the air. The per-episode license fee that Fox pays its sister studio for "The Simpsons" is north of $5 million per episode, according to people with knowledge of the terms who declined to speak publicly because of the sensitivity of the situation. At that price, the show is no longer profitable for the network, these people said.

"The Simpsons" continues to generate lots of money for News Corp. through reruns and DVD sales, although not as much as it once did and there is little financial need for more episodes.

With regards to reruns, the deals for repeats of the show are very old and heavily favor the stations carrying it. Usually, TV stations pay cash plus a portion of commercial inventory (known as barter advertising) in return for getting to air reruns of popular shows. In the case of "The Simpsons," the barter advertising portion of the agreement with the stations that carry it expired years ago and now it is strictly a cash deal.

Until the show stops producing new episodes, News Corp.'s hands are tied with regards to finding new buyers that will pay more for the repeats. Once the show is done on Fox, the contracts News Corp.'s syndication unit 20th Television struck with local stations will start to expire and new rerun deals can be struck with both local stations and cable networks. Given the strength of "The Simpsons" performance in reruns, there will be no shortage of buyers. News Corp. Deputy Chairman Chase Carey has even talked about starting a cable network devoted to reruns of "The Simpsons."

"There’s only upside opportunity given the fact that the syndicator would be able to sell another cycle of the program to broadcast which would definitely include barter and also allow for a sale to cable," said Bill Carroll, a vice president at industry consulting firm Katz Television.

Although from a business standpoint a case can be made that it's time for Homer and the gang to retire, the show's creative team, which includes creator Matt Groening and executive producer James L. Brooks would like to see it last 25 years. The show just started its 23rd season.

"We are hopeful that we can reach an agreement with the voice cast that allows 'The Simpson' to go on entertaining audiences with original episodes for many years to come," the studio said in its statement.

"The Simpsons" is still a valuable platform for Fox. Its iconic characters remain the face of the network. A Sunday night without "The Simpsons" would be like a "60 Minutes" without Andy Rooney. Oh, wait a minute.

RELATED:

Could Homer Simpson get his own cable channel

-- Joe Flint

Photo: "The Simpsons. Credit: Matt Groening / 20th Century Fox Television

 

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