HBO, Still Vertically Integrated

A few recent developments in cable TV have sort of confirmed that the concept of “vertical integration” – networks buying mostly shows from their own corporate parents – is less prevalent than it seemed to be a few years ago. Showtime renewed Homeland for a second season, its best current show and probably the best show it’s had in years; that show is produced not by Showtime, but by Fox. Starz, which is making a less-than-successful push to be the new HBO, is building part of that push around Boss, a show produced by Lionsgate. FX’s most popular drama, Justified, is a co-production with an outside studio, and the network just won the bidding to get Lionsgate’s new Charlie Sheen sitcom Anger Management.

(That’s also another reminder of how the identity of a network can look different depending on what time you watch it. To fans of FX’s original programming, a Charlie Sheen show seems like a violation of much of what the network has come to stand for. But FX is also the Two and a Half Men rerun network, and those reruns are an important part of the network’s overall appeal, not to mention its bottom line. That being the case, it had to buy Sheen’s show; it’s as logical as USA, the NCIS rerun network, signing Mark Harmon for a TV movie.)

A few years ago, it seemed like self-owned productions had a clear advantage: they’d get more promotion, and the DVD sales would not flow to a corporate competitor. Now with the DVD market declining, DVD sales are not very relevant to a show – and they were never very big for most TV shows, not compared to movies – so that might be part of what makes it less imperative to buy within the family, so to speak.

An exception is HBO, which is mostly sticking to its policy of complete vertical integration: no more Larry Sanders type deals where they buy from another studio; almost everything comes from within. (An exception is Hung, which comes from the studio that makes many Canadian shows like Rookie Blue and Call Me Fitz, as well as AMC’s new show Hell On Wheels. But even with Hung, the DVDs were produced by HBO.) This makes sense within the model HBO has adopted, since owning their own shows gives them maximum leverage for making them profitable. I wrote about this a couple of years ago, with a quote from HBO co-president Richard Plepler. Overseas sales are an important part of the model, and the network is happiest when it has a show with international appeal, like Game of Thrones. The studio-system, internationally-based model doesn’t mean that a show will never end early; this is the network that canceled Deadwood and is still pondering the question of how long to keep Treme going. It does mean that they have more flexibility in deciding whether a show is working for them, whereas most networks have to depend more on the basic data: ratings, subscribers, advertisers.

The HBO model doesn’t work for most networks and studios, though, because to make it work you almost have to operate like an old Hollywood studio: sign up the talent and put them to work producing stuff for you until their contracts are up. HBO rarely even produces shows for outside networks, unless it’s something like Everybody Loves Raymond that wouldn’t be right for them under any circumstances. Most TV studios can’t afford to operate in that kind of closed environment; as I’ve said earlier, even the studios that spent years producing mostly in-house (like NBC/Universal) have concluded that this was a mistake. It does work for HBO, though, at least as long as they can come up with shows that have strong international appeal.

It was pointed out to me that AMC is one of the cable networks moving toward in-house production rather than away from it; Walking Dead is self-produced, while their previous flagship shows were from outsiders. On the other hand, they also have The Killing, and that’s a Fox production. Which just goes to show that ordering from outside doesn’t guarantee you a better show than one you make yourself.