It's a Vertically, Vertically, Vertically Integrated World

Zack Smith found a telling item in the L.A. Times about why Holly Hunter’s vehicle Saving Grace was canceled even though the network wanted to keep it going (emphasis mine):

The cable network will push back the previously announced winter run of the remaining six shows in Season 3 of “Saving Grace” and Fox will film just three more episodes to tie up loose ends. While TNT wanted to continue with “Saving Grace,” Fox decided to end production on the show after disappointing overseas and DVD sales.

This didn't sell at allWhile I don’t know if this specific situation happens that often (it requires the show to be on the exact midpoint between success and failure, successful enough that the network can take it back but unsuccessful enough that the studio doesn’t want to pay for it), it’s an illustration of why the old model of network-studio relationships is dying out. Under that model, a studio or independent production company makes a show, sells it to a network, and then gets the windfall when the show is sold into syndication and overseas markets. Today, most networks and studios prefer to have everything under one roof, with the network buying shows primarily from its corporate partner.

A major reason for that, as discussed elsewhere on this blog, was the elimination of the so-called “fin-syn” rules that forbade networks from owning their own shows. But an incident like this one shows why the fin-syn rules couldn’t last (nostalgic though I may be for the independent producers that flourished under those rules). It’s not just that networks prefer to own the shows they air; it’s also that studios have increasing trouble making back their money on a lot of shows. The syndication market isn’t what it was, nor are overseas sales, and while DVD sales can help some shows (like Heroes) they are not good for older-skewing procedural shows like Saving Grace.

Part of the security of the vertical-integration model, making the broadcaster and supplier be part of the same company, is that if one revenue stream is disappointing, the show might still be kept alive by the other one, or there could be added pressure on the studio and/or broadcaster to keep it going for the sake of the corporate partner. (Bill Lawrence has pointed out many times that this is why Scrubs has stayed alive by moving from NBC, which did not own it, to ABC, which does. NBC didn’t have any reason to care about Scrubs‘ good DVD sales and other ancillary benefits because they didn’t stand to benefit from any of that, whereas ABC does.)

An exception, as I’ve also said before, is CBS, which gets most of its hit comedies from outside studios like Warner Brothers and Fox. But most successful multi-cam sitcoms are reliable moneymakers in syndication, so they are the closest thing we have nowadays to the old model, where the studio can look forward to big profits from endless reruns.