The ‘Simpsons’ salary dispute and the costs of success

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A salary dispute between the actors who provide voices for ‘The Simpsons’ and 20th Century Fox Television, the studio that produces the hit cartoon for its sister Fox network, has shone a light on just how much News Corp., parent of both the studio and network, has made from the show.

No doubt Bart, Homer, Marge and the rest of the Springfield gang have been a cash cow for Rupert Murdoch’s media empire. Between reruns, DVDs and the slew of merchandise that has come out over the more than two decades that ‘The Simpsons’ has been on the air, the show has generated more than $1 billion in profits.

However, it is not as if Murdoch takes that big pile of money and puts it under his pillow every night like he’s Homer’s boss C. Montgomery Burns. After everyone involved in the show, including the folks lucky enough to be profit participants in ‘The Simpsons,’ gets his or her cut, the bulk of the leftover dough gets pumped back into the company.

There it is used to sign writers and producers to make other shows, most of which will fail. That $15 million that was spent by 20th Century Fox Television to make the pilot for ‘Terra Nova’? ‘The Simpsons’ helped pay for that.

The actors’ contributions to the show’s success should not be minimized, and they too have earned millions off of the success of ‘The Simpsons.’ The main voices on ‘The Simpsons’ -- Dan Castellaneta (Homer), Julie Kavner (Marge), Nancy Cartwright (Bart), Yeardley Smith (Lisa), Hank Azaria (Moe the bartender, Chief Wiggum and Apu) and Harry Shearer (Mr. Burns) -- currently make about $440,000 per episode, according to a person close to the show who was not authorized to speak publicly on the matter. They also typically get paid for any use of their voices in ‘Simpsons’-related merchandise or commercials.

The studio wants to cut that by 45% to roughly $240,000 per episode. Producers and others involved in the show also have been asked to take reductions in pay.

The reason the studio is trying to cut the show’s costs is because over the years ‘The Simpsons’ has become a lot more expensive to produce. The longer a show is on the air, the bigger the salaries get for all involved. That’s how it should be. With ratings success comes financial rewards.

For the Fox network, though, ‘The Simpsons’ has entered into the loss leader category. Its audience has shrunk by almost 20% over the last five years, and at more than $5 million per episode the network no longer makes money on it, people familiar with the matter said. That’s why Fox is pressuring the studio to lower the license fee and the studio in turn wants the creative team to take a pay cut.

Interestingly, the studio and parent company News Corp. also know that even if new episodes of ‘The Simpsons’ end, that doesn’t mean the money train will stop running. In fact, it could get bigger.

That’s because once the show goes off the air, the syndication unit of News Corp. will be able to cut new rerun deals for ‘The Simpsons’ and find other ways to monetize the show, including starting a cable channel devoted to the antics of Bart.

‘Ironically, the cancellation of the show would allow News Corp. to finally sell off-network syndication rights into cable channels (and potentially to online distributors),’ wrote David Bank, a managing director at RBC Capital Markets. Bank estimated that News Corp. could generate as much as $750 million in new rerun deals. It can’t do anything with the reruns though until the show stops production, which would lead to the expiration of the original rerun deals signed in the mid-1990s.

Being asked to take such a big cut in a job one has held for more than 20 years is not easy to swallow, especially on such a hugely successful show. The bean counters at 20th Century Fox Television should look for every other place that fat can be trimmed from the budget of ‘The Simpsons.’ No doubt there is a donut budget in there somewhere that can be slimmed down.

The studio has set a deadline of Friday afternoon for the actors to agree to the terms. Odds are, as is often the case in these situations, some sort of an middle ground will be agreed upon. If not, then a lot of people will be saying ‘d’oh!’

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-- Joe Flint